§ 8. Mr. PikeTo ask the Secretary of State for Social Security what change would result in the administration costs of the social fund if loans were to be ended and the resources used for grants only.
§ Mr. Roger EvansIt is impossible to make a useful comparison between the present system of grants and loans with the hon. Gentleman's hypothetical grants system. But if grants were to replace loans entirely, for the same amount of money far fewer people would be helped.
§ Mr. PikeDoes the Minister accept that that answer must be nonsense when in a previous answer the Under-Secretary of State said that more than 45 per cent. of the social fund was used in administrative costs and that a large part of that was due to the administration cost of giving loans? Is not the system targeted to help the poorest section of the community? Is it not nonsense to try to administer a scheme with all the costs involved and to ask people to pay back loans when they cannot afford to pay them back in any case?
§ Mr. EvansThe answer is firmly no. In fact, people pay back the loans. The recovery level is very high indeed. The hon. Gentleman has not appreciated the force of the point that for £43 million net cost, total loans of £255 million in total are currently advanced. What might be described as the multiplier effect of giving loans increases the amount of help given fivefold. Any system that is designed to be attuned to specific needs and responsibilities is bound to be more expensive to administer.
§ Mr. HendryWill my hon. Friend confirm that, for a total outlay of £280 million over the life of the fund, it has been possible to offer loans of £1.2 billion? Does that not show the benefits of recycling money in that way?
§ Mr. EvansI am grateful to my hon. Friend. He has cast the figures that I gave a moment ago over the period since the scheme was introduced and they point my previous reply. By making a loans system operate in the way that we have done, we have vastly increased the amount of help given.