Social Fund (Hansard, 10 January 1995)

§ Mr. Kevin Barron (Rother Valley)
Hon. Members are not leaving, are they?—[Interruption.]

§ Mr. Deputy Speaker (Mr. Geoffrey Lofthouse)
Order. Will hon. Members leaving the Chamber please do so quietly?

§ Mr. Barron
Thank you, Mr. Deputy Speaker. I applied to the Speaker's Office to bring up the treatment of one of my constituents, Mr. Michael Pitson, and the local social fund and how it operates within the Rotherham area.
It is one of Parliament's great strengths that we are able to use the Adjournment procedure to highlight individual cases and I hope that that never stops. We represent millions of people and we should be able to raise individual cases here when we believe that an injustice has been done.
Mr. Michael Pitson is a married man with two young children who lives in Maltby—a village in my constituency. He worked at Silverwood colliery in October 1992, when the President of the Board of Trade made an announcement about the future of the British coal industry. It is ironic that Silverwood colliery was not on the original hit list of coal mines at that time, although it subsequently closed. Like many others, Mr. Pitson had joined the coal industry thinking that he had a secure future. That was not to be.
Following the closure of Silverwood colliery, Mr. Pitson decided to change his career and applied to train as a nurse in the mental health field. He passed the entrance examination in December 1992 to commence a three-year course leading to a higher national diploma in nursing—mental health branch. Mr. Pitson wrote to many colleges and, after an interview, was accepted at Humberside college of health.
Mr. Pitson came to my constituency surgery last April and explained in detail his problems finding accommodation for himself and his family. Initially, I asked him to put the matter in writing as I wanted to consider his problem. He wrote to me and said: On being accepted by Humberside College of Health I went to the council office in Hull to inquire about a council house in or near the Hull area. The spokesperson for the council told me that because I would have student status I was not eligible for a council house in the Hull area. After this I went to Grimsby council to apply for a house on that side of the Humber and travel to the hospital over the bridge. No luck here! To be eligible for a council house in Grimsby you had to have lived in Grimsby for one year or more. Having looked at the council map I noticed two councils that border the Hull area. Holderness is only two miles from De La Pole Hospital"— where Mr. Pitson had been accepted to take a course. They told me that if the course had been inside their border, they would have offered me and my family a council house but because it was two miles outside their area, they said, 'Sorry can't help'. The other bordering council was Beverley, who said if I wish to return to Beverley and were of pensionable age, no problem, but at a mere 26 and with a family they said, 'Sorry, nothing to offer'. 126 So having tried all the councils I approached several private rental agencies. All had the same answers to my inquiries—as I was only a student nurse and currently unemployed they were unwilling to take me on their books. I have also had my name on the home swap list, but to the present I have had no inquiries. Mr. Pitson wrote to the Department of the Environment and the Prime Minister. He received a letter from the Government Office for Yorkshire and Humberside telling him about the "Homeswap" scheme and giving him a list of other agencies to which he could talk. At the beginning of July, he thought that he had made a breakthrough. He wrote to me and said: I am writing to thank you for all your help in trying to find me and my family a home in Hull, so I can take up my nursing course. But like me your efforts seem to be hitting a brick wall. So as a last effort before giving up I tried ringing around all the estate agents in the Hull area. Then to my surprise I came across an estate agent who not only rented the type of home I was looking for but they were also willing to accept me. The houses they were offering all had a monthly rent of £350. As I am eligible for rent rebate I approached Hull council who said once I had moved in, there would be no problem with claiming housing benefit to the full amount. Hooray, victory at last! Mr. Pitson went on: Not so, the estate agent said to secure any property they would need 1 month's rent plus £100 administration fee before I could move in. So not giving up I went back to the Social Security office to see if I could have the first month's rent in advance. They said `No', I was not eligible for housing benefit until I had moved in, and I could not move in because I have not got the £450 needed. So after getting so close the brick wall strikes again. I then wrote a letter to the Benefits Agency in July. I said: I have been corresponding on Mr. Pitson's behalf about the possibility of him getting housing on Humberside where he had been offered a course in a higher education diploma in nursing starting in March of next year. I have enclosed a copy of a recent letter from the college. I also enclose for your information a copy of a letter I received a few weeks ago from Mr. Pitson saying that our attempts over the last few months to find housing for him and his family on Humberside had shown some fruit, but were eventually dashed because of the need to have a month's rent paid in advance. I would like to know if there is any possibility of Mr. Pitson being assisted in moving house and if a payment for rent in advance could be secured from Social Security. Throughout the months that I have been dealing with Michael Pitson, he has shown nothing but a determination to get on in his life both for his own sake and that of his family. It appears that he now has a good opportunity to move into higher education and at some stage, hopefully in the not too distant future, to move off benefit dependency. I would hope that all people concerned will assist in any way that they can to make this happen. The reply from the local benefits agency stated that it had no record of a budget loan claim, but that he had been sent the requisite forms. The letter also stated: A claim for rent in advance is generally considered to be of medium priority. At present we are only able to make loans of high priority items. However until we know the full circumstances we are unable to consider whether in Mr. Pitson's case the loan could be considered as high priority. His application for a loan was made in August for advance rent and a bond and it was subsequently rejected.
