The DWP have recently had a change of policy that could see those on low incomes become eligible for interest free loans from 3^rd parties that can then be deducted from Benefits.

Basically the Eligible Loan Deductions Scheme idea is: If you take a loan from a specific type of charitable, or not for profit organisation and are finding it difficult to manage repayments yourself, that the DWP will spread the cost by making deductions  from your benefit before you get it.

This is great news as it allows those who can not get a crisis loan to be able to secure alternative income when they find themselves in an emergency.

As ever the DWP have publicised this change without any fanfare, ( to be honest we only found out today)

To get an understanding of what the DWP are agreeing to do we have found a link to   Eligible Loan Deductions Scheme terms issued by the DWP.

If you have applied for a Crisis Loan for living expenses or for help with rent in advance and have been refused the loan then you can appeal, and in most cases have a good chance of the decision being overturned in your favour.

The rules around crisis loans are pretty clear, and there are some rules that you will not be able to get around for example if you already owe more than £1500.00 to the social fund then your crisis loan application will be turned down, and although you can appeal, your appeal will not be successful as the law state stat you can not owe more than £1500.00 at a time.

However if you have been turned down due to the way they the decision maker has interpreted your application ( the discretionary part of the process )that you can ask for the decision to be looked at again.

The appeal process:

The process that you must go through if turned down for a Crisis loan is split into two parts.

1. The Review- This is when you disagree with the decision, and must be done in writing and is when another Decision Maker ( The reviewing officer) looks at your application and makes a new decision based on the evidence supplied, and also checks that the original decision is correct in fact and law. the best way to ask for a review is to fax a letter stating your reasons to the Benefits Centre from your local Jobcentre. The process should take 48 hours.
2. An Independent Review: This is the step after you were turned down initially AND have already been turned down by the reviewing officer. If you have been told by the reviewing officer that they can not change the decision that all you need to do is ask that they refer your appeal to The Independent Review service who will take a 3rd look at your crisis loan appeal and again see if the law has been applied correctly- HOWEVER the IRS tend to side with the customer as they state  that ” The customer has the right to be believed” so if you were turned down because the decision maker did not believe what you were saying, but could not prove otherwise then the IRS are more than likely to overturn the decision when you appeal.

A Crisis Loan is money that is made available by the government to help to alleviate an unforeseen financial disaster or emergency that you are unable to cope with your self.

What is a Crisis Loan?:

A crisis loan is an interest free lump sum payment form the Government that is administered bye the Department of Work and Pensions in the UK

Who can Apply?:

In theory anyone can apply for a crisis loan, however they are aimed at those who are unemployed and who are claiming state benefits like Jobseekers Allowance, Income Support or Employment and Support Allowance.

How do I apply?:

You can apply in one of two ways; you can either request and complete a paper application for ( SF401) and return this to your local Social Fund processing center via the Job Centre or you can call the free national telephone number 08000 327952.

How long does it take for a decision?:

A paper application can take anywhere up to two working weeks and is generally for larger amounts for example rent in advance, a telephone application should take around 45 minutes.

When do I get paid?:

If you have sent in a paper application and have been awarded a crisis loan then you should expect to see your payment within 15 days, if you made an application over the phone then you payment could be with you in 3-4 hours from the call.

How much can I apply for?;

The maximum amount that any one household can apply for is £1500.00 at any time, although awards are generally smaller than this.

When do I have to pay it back?:

The period that you repay your loan over depends on your income, but is generally tailored to complete within 104 weeks.

What if I am turned down?:

If your application is refused you can apply for a review, this is when a separate decision maker looks at your application and makes a second decision. If the reviewing officer turns your down, you can then ask for your application to be looked at for a 3^rd time by an independent body ( the independent review service)

• the maximum rate for daily living expenses available to non-householders (other than those who are homeless) will reduce from 60% to 30% of the personal allowance rate (see paras 3-21)
• Crisis Loans awarded to alleviate hardship because Child Tax Credit (CTC) has not yet been received will be treated as alignment payments (see paras 22-25).

Note: The changes detailed in this bulletin are the only ones that have been agreed. No other aspects of the CL scheme are changing from 9^th April.

