HL Deb 17 October 1991 vol 531 cc1291-304

8.10 p.m.

Earl Russell rose to ask Her Majesty's Government whether they are satisfied with the operation of the Social Fund.

The noble Earl said: My Lords, All social security systems are based on entitlement"— that based on right. When those words were written by the noble and learned Lord, Lord Scarman, in 1974, they were correct. The shock value that they have now illustrates that the discretionary, cash-limited character of the Social Fund is something of a novelty in the social security system. It is a system in which single payments have always been one of the most difficult areas. Sir Michael Partridge, Permanent Secretary to the Department of Social Security, giving evidence to the Public Accounts Committee, said that these difficulties had been continuing for 400 years. He is quite right about that. It is therefore rather unfortunate that so high a proportion of human need happens to arise in this single payment form. Four hundred years ago, judging by those few parish accounts that I have looked at, the proportion paid out in single payments seems to have been about 30 per cent. That is not a research finding, by the way; it is an illustrative figure.

When we consider our own budgets on a much more generous basic provision, I should be surprised if many of us find our expenditure on this kind of emergency item as low as 0.5 per cent. of our budget. I am certain that I shall not be of that number when my next plumber's bill arrives. The figure of 0.5 per cent. of the budget of social security is thoroughly inadequate for meeting this need. It should be compared with 4.2 per cent. of departmental manpower and 2.8 per cent. of departmental running costs. Those figures may be a slightly more realistic picture of the amount of need which arises in the form of single payments.

The label which has been hung on the Social Fund—"the most expensive benefit in the department"—may in part not be a measure of the inefficiency of the Social Fund officers but of the inadequacy of the budget. The figures are expressed in terms of percentage of administrative costs within the whole budget. However, the lower the benefit element falls, the higher rises the percentage of administrative costs. If the amount paid out in benefit were more realistic, the administrative costs might look less unreasonable.

In its seventh report the Social Security Advisory Committee commented: One of the most disturbing elements is the inadequacy of the budget". I agree with that finding. There is here a clash of principle which I do not think we can reconcile between cash limit and entitlement; between discretion and right; between the need to control public spending and the need to relieve want. These are good principles on both sides. When they meet head on like this, we have the kind of situation I tend to refer to as a culture clash. In those situations, it is incumbent upon us to avoid a head on collision when we can. It is our task to set up a network of signals, points, sidings and buffers before a head on collision happens. But nevertheless, in the end, when all efforts have been made to avoid collision, one or other of the two must have priority.

I am not attempting to make an election speech, I am in the only place in the British Isles where I can address a collection of free, sane British adults, none of whom has the vote. I am therefore concerned for the major part of my speech to draw attention to matters which might, within the Government's basic principles, be dealt with before rather than after the election. Whether they will is another question.

I am not convinced that the department has yet got the formula for allocation right. Eighty six per cent. is based on past allocation; 6 per cent. on last year's income support case level; and 8 per cent. on last year's demand. That recalls Harold Macmillan's remark about planning a railway journey with the aid of last year's Bradshaw. We need to know what is happening to the local economy this year. Need is not necessarily the same in a particular area from year to year. Specific needs arise in particular places and make particular calls on the budget. That is why the allocation of money or availability of forms of help varies so dramatically from area to area.

In its 24th report, the Public Accounts Committee said: We consider it indefensible for individuals in need of essential items such as a bed to be treated differently simply on the basis of the area in which they happen to live". I agree with them. The surveys by Barnardos published in January 1990 show that this has been perceived among claimants, and that a general sense that it is not fair is eroding confidence in the system. That was to be expected.

One constructive way of handling this is by means of a much bigger contingency reserve, to be allocated according to need in a particular area, as it arises. I know that there was a contingency reserve of £2 million last year; £20 million might be more realistic. This should be allocated, first, to those areas where a particular problem has arisen by fire, flood or act of chancellor. Secondly, it should be allocated to those areas where what is happening shows that the budget is under acute pressure where, as one Social Fund officer recently put it, "We only pay to priority five". That might make the inconsistency a good deal less.

