Social Fund (Hansard, 2 November 1992)

§ 1. Mr. Mandelson
To ask the Secretary of State for Social Security what steps he is taking to increase the social fund budget to take account of levels of unemployment.

§ 3. Mr. Corbyn
To ask the Secretary of State for Social Security when he next expects to review the allocation of social fund money to local DSS offices.

§ The Secretary of State for Social Security (Mr. Peter Lilley)
With permission, Madam Speaker, I will answer this and Question 3 together.

§ Mr. Corbyn
We were not informed of that.

§ Mr. Lilley
I apologise for the fact that the hon. Gentleman was not informed.
I am pleased to announce that I have authorised the allocation of an additional £8 million to discretionary social fund budgets for this financial year. The extra money allocated to districts takes full account of their individual income support caseloads, which in turn reflect local unemployment levels. All districts will receive budget increases. Details will be placed in the Library in due course.

§ Mr. Mandelson
In view of what the Secretary of State just said and the Conservatives' clear election pledge that the whole of the social security budget, including money allocated to the social fund and benefits for the unemployed, would not be cut, will he confirm that the Government will honour every one of their election promises to recipients of money from the social fund, the unemployed and the poorest sections of society so that the promises made in April do not become the betrayals of autumn?

§ Mr. Lilley
The hon. Gentleman knows full well that I am not going to give advance details of the outcome of the public expenditure round or comment on any speculation about it. None the less, I should have expected the hon. Gentleman to be more forthcoming in his appreciation of the increase, especially as it was made possible by our introduction of the loans system and by the better repayment rates—even better than we had expected—that resulted. If we had stuck with grants, as Opposition Members wished, we would have had to cut the support within the social fund by 60 per cent.

§ Mr. Corbyn
Will the Secretary of State concede that the cash-limiting of the social fund to local offices—I am thinking particularly of the Euston district office—has caused appalling problems for many people? That is especially the case with women who have been victims of domestic violence and who have subsequently been placed in hostels and then housed by a local authority or housing association and approved under direction 4aIII as being victims of violence and therefore vulnerable and in need of assistance. Those people are now being refused social fund payments because of cash-limiting. Does the right hon. Gentleman recognise that £8 million is an improvement, but it is crucial to end the obscenity of cash-limiting for people who are desperately in need of help?

§ Mr. Lilley
I understand the hon. Gentleman's concern about the case about which he has been in correspondence with the Benefits Agency. I believe that there was some dispute about whether an appeal was lodged. I hope that 3 the matter has been carried forward and that progress has been made with an appeal, if that is what the lady concerned wishes.
I am sorry that the hon. Gentleman does not welcome the 25 per cent. increase in his district's budget relative to what it was last year, before the increase that I am announcing, which will ensure an increase for his district as for everywhere else. I am also sorry that he does not recognise the considerable help provided by the social fund and the officers in his area following the local floods. In that regard, I want to quote from a letter from Islington borough council which states: The instant response for assistance and the flexibility of the staff involved played a major part in alleviating what was a major crisis for many people … I would be grateful if the Borough's heartfelt thanks for a job well done could be passed on to the staff involved. I hope that the hon. Gentleman will be equally appreciative.

§ Mr. Jenkin
Will my right hon. Friend confirm that more than 5 million interest-free loans have been made since the establishment of the social fund, amounting to £700 million over that period? Does that not clearly demonstrate the Government's commitment to social policies?

§ Mr. Lilley
My hon. Friend is absolutely right. Because the loans are made, repaid and then recycled, we are able to help far more people than we would be able to help if we had only a grant system. In addition to the point made by my hon. Friend, we have helped I million people through grants costing a further £300 million. The House should welcome the support provided through the fund.

§ Mr. Ward
Does my right hon. Friend accept that Opposition Members welcome the increase in the social fund? It is a pity that there could not be a little more grace from the Opposition—grace shown by Islington council, if not by some of its members. Does my right hon. Friend agree that the social fund gives us much better control to ensure that the sums available get to those most in need?

§ Mr. Lilley
That is, of course, correct. The Opposition are not enthusiastic about the improvement because they know that it would not have been possible if we had not introduced the principle of repayable loans. We have been able to help in a way that was not possible under the old rigid single-payment system, which was unfair, uncontrollable and utterly discredited.

§ Mr. Bradley
Although any increase in the social fund must be welcomed, I fear that it is far too little, too late. Has the Secretary of State read the report, "Evaluating the Social Fund", which was commissioned by the Government, and the report by the Social Security Advisory Committee, both of which stated that the system was absolutely appalling, unjust and inequitable? Does the right hon. Gentleman realise that until the social fund system is scrapped and there is a proper system to give support to those in greatest need, people in abject poverty will continue to suffer? Will the right hon. Gentleman agree to a debate on the social fund, so that every hon. Member who has constituents who have suffered because they cannot get loans or grants can debate the matter and so that there is proper consideration of the fund?

§ Mr. Lilley
I shall continue to give full consideration to the various reports on the social fund and its operation 4 which have been published in recent months. None of them has undermined the basic principle of the system that we established—reliance on loans, as well as grants, and the belief that there must be a discretionary element on top of the rules-based system which covers the bulk of the £70 billion that we allocate to social security. I am not tempted to return to the discredited single-payment system which Opposition Members apparently hanker after.

§ Mr. Nigel Evans
Does my right hon. Friend agree that interest-free loans from the social fund have become widely accepted, that recycling of loans means that more people get more help and that the position is far more credible than the Opposition's empty promises? That would have become apparent the day after the election, had the Labour party been elected, when it would have emptied the coffers.

§ Mr. Lilley
That is absolutely right. The York university study stated that the loan principle had become widely established and accepted. Surely it is better for people to have access to zero interest loans, rather than being reliant on loan sharks.