1. Amendments have been made to:

• Secretary of State Direction 14C, 18, and 20
• Secretary of State Guidance: Part I – Introduction, Part 03 – Crisis Loans and Part 8 – The Directions
• Social Fund Procedural Guide Part 01, Part 05A and Part 05B.

The amended directions are attached at Annex 1.

Reduction in maximum rate of Crisis Loan for living expenses for some applicants

2. From 9^th April 2012 the maximum amount for a CL living expense award will be either 60% or 30% of

• the appropriate Income Support personal allowance rate for the customer and partner, or
• the appropriate Jobseekers Allowance hardship rate (JSA hardship cases).

Remember that in some cases where a sanction applies the couple rate may not apply (see Direction 18(5)).

3. The circumstances in which the 60% rate and the 30% rate will apply are set out below.

60% maximum rate (householders and the homeless)

4. The 60% rate will apply in the following circumstances:

• the applicant or their partner has an award of housing benefit (HB) or council tax benefit (CTB) in respect of their home, or
• the applicant or their partner is liable for one of the following

- rent

- hostel or board and lodging charges, or

- council tax (or would be liable if the dwelling were not exempt)

in respect of their home and has not been refused housing benefit or council tax benefit on any ground other than exceeding the income or capital limits, or

• the applicant or their partner is liable for mortgage payments, or in relation to Scotland, payments under heritable securities, or
• the applicant is a person without accommodation. (Note that the 60% rate does not apply to people who have no fixed address and who move from one address to another staying with different people.)

30% maximum rate (non-householders, excluding the homeless)

5. The 30% rate will apply where the applicant and partner, where they have one, normally reside in the home of a relative, friend or other person and do not meet the conditions for the 60% maximum rate set out above. (Note: this includes people who have no fixed address but move from one address to another staying with different people, but does not apply to a person without accommodation.)

Evidence

6. In most cases, it will be clear which maximum rate applies from the information provided by the applicant as part of the standard application process and further enquiries will not need to be made. For example if it is clear that there is no-one else living in the same household as the applicant the DM will not need to check the applicant’s household status. Paragraphs 8 to 19 set out the relevant factors in considering which maximum rate applies and the evidence which DMs may need to obtain in a range of circumstances.

Liability for rent, hostel or board and lodging charges or council tax benefit

7. Where the applicant states that they are liable for rent, hostel/board and lodging charges or Council tax, first ask whether they or their partner have claimed and been awarded HB or CTB for this address.

8. For information about whether an HB claim has been made, use the Where you Live screen on

- JA dialogue 501: JSA Claim Details Enquiry

- IS dialogue 500 : Enquiry Evidence

9. If HB has been awarded the 60% maximum rate will apply. If there is any reason to doubt the applicant’s word ask them to supply further evidence before considering a 60% award. (See paragraph 18 for more details)

10. If an HB claim has been refused ask the applicant to say what reasons were given for the refusal. If this was for any reason other than excess income or capital the 30% maximum amount rate will apply. If the HB claim has been refused because of excess income or capital the 60% maximum amount rate will apply, if you are satisfied that they are liable for rent, hostel/board and lodging charges or Council tax. DMs should not attempt to obtain information about HB claims directly from LAs.

11. If the applicant states that they are liable for rent, board and lodging charges or hostel charges and a claim for HB or CTB has been made but not decided, the DM should ask them to provide supporting evidence, by providing sight of the tenancy agreement with their landlord (See paragraph 19). DMs should note that although a written contract is not required for such an agreement to exist, few landlords are prepared to rely on an oral agreement.

Home Owners with a mortgage

12. To check whether the applicant or partner has a mortgage, use the Home Loan screen on:

- JA dialogue 501: JSA Claim Details Enquiry

- IS dialogue 500 : Enquiry Evidence

13. Where there is no mortgage, check whether the applicant or partner has claimed CTB using CIS dialogue 110: Award History.

14. If a CL applicant or partner has not made a claim for Income Support, income-related Employment and Support Allowance or income-based Jobseekers Allowance and states that they are liable for mortgage payments or payments under heritable securities see paragraph 18, 3^rd, 4^th and 6^th bullet points, for details of other evidence which it may be appropriate to ask the applicant to provide.