We need a much lower rate of refusals. We also need a much lower rate of part refusals. The latter are not shown in the DSS statistics. They have, however, been found in claimant-based surveys such as that by the National Association of Citizens Advice Bureaux or Barnardos. NACAB found 13 per cent. of their sample had received part refusals. I should like to know more about this. I was particularly struck by a case found by Barnardos: a woman with young children who needed a new cooker. She applied for £80 which she thought would buy her the cheapest cooker available. She was offered £52. She picked up a second hand cooker for that price, took it home and found that it did not work. She could not afford to have the cooker mended and so all the money she had obtained was wasted. I cannot help regarding that case as a paradigm of this Government's public spending policy.

I appreciate that there will have to be part refusals. Not every claim is necessarily realistic but the point is that part refusals should not be budget led. They should be based on an assessment of the value and price of the items needed. There is a very large hidden demand here. Some of this is because the rate of repayment is too high or, to put it another way, the rate of income support and the rate of repayment are incompatible.

The Family Welfare Association has provided a good deal of information to which I may perhaps return as regards the up-rating statement. The association has stated that it is difficult to buy sufficient food when one is on income support. If that is difficult on the full income support, a fortiori it is difficult to do so on income support minus 15 per cent. The claimant based surveys conducted by NACAB and Barnardos have shown that considerable numbers of people fail to apply to the Social Fund because they cannot afford the repayments. Instead they are approaching mail order firms which of course costs them more in the long run. One can say of people on benefit—as one of my colleagues said of early Stuart kings—that they are not rich enough to afford economies.

There is also the matter of people who are too poor to benefit from the fund at all. From 1988 to 1990 some 37,000 people were refused budgeting levels because they were considered to be too poor. I have read in the Secretary of State's annual report that those people may instead be given money advice. I thought the first thing one needed in order to receive money advice was to have some money to be advised about. I had always imagined that the biblical phrase about asking for bread and being given a stone was somewhat fanciful. Perhaps I was wrong.

These repayments have to compete with a growing volume of other deductions from income support; for example, deductions for water. A great volume of anxiety was expressed about that matter at the Liberal Democrat conference. There is also the point—I shall not go into that now—that it would be much easier to carry the Social Fund on if the Government would give up the idea that everyone has to pay 20 per cent. of the community charge. The figure of 15 per cent. is normally the department's limit of the total deductions which it is reasonable to expect from income support. Therefore if people are already repaying 15 per cent. in a Social Fund loan, does that put a stop to all the various penal deductions about which my noble kinsman and I have argued on many occasions? That might not worry me, but I wonder whether it might worry him.

There is also hidden demand in terms of eligibility. I shall talk first of eligibility in terms of people, for example, those on invalidity benefit, and those who have been on income support for less than 26 weeks. We have discussed this matter before. That covers a large number of people. It seems to me that getting into a crisis is rather like getting one's boat on to a sandbank: the quicker one gets off the sandbank, the better one's chances are. But the longer the boat is stuck there, the harder it is to get off. I wonder whether that period of 26 weeks is locking people into a dependence on benefit when, had they received help quicker, they might have got out of that dependence, got back to work and off the department's budget.

In another way I believe the Government are letting themselves in for an unnecessary demand on the fund through the practice of paying income support in arrears. Last year that practice accounted for 42 per cent. of all crisis loans. That is a colossal and, in my opinion, quite unnecessary pressure on the fund. The fund would be under much less strain if that could be stopped. Some of the priorities need to be looked at. NACAB found that 80 per cent. of young people applying to the fund had been refused assistance. I sometimes wonder whether this Government have something against young people; and if so, what.

In the end we must come back to the question of entitlement. The Liberal Democrat policy is to restore specific entitlements for individual things followed up by an area of discretion. I was interested—I think my honourable and right honourable friends might also be interested—in a variant on that suggested by Professor Ruth Lister on Tuesday which would save all the argument about which items are essential. She suggested a sum to be allocated to people on benefit once every six months without any argument about what it is to be spent on.

It could be a sum to be saved up for meeting big bills. That might deal with the question which always exercises us of whether an item is more essential to some people than to others. For example, whether a refrigerator is more essential to a mother who is bottle feeding her baby than to a mother who is breast feeding. Here is something that could be looked at. The contingency reserve could also be looked at and the possibility of supplementing it in situations of rapidly rising unemployment. The Government have attempted the impossible here; but, having attempted the impossible, they would be wise to do something to make things a little easier for themselves.

8.27 p.m.

