Social fund needs overhaul

Applications for budgeting loans from the discretionary social
fund increased by almost 3 per cent in the last financial year,
although applications as a whole fell, according to the Department
of Work and Pensions’ annual report for the heavily criticised

The report confirms the shift in the cash safety net for the
poorest from a grants scheme to a system of loans. The fund is
split into a mandatory fund – comprising maternity payments, Sure
Start maternity grants, and cold weather and funeral payments – and
a discretionary fund of community care grants, and budgeting and
crisis loans.

It is the latter fund which has received most criticism, notably
from the House of Commons Social Security Committee in a report in
April which called for an “urgent overhaul and an injection of

Spending on the discretionary fund has risen from £556
million to more than £600 million, though the net cost of
running the fund has decreased because of a significant rise in the
amount recovered in debt repayments.

Annual Report by the Secretary of State for Work and
Pensions on the Social Fund 2000/2001
, from

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