This is CPAG's response to the consultation initiated by the Labour government on reform of the social fund. This was a last minute attempt by the Labour Government to reassess the chance for social fund reform which was also linked in with providing low interest loans for those on low incomes. The new Coalition Governement has been looking at the responses and we have yet to hear whether there will be a positive set of policy proposals as a result.
The current situation often leaves claimants at the mercy of loan sharks and other lenders charging extremely high interest rates because little help is available via the social fund. CPAG believes that reform of the social fund and the need for low cost credit are two different issues and should be dealty with separately. Our response deals with what we believe should replace the existing somewhat haphazard system of cash-limited grants and loans, and advocates a new formula for deciding entitlement.
We recommend that a series of grants should be made available to claimants based on a new income formula which takes account of child tax credit. The grants should be rationed by legal criteria and not dependent on discretion. They should be clear and easy to understand. Our proposals include:
- An early years grant – lump sum paid annually for a child aged from 0-5
- A child development grant paid at the start of the school year designed to help with costs of schooling, clothing etc.
- A health and safety grant to help people replace essential household equipment, cooker, heater, fridge and bed/ cot.
- A resettlement grant (or secure homes grant) towards the cost of setting up home.
These proposals were made before the Coalition Government issued its emergency budget which will result in severe reductions to benefits and tax credits from 2011 onwards and which will be cumulative as specific cuts, reduced levels of uprating feed into the levels of benefits and tax credits. The impact will be particularly serious for those with disabled children. A more generous Social Fund whether delivered via DWP or in conjunction with other Departments will be all the more necessary.