Crisis Response to the Department for Work and Pensions Consultation - Social Fund reform: debt, credit and lowincome

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1 Crisis Response to the Department for Work and Pensions Consultation - Social Fund reform: debt, credit and lowincome households June 2010 Introduction Crisis, the national charity for single homeless people, welcomes this consultation on Social Fund reform. The scheme is an important part of the welfare state and a vital resource and safety net for people on limited incomes, including some of society s most disadvantaged and marginalised individuals such as single homeless people. Whilst we welcome measures to improve the scheme s efficiency and operation, we would be very concerned at any changes which hindered or prevented people from being able to benefit from the support the Fund provides. We are particularly concerned at proposals to introduce additional conditions in order for people to access support. Requiring those who make repeat applications to attend interviews or undertake a financial health check may not be necessary or helpful and could serve only to make it more difficult for them to access the support they need in a timely manner. Applying to the scheme is a clear indication that applicants are in a difficult financial situation but not necessarily that they have more deep seated financial difficulties that they are unable to manage and need help for. They may simply be on a very limited income and unable to access extra finances when they experience difficulties. Whilst the offering of additional support is to be welcomed, we would not like to see the offering of a grant or loan be conditional on accepting this support. In fact this could undermine the Fund s essential function of swiftly providing emergency financial assistance. Finally, we are only too aware that public funds are currently under considerable pressure but in these difficult economic times, it is of more importance than ever that those who are the worst off are not unduly affected and that there is an effective scheme which can provide support at times of particular financial hardship. Crisis answers all consultation questions bar 10 and 11. Consultation Questions: 1. What types of intervention would be most useful for customers? 1

2 Crisis has concerns over the Social Fund making interventions in customers lives. It should be noted that the purpose of Crisis Loans are to provide financial support to people on low incomes to address immediate short term need. Interventions run the risk of delaying this much needed help. What s more it is not the Fund s purpose to intervene but rather to provide financial support as needed. Crisis believes that it should not be assumed that an application to the Fund necessarily demonstrates that the applicant has underlying problems which prevent them from becoming financially independent for which they need advice and support. On the contrary, in Crisis experience people on low incomes are often very good at budgeting and managing their finances because their situation necessitates this. Whilst some customers may require extra financial inclusion support not all will, for which reason Crisis would be concerned about a proposal which makes the seeking of advice and support a condition of an applicant s loan. It is also the case that many applicants to the Fund are likely to already be in receipt of financial and other types of support and so it would be unnecessary, as well as costly, to make a loan conditional on accessing additional support or attending an interview or financial health check. These proposals would affect the loans rather than grants given by the Social Fund. It therefore seems particularly important that extra conditions should not be introduced in order for people to access funds which they are obliged to repay. What s more, many of those accessing multiple loans will have previously repaid loans thereby demonstrating an ability to manage their own finances. Crisis is also concerned that some of the interventions proposed in the consultation may delay or hinder people s ability to access the financial support that they urgently require. Requiring customers who make repeat applications to Crisis Loans to attend an interview, for instance, could mean delays in addressing an immediate and pressing financial need. This could place real financial constraints on the applicant who may well not have the funds to cover transport upfront, nor additional costs such as child care. There is also the potential that a limited number of decision makers means that applicants may not be able to secure an interview straight away, and may have to wait before a slot becomes available, which could slow down their loan application process, add to their to financial difficulties and leave them facing real hardship. For these reasons, Crisis is concerned at proposals which place requirements on applicants, be it to attend interviews, as above, to agree action plans with advisers similar to those being made in jobseeker arrangements, or to take up more holistic support. Instead, we believe that there are already mechanisms in place to direct people to additional support as evidenced by case study 2 in the consultation. We do think there is a role for the Fund s decision makers to encourage and connect customers to other services that might be useful to them and we would like to see decision makers consistently offering this type of support. However, acting on this advice should be completely optional and in no way a condition of the loan application. 2. When do you feel it is most effective to intervene in a customers interaction with the Social Fund, for example following a second loan application? 2

3 Crisis believes that the Social Fund s role should be as an impartial provider of loans and grants to applicants and that intervening in a customers interaction with the Fund is not therefore an effective way to provide support. However, we believe that the Fund is well placed to signpost and connect applicants to different services and support and that it is important that this is offered as early as possible in a person s interaction with the Fund. For customers who would benefit from financial advice, for example, the earlier they access this support the easier it will be for them to resolve budgeting, debt or other issues. Again we would stress that this should be optional and separate from the customer s application for financial support. 3. How best can we identify the support needs of our customers in a more automated system? Crisis believes that the ability of an automated system to identify the support needs of Social Fund customers is limited. Without one-to-one conversations with customers it is difficult to get a complete picture of an individual s potentially complex situation and in turn advise as to what type of support they might benefit from. However, Crisis does believe that an automated system could pick up support needs that customers indentify themselves. The system could, for example, ask questions about the support customers currently receive, their financial and wider situation and whether they could benefit from support around money management, financial inclusion, debt issues and so on. It would be very important to ensure that these questions were limited in number so not as to make the application process overly time consuming and burdensome. Furthermore we would not like to see this type of self assessment be a condition of receiving a loan. It could perhaps operate as an opt-in part of the application process so that customers who did not need or already received support would not have to answer further questions. There would need to be information provided to customers on the benefits of answering these questions as well as an emphasis that their answers would not affect their application. For those who were experiencing wider financial issues and required support, a one to one interview could follow the self assessment and help direct them to appropriate services. Once again, we would emphasise that this should be in addition to and not a condition of the loan application. 4. Who do you think would be best placed to carry out these interventions? We would reiterate that we do not believe that carrying out interventions is the right way to proceed as not everyone applying to the Fund will need or benefit from extra support and therefore requiring people to engage in additional ways could in fact serve only to delay the loan application process and increase the hardship people face. However, Crisis believes that there is a role for the Social Fund to be more proactive in connecting people with support. We believe that agencies who are experienced in providing the kind of advice and support that might benefit customers are best placed to continue to do so. We would like to see the Social Fund act as an intermediary between the applicant and other service providers, such as financial inclusion services, benefits advice, 3