People who are living rent free or mortgage free

15. The 60% rate applies to applicants who are not paying rent or a mortgage because, for example, they have paid their mortgage off, but who are responsible for Council Tax (or would be if the dwelling was not exempt). If necessary, confirm responsibility for Council Tax for the residence. Note that some homes are exempt from Council Tax, e.g. Armed Forces accommodation or a self-contained annex to the home of a relative. Where the applicant or partner has a current exemption notice from the Local Authority, the 60% rate still applies.

Persons without accommodation

16. The 60% rate will also apply to applicants who have no home at all, known as Persons without accommodation (PWAs), see Direction 18(6)(b). This means those applicants who are homeless and sleep rough on the streets or on park benches, not those who have no fixed address and frequently move from one address to another, staying with friends.

Asking the applicant to provide further supporting information

17. Where there is any doubt, applicants should be able to show their or their partner’s responsibility for housing costs by providing a tenancy or mortgage agreement and in the absence of such an agreement information about one or more of the following as appropriate:

• the landlord or landlord’s agent to whom rent is due;
• the landlord or organisation to whom commercial board and lodging or hostel charges are due;
  • the lender to whom a mortgage is due;
  • the Council tax bill for the residence or any current exemption notification;
  • any current Housing Benefit award (the DM will sometimes need to see the refusal of an HB or CTB application);
  • any current Council Tax Benefit award.

18. If the DM is satisfied that the applicant qualifies for a CL but it is still not clear which maximum rate applies and where there is insufficient time to clarify this e.g. by the applicant providing supporting evidence, the DM should consider making an award based on the 30% maximum rate. If further evidence subsequently comes to light which shows that the applicant satisfies the conditions for the 60% maximum rate the DM should review the application and if appropriate make a revised award based on the 60% maximum rate.

SFCS Action

19. The Social Fund Computer System (SFCS) will continue to display the 60% rate in dialogue 131. The desk aid contained in the appendix to Part 5A of the SF Procedural Guidance will be updated with off line calculations for both the 60% and the 30% rate. This is shown in advance at Annex 2. DMs should note that there are separate tables showing the 60% rate and the 30% rate respectively. In all cases where the 30% rate applies the DM must overwrite the maximum award amount in dialogue 131153: Living Expenses Decision. This will either be with the 30% rate from the desk aid or a lower figure based on the applicant’s circumstances. Remember to use the correct reason for offer code:

• 26 for full award
• 32 for maximum award

Telephone scripts

20. Telephone scripts will be amended to ensure that relevant information is gathered to enable a decision to be made on the rate to pay.

Alignment Payments

21. What counts as an alignment payment has been amended. The types of CL award that count as an alignment payment on or after 9^th April 2012 are as follows:

• an income-replacement benefit has been claimed but has not yet been decided or an award has been made but full benefit entitlement is not in payment, or
• CTC has been claimed but either a decision has not been made or an award has been made but is not in payment, or
• employment has begun after a period on an income-related benefit but first payment of earnings has not yet been received

and, as a consequence, the applicant needs help with living expenses in the meantime.

22. In CTC renewal cases the customer is likely to know when they last received CTC, giving a good indicator of when the next payment is due. For new claims to CTC DMs should establish whether the applicant has requested weekly or 4-weekly payments of CTC. DMs may consider restricting the period of the CL award to a maximum of 7 days and advise the applicant to make prompt contact with HMRC to enquire about an emergency payment if the CTC claim is not decided within that time span.

23. DMs should note that CL awards made in the circumstances set out in paragraph 22 will not count towards the 3 in 12 restriction.

SFCS action

24. As for all alignment cases, these applications must be recorded on SFCS using Application Purpose Code 06 (Alignment – period before first payday).

Reviews

25. When reviewing applications made on or after 9^th April 2012, apply the rules set out in the new and revised Directions. If reviewing applications made prior to this date use the rules in the previous Directions.

26. The previous Secretary of State’s Directions and Guidance on Crisis Loans are still available in the Social Fund Guide for use when reviewing applications made before 9^th April 2012.

