A government scheme supposed to provide a financial safety net for those most in need is forcing some families further into poverty, new research suggests.
A report published this week by the Joseph Research Foundation finds that the Social Fund is often failing to meet people’s needs as applications are either refused or are only partially awarded. The fund is meant to help people on a low income with necessary or emergency expenses through grants or repayable interest-free loans.
Even when applications are successful, however, participants complain of repayment levels that are “too high” and which eat into tight weekly incomes. For people on benefits who receive a loan, automatic repayment reductions force them to economise even further.
Report author Kate Legge said: “In its current form, the Social Fund is making only a limited contribution to meeting the government’s objectives of combating poverty and social exclusion. The repayment of these loans from benefits just serves to further reduce the income of some of the poorest members of society.”
The Child Poverty Action Group has backed the report’s call for a “radical review” of the Social Fund to make it more grant-based than the present system and more transparent in terms of its entitlement criteria.
“Radical reform of the Social Fund is essential to tackle child poverty and help those in the greatest need,” said CPAG chief executive Kate Green. “We would like to see more money invested in grants that give the most deprived families the basic essentials for a decent home and healthy children, as well as grants to help parents make the transition from welfare to work.”