Mr. Pitson waited for my return from holiday before asking me about what to do next. Unfortunately, the wait meant that he was outside the 28 days allowed for appeal. I wrote to the local office and to their credit the staff there accepted the reason for Mr. Pitson's delay and allowed 127 the appeal to go ahead. Mr. Pitson was interviewed again on 23 September and in his review the report officer stated: Directive 8 is satisfied for a loan but a bond is excluded under Direction 12/0, and rent in advance is of insufficient priority … for a loan to be offered. Also, by refusing the bond there is no need of the rent in advance. Therefore, it is a nil award. That is typical civil service speak. He is told that because he could not have a bond anyway, there was no sense in offering the loan. I told Mr. Pitson that if he could get the rent in advance I would write to the person with the house and try to get him to accept that Mr. Pitson was a responsible person and should not need a bond. The report also stated: the district loans budget could only constantly sustain payments for essential household items as the budget is under pressure due to the number of claims. The state of the district budget is 47.39 per cent. remaining for 51.78 per cent. of the financial year. An appeal was lodged against that decision and it was sent for independent review. The review agreed that the social fund officer had made the right decision and that it should stand. It appears that the directions that cover only three items under the discretionary directive fund exclude everything but a loan—if it has the right priority. Direction 29 states that a community care grant cannot be made for housing costs other than minor repairs.
Because Mr. Pitson had applied for one month's rent and bond money to help him rent a private home for himself and his family, it was considered that the provisions of direction 29 prevented an award of a community care grant. Direction 12 states that a budgeting loan may not be awarded in respect of rent in advance where the landlord is not a local authority. The officer stated: I consider that the provisions of Direction 12 prevent an award by way of a budget loan for the bond money. Direction 23 states that a crisis loan may not be awarded in respect of an advance … where the landlord is not the local authority. The officer went on to consider the provision of direction 23 in relation to an award for a crisis loan, which again was not for this purpose. He stated: There are two types of social fund loan, a crisis loan and a budgeting loan. I do not consider that Mr. Pitson qualifies for a crisis loan as the expense must be to assist Mr. Pitson in an emergency or a consequence of a disaster. Budgeting loans are intended to help the applicant. One of the criteria is that applicants must be in receipt of income support for 26 weeks. Mr. Pitson fulfilled that criterion, and consequently could have received a budget loan; but he was not considered to be a sufficiently high priority.
The inspector stated: To decide the priority of this application I have in particular considered the nature, extent and urgency of the need. I have also considered the guidance on priority issued by the Area SFO"— the area social fund officer— and the state of the district loans budget. In his guidance dated the 1 April 1994, the Area SFO said that the district loans budget could only consistently sustain applications considered to be of a high priority. The inspector then mentioned percentages.
I looked at the guidelines relating to discretionary social fund criteria for community care grant, crisis loans and budget loans. The area SFO, who is normally the 128 manager of the local benefits agency, issues guidance each year for SFOs who administer the fund at the desk, as it were. The area SFO tells SFOs: You are reminded that while Section 140(5) of the Social Security Contributions and Benefits Act 1992 requires you to take account of this guidance it is only one of the factors to be considered by you in reaching a decision. Whilst SFOs are required to have regard to the following guidance, it is not binding on them and is only one of the factors which they should consider in reaching their decision. It cannot be expected to cover every situation that will arise in deciding the overall priority of an application. SFOs must, using their discretion, consider every application on its merits, and have particular regard to the individual circumstances of the application, and the need for the item or service. SFOs should consider raising the level of priority where needs of the applicant and the circumstances warrant it. That clearly was not done in this case.
The guidance goes on to discuss crisis loans. Of course, the SFOs must grant such loans only when they deem the applicant to be experiencing a crisis.
