1 April 2005 - Cash boost for Social Fund will help most vulnerable
The Social Fund, which provides low income households with help to pay for a variety of expenses and household goods, has been granted an extra £10 million to spend for the financial year beginning April 1st 2005.
The discretionary Social Fund budget provides interest free loans and grants to people on low incomes faced with an immediate financial need, from buying household equipment to attending a relative’s funeral or re-settling in the community after leaving a care home.
Chris Pond, Minister for Work and Pensions said:
“The Social Fund makes a significant impact on the quality of life of those most in need and is an important part of the Government’s agenda for tackling poverty and social exclusion. The Chancellor announced an additional £90 million over 3 years in the 2002 Pre Budget report. This has resulted in £40 million for the Fund this year, an extra £10 million on last year.
“This year I will allocate all of this £10 million to Community Care Grants. These are non-repayable grants which target the most vulnerable in society who are in urgent need of financial help.
“Every Jobcentre Plus district in Great Britain will benefit from an increase in their Community Care Grant budget.
“The budget for interest free loans has also increased - to £580 million, boosted by £20 million on last year from expected increased loan recoveries. This assists people to meet intermittent expenses that may be difficult to budget for.”
Notes for editors
- The Social Fund has both discretionary and regulated elements. The discretionary scheme, which has an overall limit to the cash available, gives flexible help with a variety of needs such as cookers and other household items and includes a system of interest free repayable loans. The regulated scheme provides for events that are more predictable and can be more adequately provided for through defined qualifying criteria.
- Written Ministerial Statement issued 24th March 2005
I am pleased to announce that the gross discretionary Social Fund budget for 2005/06 will be £719m. This includes a further increase in net treasury funding of £10m compared with last year and means that net funding is now £40m higher than 2002/03. It is the final one of three annual increases from a £90m boost for the discretionary Social Fund announced in the Autumn 2002 pre-budget Report.
After careful consideration, I have decided to allocate all the extra net funding to community care grant needs. I have therefore increased the community care grant (CCG) budget by £10m. This is a further significant increase that will help the most vulnerable. It has been distributed so that every District benefits by an increase in their CCG budget and Districts move closer to meeting the same proportion of demand nationally.
My current priorities are for the grants budget. The net loans budget however, received a significant investment of £10m in the first year (2003/04) and this, plus higher loan recoveries have promoted steady growth in the gross loans budget. The gross loans budget for 2005/06 will be £580m, which represents an increase of £20m over the April 2004 allocation. To maintain fairness within the scheme, the gross loans budget will continue to be allocated to Districts to support consistency of outcome for applicants wherever they live.
£1m will be retained centrally as a contingency reserve. For example to provide additional help to Districts facing unexpected and unplanned expenditure.
Details of individual District budget allocations will be placed in the Library.
- Background note about the discretionary social fund budget
The discretionary social fund budget is cash limited. Budgets are allocated to Districts on 1 April each year.
The gross discretionary Social Fund budget allocated for 2005/06 is £719m made up of:
- New money (AME) £178.2m
- Forecast loan recovery £540.8m
This was allocated as follows:
- Loans £580m
- Grants £138m
- Contingency reserve £1m
If the forecast for loan recoveries proves to be an underestimate, any additional recoveries can be allocated to Districts during the year.
The contingency reserve is held centrally and allocations made from it re-imburse Districts for expenditure resulting from a local accident or disaster.
Since April 1997, the gross discretionary social fund budget has increased by £251.5m from £467.5m to £719m, an increase of over 53%.
Since April 1997, the community care grant budget has increased by £41m from £97m to £138m, an increase of just over 42%.
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