§ Mr. WebbTo ask the Secretary of State for Social Security if he will estimate the number of people in each sub-region who were turned down for social fund budgeting loans in 1999–2000 on the grounds that they already had excessive levels of outstanding debt. [134514]
§ Angela EagleOn 5 April 1999 we introduced major changes to the budgeting loan scheme, which have made it fairer, more objective and quicker and easier for customers to use. Applications are decided according to a few simple facts relating to the applicant's length of time on benefit and the size of their family, taking into account the level of budgeting loan debt they may already have. Because loans are repayable, applicants no longer have to justify their reasons for needing a loan or provide information about what they will spend it on.
During 1999–2000 the scheme provided more help to more people than ever before. The number of applications for budgeting loans increased by 26 per cent. to almost 1.7 million. The number of successful applications increased by 9 per cent., with 82,000 more people receiving help than in 1998–99. Expenditure rose by 15 per cent. to almost £400 million, an increase of £52 million over the amount spent in 1998–99. And, for the first time since the fund started in April 1988, over 1 million budgeting loans were awarded in a year.
The significant increase in applications inevitably led to an increase in the number that were refused a loan—38 per cent. of applications were refused compared to 33 per cent. in 1998–99—an increase of only 5 percentage points.
As part of the April 1999 changes, the wide-ranging reasons for refusal, which had existed previously, were radically simplified and reduced. As a result, a new reason for refusal, which only applies to people with social fund debt, has been introduced. Those with existing debt of 325W half or more of their maximum possible loan amount are restricted from having further loans until their outstanding debt drops below that level, at which point they are free to re-apply. The scheme therefore does allow limited access to further loans while previous loans are still being repaid but without encouraging people to run up and maintain high levels of debt. It would not be fair to allow the cash-limited budget to be monopolised by people continually topping-up their loans to the maximum at the expense of other applicants.
By limiting access by those with existing social fund debt, the scheme is able to offer loans to all applicants who satisfy the qualifying conditions and who have no debt. While benefiting all family types this change has enabled more single people to access the scheme, the group most likely to have been refused a loan on priority grounds under the previous scheme.
Budgeting loan applications refused between April 1999 and March 2000 because of the level of existing budgeting loan debt are given in the table by Benefits Agency Area Directorates. For completeness the table also includes the number of awards made.
Budgeting loans: awards and refusals because of existing budgeting loan debt 1999–2000 Benefits Agency Area Directorate Awards Number of refusals East London and Anglia 79,195 24,280 Chilterns 63,356 18,986 London South 98,896 28,754 West Country 56,713 18,333 Mercia 75,515 28,075 West Midlands 78,388 26,778 Wales 70,917 27,338 North West Coast 109,800 38,231 Greater Manchester 76,537 27,121 Yorkshire 99,980 35,978 Tyne Tees 88,850 34,283 West of Scotland 82,918 32,105 East of Scotland 61,139 22,167 Total 1,042,204 362,429