Government refutes need to overhaul social fund

The government has rejected a parliamentary committee’s
conclusion that the system of emergency loans and grants set up to
help the most vulnerable in society undermines child poverty
reduction strategies, rather than enhancing them.

“The government does not accept that the operation of the social
fund works against its wider social policies, such as the
eradication of child poverty,” concluded the Department of Work and
Pensions’ (DWP) response to the House of Commons social security
committee’s report on the operation of the social fund.

The social fund was set up in the late 1980s as a cash safety
net for vulnerable people. It comprises a mandatory fund, such as
Sure Start maternity grants, and funeral, winter fuel and cold
weather payments, and a discretionary fund of community care
grants, budgeting loans and crisis loans.

“The discretionary social fund seems to us to be the forgotten
end of the social security system,” said the committee’s scathing
report in April (News, page 9, 12 April).

“At present, the huge gaps and inconsistencies caused by the
inadequacies of the social fund risk undermining important
initiatives aimed at tackling homelessness, helping victims of
domestic violence re-establish their lives, supporting vulnerable
people in the community and resettling people from institutions,”
it said.

The committee found the fund to be “adding to the poverty and
social exclusion of families with children by in many cases denying
them access to basic necessities and increasing their

It also called for an “urgent overhaul and an injection of

But the DWP has rejected the charges, highlighting a “number of
improvements” to the fund since Labour came to power in 1997.

It points to the new Sure Start maternity grants which currently
triple the amount available under the old maternity payments scheme
– although these grants form part of the mandatory fund that was
not the main focus of the committee’s criticisms.

“The government will continue to keep all elements of the social
fund under review to see whether further improvements can be made
to its operation and to ensure that the fund plays its part in
reducing poverty in general,” the government’s response

In reply to the committee’s recommendation that failing more
fundamental reform the community care grant budget should be
“raised substantially”, the government points out that the budget
had been frozen since 1994 under the previous Conservative

“We have now increased it three times, including an
above-inflation rise of 3 per cent for 2001-2,” the government’s
response stated.

However, it fails to mention that between 1997 and 2001 the
budget only rose from £97 million to £100 million – less
than 4 per cent over a period of four years.

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