Lord Beaumont of Whitley

My Lords, for quite a long time I thought I was going to be in the unfortunate position of being the only Back-Bencher to be sandwiched between the three Front Bench speakers. However I am delighted to say that I have been rescued from that position by some rather heavy artillery and I am grateful for that. Although I speak from the Liberal Benches, and I am very much a supporter of the kind of approach which the noble Earl has advocated in asking this Question, I wish to speak in the first instance as a member of the executive committee of Church Action on Poverty. I speak to a certain extent on behalf of opinion that is held in all the Churches. The right reverend Prelate the Lord Bishop of Manchester had hoped to speak in this debate but he could not do so. He sends his apologies to the House.

The argument as to how to help people in need whether by loans or gifts is an age-old argument. The best solution of all would be to grant human beings as a right enough money to live on in reasonable comfort taking into account the surroundings of the civilisation in which they live.

That position is a long time off and no doubt there are many obstacles to overcome in approaching that state of affairs. That is a Utopian state of affairs, but like many Utopian phenomena it is something at which one should aim. But, given that that is not the case and that there is a problem of allocating either gifts or loans to people in need, the answer surely is that there is a place for both remedies. In each case however there needs to be a framework for allocation and if that framework does not exist the whole system breaks down.

We know that from similar fields. For instance I very much welcome the announcement today by the Prime Minister that he is contemplating as a matter of policy the remission of aid debts caused by loans and is hoping to tie it to human rights. That is surely absolutely right.

In the context of international aid we have got ourselves into a worldwide mess whereby the flow of money coming back from recipient countries is greater than the aid that we give to them. That is a valid comparison with the social security system. The kind of gesture which the Prime Minister has made today is one which tonight we invite the Government to make in this similar situation.

On the domestic scale the loan system has broken down in terms of the Social Fund in very much the same way as it has internationally. In the context of what we are considering today the loan system can work only if the families concerned—and let us remind ourselves that we are talking mainly about families—have a decent income from which they can repay the loan. However, in far too many cases we are talking about families who are already in debt and who a re already pushed over the line of what the Government regard as a minimum living standard by their present debt. As a result the agencies have a choice either of pushing them further into debt with a loan or of refusing a loan to those who most need it. In either case it creates what would be a farcical situation if it were not a situation full of human tragedy.

Possibly the worst result of the present policies is that to a large extent we do not know what happens to thaw people. We do not know how they get on and how they live when they have been refused or have failed to apply for a loan because, as the noble Earl has pointed out, they are already too far in debt. Researches that have been made suggest that to a certain extent they sink further into the mire, relying on other sources of loans which cost them much more to repay if they ever do so.

What happens to those people? We do not know. They join what must be called an under-class. We send young people out onto the streets, instead of giving them accommodation, because of our policy which results in an 80 per cent. refusal rate.

What is the alternative? In the short term there must be, in most circumstances, a system of grants rather than loans. There must be grants as of right, for a certain amount of necessities which are recognised as such, possibly with a smaller discretionary system for those goods about which there may be debate.

The argument that we could not afford the amount of money that that would cost, in an economy in which the rich get ever richer and the talk in all the newspapers is of another penny off income tax, is, frankly, nauseating. We must be able to afford it.

In the long run there is a strong case for a basic minimum income which would mean that anyone could be given a loan if he needed it with no fear that he could not repay. However, that I agree is a long-term aim and not a question for tonight.

The short-term answer is a definite switch from loans to grants. Let us now reverse the appalling loan system. Let us follow the Prime Minister's example in the international field today. The results of the present system are becoming worse all the time. On that point all the agencies seem to be agreed. We do not have the up-to-date figures because they are worse than the figures for last year rather than better.

We have a duty, and the Government have a duty, as representatives of society in this country, to see that our neighbours are housed, fed and clothed. That is a very important obligation imposed on us by the Christian religion, among others, and by common humanity. In joining in asking the Question tonight I am merely asking the Government to see to their responsibilities.

8.35 p.m.

Baroness Faithfull

My Lords, I apologise to my noble friend the Minister and to your Lordships' House that my name was not on the list of speakers. I had an appointment with a Minister of State, which had been cancelled three times, and I was not sure whether I would be able to be here. I have had my appointment and I am here.

This week, on 14th October, we celebrated the implementation of the Children Act 1989. The celebration took place on the Terrace of the House of Commons. Children came to Westminster to celebrate. A party was given by the Secretary of State for Health and the noble and learned Lord the Lord Chancellor for all those interested in families and children on the implementation of the Act.