Telephone scripts

SOCIAL FUND REFORM – update.
· December 2010 Government White Paper – Universal Credit: welfare
that works – included details of Social Fund reform proposals.
· A key aim of the reform is to protect the budgeting loans, which assists
vulnerable groups.
· The introduction of Universal Credit makes reform essential.
· The Welfare Reform Bill will abolish the discretionary social fund and
replace parts of it with new local based provision and other parts with a
national system of payments on account.
· The local provision will be devolved to local authorities in England and
to the devolved administrations in Scotland and Wales. The measure
will give local communities greater control over the way local services
are designed and delivered.
· The current remoteness of the system makes discretionary decision
making very difficult – for example, a Community Care Grant
application might be made by a customer living in Norwich but it will be
processed by a decision maker in Inverness. Local provision is a better
way of targeting support at vulnerable people.
· Community Care Grants and Crisis Loans for general living expenses
will be replaced by local welfare assistance (from April 2013), which will
be the responsibility of local authorities in England and the Scottish and
Welsh Governments.
· Currently the Welsh Government is considering whether it should
consult on the future services in Wales.
· Nationally Budgeting Advances will replace Budgeting Loans and Crisis
Loans for alignment will be replaced (from April 2013) by a national
provision of payments on account (Short Term Advances),
administered by the Department for Work and Pensions. This new
system will also replace interim payments of benefit so there is a single
system of payments.
· Expenditure on Crisis Loans has risen dramatically since 2006. The
number of Crisis Loans awarded has increased from the relatively
steady state of just over one million a year in 2005-06 to 2.7 million in
2009-10. This increase in applications can be directly linked to
structural changes made to the scheme, and is largely independent of
the recession.
· Since 2006 the number of Crisis Loan awards has tripled. We do not
believe that this increase reflects an underlying increase in genuine
need, as it is largely independent of the recession. Analysis of the
increased demand has shown that it is being driven by young single
people on Jobseekers Allowance, many of them still living at home,
rather than reflecting a more general trend across all the benefit client
groups. There is no discernable evidence to suggest that the increased
demand from this group is linked to an increase in need, as it predates
the recessional rise in youth unemployment.
· Budgeting loans will continue to be available until Universal Credit is
fully rolled out. As people migrate across to Universal Credit they will
have access to a new system of Budgeting Advances that will replace
Budgeting Loans for Universal Credit recipients.
· Funding will be based on Social Fund expenditure rather than Barnett.
Summary of reforms
Current provision Provision from April 2013 Administration in GB from
2013
Cold Weather Payments As now. Universal Credit will become a
qualifying benefit
DWP
Funeral Payments As now. Universal Credit will become a
qualifying benefit
DWP
Sure Start Maternity
Grants
As now. Universal Credit will become a
qualifying benefit
DWP
Winter Fuel Payments As now. DWP
Budgeting Loans As now for existing income-related benefits.
Budgeting Advances available to eligible
Universal Credit recipients
DWP
Crisis Loan Alignment
Payments
Replaced with Short Term Advances. The
new system will also replace interim
payments of benefit so there is a single system
of payments
DWP
Crisis Loans for general
living expenses
Abolished. Replaced with locally based
provision
English local authorities and
devolved administrations in
Scotland and Wales
Community Care Grants Abolished. Replaced with locally based
provision
English local authorities and
devolved administrations in
Scotland and Wales

The Scottish Government Offer both goods and grants plus
optional other support
Respondents broadly supported the option of
offering both goods and grants to enable individual
circumstances to be addressed, while giving people
choice and offering flexibility.
Grants
The advantage of grants was that they enable
personal choice, which helps to empower individuals
and promote financial capability. The provision of
grants would also support local economies.
Goods
The provision of goods would provide the potential for
savings through bulk purchasing and through avoiding
the inappropriate spending of cash payments.
Alternatives to goods-only provision would be to offer
vouchers or a supervised-spend system. The main
disadvantage of providing goods was that it limited
individual choice and personal responsibility.
The types of goods that should be provided
included a range of white goods, furniture and other
household items seen as essential to furnish a home.
Respondents argued that goods provision should be
flexible to meet the specific needs of individuals with
disabilities.
Optional support and advice
Respondents were generally in favour of offering
other types of support (such as budgeting advice)
with the strong caveat that such support should not
be compulsory.

Qualified endorsement for a single grant fund
There was qualified endorsement of the proposal that
the successor arrangements should operate a single
grant fund. This was seen to offer financial benefits,
both to applicants and organisations, by reducing
complexity, improving effectiveness, lowering delivery
and administration costs and maximising available
resources. This approach was also seen to fit well
with other key Scottish Government policies.
Those that did not clearly endorse the option of a
single grant fund saw benefits in running a system
of both grants and loans. The key advantage of loans
was in recycling funds back into the system.