4 employment support and so on. For those applicants who are not already accessing services, the Social Fund is well placed to connect them with services, from whom they might benefit and of which they might otherwise not be aware. Crisis therefore supports proposals which seek to better align the scheme with a range of services for those who have more complex needs, such as homelessness, mental health or drug and alcohol misuse problems, as well as the proposal for the Fund to provide more and better signposting of customers to sources of financial support, including money guidance. 5. Do you think a single gateway to deliver the loans scheme is a good idea? Crisis recognises that there are potential benefits to delivering loans through a single gateway, including increased clarity over the application process, greater consistency in decision making, improved administration and a simpler and more user friendly system. However, we are also very aware of the problems that arose when there was previously a transition in the administration of the Social Fund, from a local to a regional basis. Applicants suffered from a real increase in the time it took for their applications to be processed, a problem which has yet to be fully resolved. If there are to be further changes, we would want assurances that mechanisms will be in place to ensure that similar delays do not occur and that applicants are not adversely affected by any systematic change. Alongside a single gateway, Crisis would like to see the introduction of national minimum standards so that customers would have surety over the length of time it would take for their application to be processed. This could mean, for example, that customers were guaranteed that they would get an initial response within 24 hours of making an application and that their application would be processed within 5 working days. It would be important that there were mechanisms in place to regularly monitor this performance, to ensure that the Social Fund works quickly and efficiently to provide interest-free loans and grants to customers. 6. What support is most needed by those applying for multiple discretionary grants? Crisis believes that the Social Fund is not in a position to assess what kind of support applicants for multiple discretionary grants may need. We believe that the scheme s role should be only to determine whether or not an applicant is eligible for the fund not what their support needs are. Customers receiving multiple grants are in any case likely to be accessing other support services which are better placed to judge what they need. The Fund could play a role, where appropriate, in signposting applicants to other support but this should be alongside and not interfere with the grant application process. 7. Do you have any views on possible issues in putting the legislation around the provision of goods and services into practice? Crisis does not support the proposal to pay people in goods and services rather than in cash grants. We believe that such a move goes against the wider aims of promoting greater financial inclusion and capability. Allowing people to shop around and giving them the choice over how much they pay for certain items is an important part of empowering people and enabling them to 4

5 make decisions over their own finances. It would therefore be regrettable if this was no longer the case. What s more, this change may not make the savings envisaged as people on low incomes are often well placed to seek out and find goods and services at favourable rates. 8. In what circumstances do you think a resettlement grant should be given? Crisis supports the consultation s proposal to introduce resettlement grants for vulnerable people setting up or re-establishing a home. This could be helpful both for those who have recently moved and do not have the finances to cover the additional costs that this entails, as well as those who are seeking to move but may face financial barriers to doing so, such as a deposit or rent in advance. There are a wide range of potential costs associated with a resettlement and we would therefore like to see there be some flexibility in what the grant could cover. Professionals who are familiar with the customer and aware of their situation and needs are best placed to judge what exactly the grant is needed for. 9. What additional support could be offered to resettlement grant customers to help them move towards increased financial independence? As with other customers, we would emphasise that the role of the Fund should be to connect people with support services rather than accessing such services being a condition of a loan or grant. The nature of this grant scheme however, means that customers are more likely to already be in receipt of some form of support. If they do not already have a support worker, it may be beneficial for customers to be linked up with the relevant agencies for example, private rented sector access schemes (such as deposit guarantee or local letting agencies), financial inclusion services and so on. 12. Should the power to make Community Care Grants and a per capita proportion of the Community Care Grant budget be devolved to the Scottish Government? What would the benefits of devolution be? Whilst there could be advantages in devolving this decision making, Crisis believes that first and foremost the Social Fund should allocate loans and grants based on need. We would therefore be cautious of any moves which could effectively cap grant allocation so that some people who need a Community Care grant would be unable to access one or would not be able to access the full amount they require. Crisis is concerned that devolving the budget in this manner could effectively mean that customers in Scotland may be less likely to be able to access the financial support they need. This is especially true given the uncertain and difficult economic times we face in the coming months and years and the likelihood that more people may need Social Fund support. 5

6 About Crisis Crisis is the national charity for single homeless people. We are dedicated to ending homelessness by delivering life-changing services and campaigning for change. For further information, please contact: Katharine Sacks-Jones Policy Manager Crisis 66 Commercial Street London E1 6LT Tel: Crisis Company Number: Charity Numbers: England and Wales , Scotland SC