There are three aspects of that Act which I wish to mention. First, the welfare of the child is paramount; secondly, the responsibility of parents for bringing up their children is of vital importance; and, thirdly, Part III of the Act lays down that local authorities must meet the needs of children and families in trouble in their areas. There are many other aspects of the Children Act, but in connection with the debate this evening I shall mention only those three.

To go back in history, when the Social Fund was in operation I was director of social services in what was then Oxford City. At that time we had a furniture store, a van and a man who collected people's secondhand furniture. People wanting to move into new accommodation, perhaps new housing, were able to make use of that store. They were also able to call on the Social Fund.

Honesty compels me to say that the Social Fund was administered unevenly throughout the country. The officers administering it had discretion. Some officers had hearts as soft as butter and gave very liberally out of the Social Fund while others gave less liberally. When a liberal amount was given, not unnaturally it increased the cost of the Social Fund. However, that does not mean that the Social Fund was wrong; it just needed reorganisation and proper management.

When the Social Fund was altered and based on a loan things began to take a very different turn. For example, in one area I know the local authority—and here I pay tribute to the Minister for Housing—has been allowed to spend money on building 500 new council houses. The council is expected to put in those council houses families who have been living in bed-and-breakfast accommodation, a high proportion of whom are on income support.

There is no voluntary service for supplying second-hand furniture. The Social Fund cannot help. How are families on income support to move into those new council houses without any help from the Social Fund? Obviously they will not refuse a council house. But if they move in, they will have to have a loan. I must say that many of them—not all—are frightened of loans because they know that if they do not repay the loan, court action will follow and, if there is court action, it is likely that their children will be taken into care.

The other alternative is to go to the local authority's social services department and say, "I cannot look after my children and they are in need. What am I to do?" What is the social services department to do? The children are in need and the department has an obligation under Part III of the Children Act 1989 to look after the needs of children in its area. The parents know that they cannot survive unless they receive some help but they do not want a loan because they fear possible court action. That point needs to be looked at seriously.

As a result of the past history of the Social Fund and the unevenness of its administration, there should be a formula devised for the social security offices. In fairness to them, if the Social Fund is brought back as a grant and not as a loan there should be a formula which both they and the people who are applying understand. If the Social Fund is not brought back as a grant mechanism, one is simply robbing Peter to pay Paul because other departments will have to pay out. It means that children may fall ill and, heaven knows, we do not want any more children to need the health service.

A number of parents are in receipt of income support and their children are allowed school dinners, but what if there are no school dinners? If a mother has no cooker and cannot prepare the right kind of food for a child to take to school, that child will suffer. I shall not enumerate cases because I have intervened in this debate and therefore must not make a long speech. However, this system means that in other areas there will be more expenditure, and the Treasury should examine it carefully.

I am bound to say that often the Treasury considers individual departments but does not look at the over-linking situation with regard to departments whereby one pays out and the other pays in. I urge my noble friend the Minister to ask his right honourable friend the Secretary of State to reconsider the whole position with regard to the Social Fund, particularly this week in relation to the Children Act 1989.

8.44 p.m.

Lord Carter

My Lords, the Social Fund in operation is a classic example of what happens when a government refuse to listen. Throughout all the debates in this House and the other place, speakers from all parties and none warned of what would happen if benefits as of right were replaced by a discretionary, local, cash limited system, based mainly on loans instead of grants. The Motion asks whether Her Majesty's Government are satisfied with the operation of the Social Fund.

The success of the Social Fund can be gauged from the fact that applications to the fund have shot up, more applicants are being refused help, applicants are finding it harder to pay back loans and the administration of the fund is becoming increasingly arbitrary in its effects. The statistics speak for themselves. I shall not weary your Lordships with them. However, by any objective standard the Social Fund is a failure.

The National Association of Citizens Advice Bureaux points to the increase in arbitrary and judgmental decision-making and severe hardship as benefits drop below income support levels. The operation of the Social Fund is now frustrating other government policies on homelessness, community care and, as the noble Baroness, Lady Faithful], pointed out, the operation of the Children Act. Only yesterday the Guardian described the system as: running out of luck and into a lottery". The article gave heartrending examples of the effects of the Social Fund—or rather the effects of the refusal to give grants or loans—on homeless, disabled and mentally ill people. It pointed out that housing aid centres all over the country are now being besieged by people who are hungry, homeless and desperate. The refusal to help homeless people with the deposit on rented accommodation is a major problem. When the Minister replies, can he tell the House why this is insisted upon as a specific exclusion?

