The government has been accused of a “mean-spirited attack” on vulnerable people after deciding to restrict poor families’ access to interest-free loans to see them through crises.
Crisis loans issued under the Social Fund will be restricted from April to stem rising costs, the Department for Work and Pensions said today.
The DWP said that since 2006 there had been a tripling in the costs of the loans, which are designed to cover loss of money, damage to property or emergency travel expenses, or to help people waiting for benefit payments. Many people had made multiple claims, it said.
From April, claimants will be restricted to three loans to cover general living expenses within a 12-month period and loans will no longer cover items such as cookers and beds. The level of loans will be capped at 60% of claimants’ main benefit – usually jobseeker’s allowance – down from 75%.
Pensions minister Steve Webb said crisis loans were acting as a “sticking plaster” and warned that action was needed to protect other parts of the Social Fund, such as budgeting loans, which helps poorer families fund the cost of essential items.
However, today’s move was attacked by campaigners.
“These changes will hurt those who need it most. Far from being the sticking plaster the minister proclaims, these loans are a vital part of the welfare system for those in desperate situations,” said Helen Dent, chief executive of Family Action.
“They are a smart intervention – crisis loans help prevent places in hospitals, refuges and hostels being blocked; funding cookers means families do not resort to takeaways or handouts from food banks. This is a dismal decision and the cost will be more misery for families close to breaking.”
“This is a mean-spirited attack on people in desperate need of help,” said Brendan Barber, general secretary of the TUC. “These reductions will not save great sums of money and are therefore more about punishing vulnerable people than balancing the books.”
The news follows the government’s much-criticised decision to scrap the national delivery of crisis loans and community care grants – a non-refundable form of support for vulnerable families – and give councils the power – though not a duty – to deliver equivalent forms of support.
This will deepen poverty and potentially worsen relationships between social workers and their clients, warn welfare rights experts.
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