In April last year, the area social fund officer—the district manager of the scheme—signed guidance on priority levels. That was a clear recognition of the position, and effectively an instruction to local social fund officers. The guidance that he signed stated: I consider that currently, for grants, payment of high priorities can be consistently sustained from the budget without exceeding it. If that was the guidance at the beginning of the financial year when the budget was known, what happens to medium and low-priority applications? Clearly, they fail. It is a mockery for the Government to lay down guidelines for high, medium and low priorities if the budget does not meet medium and low priorities, and as a consequence any application in those categories fails.
I asked Rotherham metropolitan borough council's social policy unit how many people in the borough were living below the poverty line and might need assistance from the discretionary social fund. The unit wrote to me as follows: The most recent statistics available (November 1994) show that a total of 38,370 people are currently in receipt of Income Support in the Rother and Dearne area. The comparative figure for the same month in 1993 shows a total of 37,165—indicating an upward trend of over 3 per cent. This figure, of course, only shows the number of Income Support 'cases' and therefore does not cover the total number of people in each case who are living at this level (ie partner of Income Support claimants, children etc). It is also very difficult to ascertain the total number of people living below the poverty line as not everyone claims their entitlement to Income Support and are, therefore, not shown in the statistics above (for example pensioners who only live on their retirement pension). The unit also supplied me with information on the number of successful applications made to the fund between April and November last year. In August, when Mr. Pitson applied, 1,998 applications were made. August was the only month between April and November when the figure fell below 2,000. Such a figure is clearly not adequate for the needs of the district.
Figures calculated from the 1991 census show how Rotherham has high levels of deprivation in many economic sectors. The social policy unit states that unemployment is defined more widely in the census than in the official Department of Employment figures and that it includes all people seeking work, whether registered or not.
Unemployment in Rotherham has increased since April 1991, in particular as a result of pit closures and restructuring in the iron and steel industries. The national 129 England and Wales unemployment figure was 9.17 per cent. The shaded areas on the map that I hold in front of me shows the communities with more than 18 per cent. unemployment in the borough. Average unemployment in the borough in 1991 was 11.9 per cent. Maltby, the village in which my constituent lives, is in one of the shaded areas and suffers from that high unemployment.
The social policy unit's study also showed that, out of 56,802 children in the district, 12,151 were living in non-earning households. It said: The national average is 17.35 per cent, the shaded areas in the map"— which include Maltby— indicate the enumeration districts in which the percentage of children in non-earning households is at least 34.7 per cent. of children in all households. That is nearly twice the national average. Children living in and around the village are disadvantaged compared with other people. The Government have a duty to assist people like Michael Pitson to get on in life and to make a career change from an industry that will not have the sort of jobs that it had in the past. His treatment at the hands of many institutions, controlled directly and indirectly from central Government, was the opposite of the assistance that Michael Pitson should have had. We have debated the Second Reading of the Jobseekers Bill. Michael Pitson applied for an allowance to seek work and it failed. He was not of a high enough priority. He and his family should have been of a high enough priority. He said that he wanted to move out of an area like mine with such high levels of deprivation and unemployment, to have this career change and to get back into average work again. Places like Rotherham, which suffer this level of deprivation, should have social funds that are adequate and will meet not just high priorities, in terms of their discretion, but medium and low priorities. I urge the Minister to look at the operation of the social fund in Rotherham to ensure that it adequately meets the needs of people so that people like Michael Pitson and his family can receive the assistance that they should receive from the Government.

§ The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans)
-The hon. Member for Rother Valley (Mr. Barron) has presented classically a constituent case. I agree that it is a matter of great importance to the House that Members of Parliament should have the opportunity to pursue individual cases. He has developed his argument to solve the issue of the social fund in the Rotherham region.
I begin by dealing briefly with Mr. Pitson's case. It is important that we should understand precisely what lessons can be learnt from this matter. The hon. Member for Rother Valley, with the usual courtesy, approached my officials and various inquiries and discussions have taken place behind the scenes. I am happy to be able to tell the House that it looks as though a loan will be made from an access fund by the regional health authority, which will meet the initial housing cost that Mr. Pitson needs. That is an important matter and it was a surprise to the hon. Gentleman and myself as a letter was posted at the end of last week over the holiday period.

§ Mr. Barron
Does the Minister accept that if I had not telephoned the people at the college early last week to tell them about this Adjournment debate, they would not have known about Mr. Pitson's housing problem and he would not have known that the college had a fund—even the college was surprised—to help people with families? We are still left with the problem that Mr. Pitson does not have a home to move into. I hope that the Minister will address that.

