Social Fund (Hansard, 20 June 2000)

§ Angela Eagle

The administration of the Social Fund is a mater for Alexis Cleveland, the Chief Executive of the Benefits Agency. She will write to the hon. Member.

Letter from Alexis Cleveland to Mr. Steve Webb, dated 19 June 2000:

The Secretary of State has asked me to reply to your recent Parliamentary Question asking if he will estimate the additional administration cost of every (a) budgeting loan and (b) crisis loan if they were repaid over a period of (i) 78 weeks, (ii) 104 weeks, (iii) 130 weeks and (iv) 156 weeks.

The integrity of the social fund depends on recycling the loans within a reasonable timescale to make future loans available as soon as possible.

Only a composite figure for the cost of recovering budgeting loans and crisis loans is available. Approximately 95% of Social Fund recovery is taken directly from benefit in payment to the customer. Around 90% of that is taken automatically through a computerised link between the Income Support and Jobseeker's Allowance computer systems and the Social Fund system. Staff input is required at the beginning and end of the process, but very little intervention is needed during the course of the recovery. While some recovery from benefit is made by clerical processes, and customers no longer in receipt of benefit are pursued to repay their loans by other means, the proportionate cost of this is small in comparison to the overall cost of recovery.

As a consequence, it is estimated that the administrative cost of the process would not be greatly affected by the duration of the recovery period if the customers who took advantage of the longer 163W repayment periods remained on benefit throughout. However, the longer the payment period, it is more likely that customers will leave benefit before their loan is repaid. Then the proportion requiring clerical activity would increase and therefore administration costs would rise but we are at present unable to quantify by how much.

I hope this is helpful.