HC Deb 21 May 1996 vol 278 cc84-5
4. Mr. Battle

To ask the Secretary of State for Social Security how many applicants were refused a social fund loan on the grounds of inability to pay, in (a) 1991–92 and (b) 1994–95; and if he will make a statement. [28807]

Mr. Roger Evans

In 1991–92, out of 2.07 million applications, 37,213 were refused on that ground. In 1994–95, out of 2.5 million applications, 12,303 were refused on that ground. Refusals on grounds of inability to repay decreased again in 1995–96 to 10,411 out of 2.5 million applications.

Mr. Battle

Is not the social fund loan system proving to be a classic Catch-22? Unemployed people cannot afford to pay back the required interest. Moreover, grants are made only to people who have been discharged from long-term stays in hospital or who have been released from prison. There is nothing for families who want to set up home. Are not the Government dumping their social obligations on charity second-hand shops and driving people into the hands of unscrupulous loan sharks?

Mr. Evans

That is wrong on all points and a grotesque exaggeration. For an outlay of £344 million since the fund was set up, £1.6 billion-worth of loans have been made, which have helped five times as many people as a simple grant scheme would have helped for the same cost. In the past year, 41,000 budget loan applications were refused and grants given instead.

Mr. Bradley

Does the Minister recognise that the social fund is failing to help the people in greatest need— 60 per cent. of the budget is swallowed by administrative costs? The excellent children's charities report, "Out of pocket the failure of the social fund", shows that many vulnerable groups, especially children in families, are not receiving adequate help. How does the Minister respond to the many examples in the report of families having to cut back on food and other essential items because they have to repay loans instead of getting grants? Will he consider the workings of the social fund and ensure that it alleviates poverty rather than reinforces it, as it does for many families?

Mr. Evans

I can only conclude, from the logic of the hon. Gentleman's question, that he would scrap loans and replace them with grants at an annual extra cost of £263 million. Is that a spending pledge from the Labour party?