§ Mr. Evans
The answer to the hon. Gentleman's first point is yes. The hon. Gentleman has pursued his constituent's interests with energy and I understand that it is as a result of his approach to the relevant college that an access fund loan is now available.
There is still the problem of finding private rented accommodation, but it looks as if the problem of the initial cost of a fee plus some form of rent in advance can be met, as it is intended that it should be by the system, through an access fund loan.
Happily, the purpose of all this is to enable Mr. Pitson to attend a three-year full-time nursing course at Humberside college, beginning in April this year. The hon. Gentleman might like to consider with his constituent, who has been awarded a bursary at a higher level than the present income support level, whether he is entitled to any of the in-work benefits such as housing benefit or possibly family credit. We do not have enough information and a proper application must be made. It may be that more can be done.
Let us suppose that an access fund loan had not been available. It does not necessarily follow that nothing could have been done for Mr. Pitson. At the discretion of a local authority, if it deems it reasonable, housing benefit may be payable on two separate dwellings where one of the partners is away on a training course.
I must be careful about my comments on the operation of the social fund as it applied to Mr. Pitson because, as the hon. Gentleman will appreciate, the decision-making and the review of decision-making is an independent process. I endorse entirely the account of the facts given by the hon. Gentleman, but perhaps I can explain what appears to have happened. The first decision of the social fund officer on 15 August 1994 was that a community care grant was not possible because direction 4 was not satisfied. The second decision was that a budgeting loan for a rent bond, deposit or administrative fee—however it is dressed up by the prospective landlord—was refused as that is a specifically excluded item under direction 12(O). As the hon. Gentleman said, the request for rent in advance was refused on priority grounds. As the hon. Gentleman explained, the social fund inspector upheld that subsequently.
Since it is an independent process I cannot comment on the particular case. However, perhaps I can explain to the hon. Gentleman and the House the Government's thinking behind the scheme and the directions as they are drawn. The issue of deposits and whether there should be provision for them is a very old and difficult one. Direction 12(O) came into being deliberately to exclude them because the previous scheme had escalated dramatically. Between 1981 and 1986 the sums involved increased from £18,000 to £3 million as the number of cases increased from 750 to 33,000. In 1987–88 the sums involved had reached £10 million.
131 There is no easy answer to the problem. If one does not pay, the poor applicant who wants the home cannot jump the hurdle. If one does pay, human nature is such that every private landlord in every circumstance will demand such a deposit. [Interruption.] The difficulty is that if a contract is to be entered into freely it is a matter of bargain between the parties. If one of the parties is paid a blank cheque by the taxpayer, there is an inevitable tendency for the other to take advantage of it.
The Department of the Environment is examining a pilot scheme to help with deposits run in conjunction with the Notting Hill housing trust. The Government's general thinking on this matter is that direction 12(O) represents a sensible policy.
The case for rent in advance failed on grounds of low priority. I must say that I find it difficult to comment on this aspect. The hon. Gentleman explained the facts of his constituent's case—I have no doubt that the House was sympathetic to Mr. Pitson—but we do not know about any other claims that were made or the context in which the priority was established.
In 1993–94, the social fund made 21,600 rent-in-advance loans worth nearly £3 million. I heard what the hon. Gentleman told the House about the sums available under the fund and how the fund operates in his constituency. I should be able to comfort him to the extent that the local guidance to which he referred as an instruction is not, in fact, an instruction.
132 The Government's view of the social fund is that it is generally working well, focusing resources on those most in need of help and making the most effective use of the available resources to help large numbers of people. Since the scheme began, nearly 1.7 million non-repayable grants have been awarded and more than 8.5 million interest-free loans. Last year, the fund helped 5 per cent. more people than in the financial year ending in 1993. Our commitment to this important aspect of provision is clear. We have given more money to the fund every year and that was also the case in 1994–95, even with fierce competition for public funds.
The social fund's gross budget now stands at more than £50 million higher than two years ago. As recently as November, the loans budget was increased by £13 million, a 5 per cent. increase on the allocation announced at the beginning of this financial year. I should explain that Rother Valley had its portion of that. It was made possible by the improved performance of the Benefits Agency in recovering loan repayments, in part due to the new computer system introduced last year. Recycling money in the form of recoverable loans is a successful and effective way to use public funds as it increases the amount of help available. The proportion recovered is substantial and the money can be used again and again.
The Government will continue to keep the operation of the fund under close scrutiny and we shall make improvements to ensure that the considerable help provided by the social fund goes to our most vulnerable citizens.