NACAB also points to the exceptionally high refusal rate for refugee families. I ask the Minister whether the department has any statistics on that point. Is it a matter of policy or is there some other reason for the high rate of refusal of help to refugee families? The Family Welfare Association says that it is overwhelmed by applications for assistance. It says that 75 per cent. of applications to the association are a direct result of the refusal of a grant or loan from the Social Fund or the unwillingness of the claimant to take out a loan because he is frightened that he will not be able to repay it. Where is the coherence in a government policy which claims that it wants to see reduced the number of people in bed and breakfast accommodation and then refuses help for people to set up in alternative accommodation?

There was a most interesting presentation this week to a number of noble Lords made by the Social Security Research Consortium. It described the results of its search into the operation of the Social Fund. Nobody who studies its objective findings could possibly defend the operation of the Social Fund as it is now developing. I should like to ask the Minister the same question that I asked the members of the consortium. It was referred to earlier by noble Lords. What happens to the people who are refused loans because they are too poor to repay them? Does the department know or care? Do those people go to loan sharks? Are they reduced to "fiddling" their rent or do they get further and further into debt? Or do they just have to go without—that is, starve?

This Government since 1979, during a period of so-called sustained economic growth, have succeeded in driving a further 7 million people into having to live on less than half the average income. In operation the Social Fund is a classic example of the way in which the Government have achieved that. People are entitled to know what will happen when a Labour Government come into office. Immediately on taking office a Labour Government will turn all Social Fund loans into grants and will restore the right of independent appeal against Social Fund decisions. They will then undertake a fundamental and speedy review of the whole basis of the Social Fund.

The election of that Labour Government cannot come a day too soon for the 900,000 cases of people who were refused help from the Social Fund last year and the nearly 600,000 cases of people who have been refused help in the first five months of this year. The Social Fund is a failure on every objective criterion. We have heard a great deal recently about privatisation. This Government have achieved the ultimate in privatisation: they have succeeded in privatising poverty.

8.48 p.m.

Lord Henley

My Lords, as I expected, unlike my noble kinsman Lord Russell, the noble Lord, Lord Carter, made an election address. As is right and proper in an election address he gave various commitments and promises, as one would expect from someone who thought that there was an off chance, however remote, of gaining office. I should like to put just one question to him. He need not answer it now. Are those promises priorities or are they that other kind of priority—

Lord Carter

I said that they would take place immediately. They will take place immediately, within the first 100 days of office.

Lord Henley

I thank the noble Lord for that. I was about to ask whether they are the one kind of priority or the other kind of priority. There are priorities and priorities in Labour Party commitments. There are priorities which seem to cost some £30 billion but when we—

Lord Carter

The Minister surely is not saying that changing the grants from the Social Fund into loans will cost £30 billion.

Lord Henley

Of course, I do not say that it will cost £30 billion. I am saying that the Labour Party has been and is still being grossly irresponsible in stating that it will increase public expenditure in many ways yet they do not have permission from their potential Chief Secretary to the Treasury or the potential Chancellor as to the priorities.

I refer now to the comments of my noble kinsman Lord Russell. He said that he was not making an electoral address. He certainly did not, because he seemed to be arguing, even more than the noble Lord, Lord Carter, for absolute uncontrolled expenditure. We have a very real duty to look to costs. I shall not give way to my noble kinsman. Costs must always figure in the Government's view of such matters. I am aware that my noble kinsman said that on balance one had to look at costs and need. However, costs in the end must always be a priority because someone has to pay for those costs. We have a duty to those who fund all social security benefits—all those taxpayers and national insurance contributors—who, as I told the noble Lord, Lord Carter, at Question Time today, are now spending £20 a week for every man, woman and child on social security benefits.

Lord Carter

My Lords, that is on unemployment.

Lord Henley

My Lords, it is on social security benefits. We have a duty to consider their interests.

I shall not refer to any individual cases that have been cited by my noble kinsman. Those are decided by individual Social Fund officers. Obviously I shall be more than happy to consider any individual case that any noble Lord who has spoken wishes to put before me to the extent that I or any other Minister can interfere in such matters.

