HC Deb 24 July 2002 vol 389 cc1579-80W
Mr. Caton

To ask the Secretary of State for Work and Pensions (1) what plans he has to reform the management of budgeting loans; [71213]

(2) what plans he has to (a) improve the flexibility of and (b) reduce interest rates for repayment of budgeting loans. [71214]

Malcolm Wicks

The discretionary Social Fund provides interest-free loans giving flexible help for a wide variety of needs to the poorest and most vulnerable people in our society.

We have already substantially modernised and improved the administration of the budgeting loan scheme to make it simpler, less intrusive, more transparent and faster. We have also changed the way the loans budget is allocated to ensure greater consistency across all areas of the country.

The scheme already provides for anyone who finds the repayments terms offered unacceptable to opt for a lower size of loan and lower repayments. In addition, anyone who has difficulty maintaining repayments can ask for the repayment period to be extended so that weekly repayments are reduced to a more manageable level.

We will continue to keep all elements of the Social Fund under review to see whether further improvements can be made to its operation and to ensure that the Fund supports our wider welfare reforms.

Mr. Caton

To ask the Secretary of State for Work and Pensions what assessment he has made of the reasons underlying the proportion of allocated budgeting loans which are not received in full. [71210]

Malcolm Wicks

The discretionary Social Fund plays an important role in the welfare system by helping the poorest and most needy members of society meet the cost of occasional one-off essential items through community care grants, budgeting loans and crisis loans.

It would be unfair to allow the cash-limited loan budget to be monopolised by people continually topping-up their loans to the maximum at the expense of others. Therefore under the reforms we introduced in April 1999 the scheme limits access to further budgeting loans while previous loans are still being repaid.

We no longer allow further loans to people who have outstanding budgeting loan debt of more than half the maximum amount available to them. Once their existing debt drops to less than half they can reapply, although the amount of further loan available to them could still be affected by any outstanding debt.

Other reasons for reduced awards are because a person's debt has reached the maximum of £1,000, because their savings exceed the limits or because they would be unable to repay a higher amount.

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