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For a government committed to ending child poverty and social exclusion, the social fund is a strange anomaly. As a cash-limited benefit, it has provided an unreliable and often downright unfair safety net for the poor. It was the brainchild of a Thatcher government bent on cutting welfare spending and of all social security benefits is the one most obviously passed its sell-by date.

More than four-fifths of the social fund takes the form of budgeting and crisis loans, but perversely these may be denied to claimants most in need on the grounds that they will be unable to repay them. The grants that make up the remainder of the fund are so under-resourced that even those who meet the qualifying criteria are regularly turned away.

The chancellor has introduced important reforms to the benefits system so as to make good his aim of ending child poverty by 2019. In the April budget these included a new child tax credit, extra help for working single parents, and a minimum income for working families of £237 a week. Now it is surely time to shake up the social fund, and the comprehensive spending review, expected imminently as we went to press, would be a good place to start.

Reform of the social fund would provide an opportunity to tackle child poverty in the poorest families on income support, where social exclusion is the most likely result if the government fails to act. One option would be the introduction of a system of “inclusion funds” including child development grants, as proposed by the National Council for One Parent Families, Family Welfare Association, and Child Poverty Action Group in their report Like It or Lump It. The alternative for these children, as all the indicators suggest, may be low educational attainment, inadequate nutrition, poor health, and few chances later in life.