My noble kinsman's Question asks very simply whether the Government are satisfied with the operation of the fund. If I were to give him a simple answer, it would obviously be in the affirmative: yes, we are satisfied. However, a simple expression of satisfaction can obviously be interpreted as an indication of complacency, as the noble Lord, Lord Beaumont, seems to suggest.

The Social Fund was introduced in order to concentrate help more effectively on those people facing the greatest need. There can be no complacency when that is the aim of the fund. I stress that there is no complacency. The operation of the fund is closely monitored. Better ways of delivering the various different payments available for the people who need them are always being examined.

Before I comment on some points that have been raised—and I shall not comment on every point—I should like to inform the House of two recent changes to the Social Fund that demonstrate the close scrutiny that my right honourable and honourable friends have given to those issues and which indicate the Government's real commitment to improving services. After examining the lessons learned during last year's period of exceptionally cold weather, significant improvements have been made to the cold weather payments scheme. I stress—noble Lords might forget it—that that is part of the Social Fund. As noble Lords know, cold weather payments give extra help to people who are placed most at risk during periods of very cold weather. They can receive a payment of £6 a week to assist with higher heating costs during very cold spells.

The changes for this winter include automatic payment of benefit to all those who are eligible without their having to go through the process of making a claim; the abolition of the capital rule which will make some 400,000 more people eligible; and—a more complicated and technical matter—forward declaration of periods of cold weather. On top of that, links with the Meteorological Office weather stations have been reviewed in order to improve coverage where there have been some problems in the past. That package of improvements will ensure that benefit is delivered to more people more quickly with advance notice should there be any repeats of the severe weather of last winter.

In response to the comparisons with international aid made by the noble Lord, Lord Beaumont of Whitley, I stress that the loans are interest free. The House will be aware that the interest free loans and community care grants section of the Social Fund operate within overall budgets. The budgets were introduced to target help at those who need it most. Costs under the previous single payments and urgent needs regulations were spiralling out of control. Single payment expenditure—I believe that my noble friend Lady Faithfull confused that with the Social Fund —was doubling every two years. Expenditure on single payments in 1985 was £335 million. I do not believe that it was open simply to reform it in the way that she suggested. My noble friend also suggested that we could possibly save money by spending yet more. I have heard that argument with regard to many social security benefits from my noble kinsman Lord Russell. I simply do not accept it.

The Government have demonstrated that they are able to manage the budget in a careful, flexible and responsive manner. They have demonstrated that they are capable of listening, despite what the noble Lord, Lord Carter, said. In the past, money recovered in the form of loan repayments has been ploughed back into the fund so that more people can receive help and potential underspends have been identified so that resources can be directed to where they will be used most effectively.

This year monitoring of the fund identified that extra resources could be used if they were allocated to the national budget. In August an extra £10 million was allocated to the grants budget and an extra £30 million was made available to the loans budget. The total budget for the loans and grants element of the fund now stands at £270 million for this financial year. My noble kinsman suggested that the Social Fund was not flexible. That increase in resources has meant that every district office has received an increase in its budget of at least 10 per cent. If my noble kinsman cares to receive it, I can give him a list of increases of all the other budgets for all the other related offices, many of which are considerably more.

Additional resources have been allocated to some districts identified as having greater need. In some cases they are as high as 40 per cent. extra to ensure that the aims of the Social Fund can be met. I believe that that is yet another indication of the Government's commitment to ensuring that the Social Fund can deliver benefits effectively to those whose needs are greatest.

My noble kinsman alleged that there were far greater costs in the administration of the Social Fund. What he forgets is that the Social Fund was introduced as part of a package of social security reforms in 1988. It is intended thereby to complement the income related benefits. If my noble kinsman had been present at Question Time he would have heard me responding to the right reverend Prelate the Bishop of Manchester on this subject. It is unwise to make direct comparisons of the cost of the Social Fund administration purely with the cost of single payments. It is far better to look at the costs of the Social Fund plus income support in relation to single payments and supplementary benefit. That will give my noble kinsman a much better picture.

Earl Russell

My Lords, I only wished to say that that is the figure of the Comptroller and Auditor-General. Perhaps my noble kinsman should address his reproach to him.

Lord Henley

My Lords, I made no reproach. My noble kinsman will know that we dealt with this subject in a Question asked in this House some months ago by the noble Lord, Lord Carter. I am trying to make clear that if considered alone the Social Fund is, as is any benefit at the margins of social security, more complicated and more expensive to administer. It is fairer to consider the Social Fund in relation to income support as against single payments and supplementary benefit. As the noble Lord knows, that was a more complicated benefit to administer than income support. That is again a matter which we discussed earlier today.

I turn now to the remarks made by my noble kinsman about the allocation between offices and the claim that to some extent we used last year's Bradshaw to make our allocations between offices. My noble kinsman will be aware that the Public Accounts Committee endorsed a move towards an allocation based on need rather than an allocation dominated by demand, as was the case with the old single payments. I should add that district allocations reflect local services because the formula takes account of the caseload and the level of demand in any individual district. As I said earlier, we were able to increase quite dramatically—and I gave the figures for last August and earlier—the amount available for some offices.

The noble Lord, Lord Beaumont of Whitley, claimed that we did not know what was happening. As my right honourable friend the Minister of State has said on many occasions, in 1988, soon after the introduction of the Social Fund, we commissioned extensive research into how far the fund would meet its goals. The Social Policy Research Unit at York University is due to report at the end of this year. Its project will be based on a large sample of some 2,500 people in 39 areas. A research project of that size will add valuable insight to the large body of information which we gather. Again, that will help us to consider whether further improvements can be made to the operation of the fund.

There were also allegations by my noble kinsman and the noble Lord, Lord Beaumont of Whitley, that we do not do enough to help young people through the fund. The fund can help young people in several ways. Young people who have left care and are unable to live with their parents are a priority group for community care grants. The guidance on crisis loans makes specific reference to the vulnerability of young people without accommodation to the risk of drug dependency, alcohol misuse, exploitation and offending. We have no reason to believe that Social Fund officers are not taking account of the priorities of young people when considering their applications. I should add that an assistant manager in each district is personally responsible for service to 16 and 17 year-olds.

Lastly, I turn to the comment made by my noble friend Lady Faithfull and the noble Lord, Lord Beaumont of Whitley, that we should use grants and not loans. I do not accept that. Other people on low incomes must budget. As regards Social Fund loans, we are merely seeking equity in the matter. I remind your Lordships that the loans are interest-free.

In the first five months of this financial year over half a million loans and over 100,000 grants have been paid. Nearly £100 million has been distributed in that short period of time. The Social Fund has provided fast—I stress that—fair and extensive assistance since it was introduced by the Government. Over 3.5 million loans have been paid, along with nearly a quarter of a million grants. People have shown their willingness to use a scheme which can respond to individual needs. Expenditure of nearly £700 million since the start of the scheme I am sure would be criticised by the noble Lord, Lord Carter, whose party makes promises of further priorities and expenditure as not being enough. However, what figure is his party promising for the future and who will pay for it? The present scheme is designed not only to deliver to the people who need the special help it provides but also to protect all who pay for public expenditure.

Lord Carter

My Lords, I asked the noble Lord three specific questions on what happens to people who are too poor to be given loans, why there is the exclusion of deposits on rented accommodation and the position of refugees. Perhaps the noble Lord will write to me.

Lord Henley

My Lords, as regards the first point we offer advice to people who fail to be given a loan because it is felt that they will be unable to repay it. We do not wish to have people repaying loans when they are unable to do so. However, I assure the noble Lord that the percentage of people who are refused loans on those bounds is small.

I prefer to write to the noble Lord on the matter of refugees. The question of deposits was difficult. When introducing the Social Fund it was felt that there had been an abuse of the old system. Between 1981 and 1986 the cost of providing deposits escalated from £18,000 to over £3 million and the number of payments increased from 750 to 33,000. That may indicate that the availability of help was stimulating demand. For that reason grants or loans from the fund for key money was not thought to be a good way forward.

Baroness Faithfull

My Lords, before my noble friend sits down, has there been communication between his right honourable friend the Secretary of State for Social Services and his right honourable friend the Secretary of State for Health as regards the administration of the Children Act 1989?

Lord Henley

My Lords, I can never give an absolutely categorical assurance as to what communication there has been between my two right honourable friends on any subject. It is extremely likely that there has been communication between them on that matter. However, without personal knowledge I should be unwilling to give a categorical assurance to my noble friend.