Scottish Crisis Loans and social fund
Main Findings
?? Respondents welcomed the devolution of the Social Fund as an opportunity for the Scottish Government to
remedy the deficiencies and complexities of the existing system and to secure better integration with other
aspects of welfare and public policy in Scotland. More information was sought about the parameters of the
future system and there were caveats in relation to funding and financial risk, eligibility, the interface with
forthcoming welfare benefit changes, equalities issues and accessibility.
?? Respondents gave a qualified endorsement of the proposal for a single grant fund, combining the current
systems of grants and loans.
?? Overall, where a preference was expressed, it was for local delivery, particularly by local authorities; they were
the most widely proposed organisations to take on successor arrangements. Preference for central delivery
came almost entirely from the third sector. However, respondents also saw scope for taking the best elements
of both central and local delivery approaches.
?? Respondents felt a blend of delivery channels would best support a client-focused approach, able to meet a
variety of needs, by providing a tailored service to assist the most vulnerable, to promote accessibility of the
service and give choice.
?? Responses indicated that eligibility and prioritisation should be based on individual need and the immediacy
and extent of any threat to health and wellbeing, rather than on particular groups or events. Respondents felt
that eligibility definitions should be provided as guidance rather than being prescriptive.
?? The provision of both grants and goods was well received and other non-compulsory support, such as budgeting
advice, was endorsed.
?? The successor arrangements were seen to offer an opportunity to establish an effective appeals system as well
as reducing the volume of appeals.

2
Background
The devolved administration in Scotland has
responsibility for establishing successor arrangements
for two elements of the discretionary Social Fund —
Community Care Grants and Crisis Loans. These
findings detail the views of respondents to a
consultation about how these aspects of the Fund
might operate in Scotland when funding transfers
from the Department for Work and Pensions (DWP)
to the Scottish Government in April 2013. The
results will inform Ministerial decisions for successor
arrangements.
The Scottish Government consultation paper,
published in August 2011 sought views on the
successor arrangements including: the potential
format of funding and balance of grants, loans and
goods, different ways to deliver support (centrally
or locally); delivery channels, eligibility criteria and
how appeals should be organised. The paper made
it clear that the devolved funding should continue to
address similar needs to those of the current system,
administered by Jobcentre Plus.
Overview of responses
The consultation attracted 50 responses, most of
which were from organisations, with four individual
responses from people with professional experience
of the issues. Twenty-nine responses were from third
sector organisations, 13 from local authorities and
4 from other public sector organisations, including
the current Social Fund Commissioner. There were
submissions from several third sector umbrella
groups in the areas of poverty, advice and disability.
There were no direct responses from black and
minority ethnic organisations or from those working
with the elderly. Responses included feedback from
agency-run workshops and were largely based on
direct service user and practitioner experience.
The consultation process invited anyone who wished
to respond to do so; as such, the responses are not
based on a representative sample. The data was
largely qualitative and the report highlights the nature
of the responses and the themes that emerged across
responses. No attempt has been made to identify an
overall consensus.
General views on the successor
arrangements
Respondents welcomed the devolution of the Social
Fund as an opportunity for the Scottish Government
to remedy the deficiencies and complexities of the
existing system and to secure better integration
with other aspects of welfare and public policy
in Scotland. It was seen as an important step in
tackling the way in which the current welfare system
undermines other aspects of Scottish Government
policy. However, further information and clarification
on the level of funding to be available were widely
requested to inform judgements about the best way
to deliver the service.

Scotland to have separate Crisis Loans Budget

As part of the Devolution process the Scottish National assembly have been considering options around how they are going to administer Crisis Loans, Budgeting loans and community care grants when they are handed responsibility for their own Social Fund System by the DWP in 2013.

A Recent study has found that a small sample of people who responded would consider having Vouchers instead of actual cash payment being awarded by the New social fund section.

The Scottish Government sought views through a consultation paper on how Community Care Grants and
Crisis Loans, two discretionary elements of the Social Fund, might operate in Scotland when funding
transfers from the Department for Work and Pensions (DWP) to the Scottish Government in April 2013.
Fifty responses were received; these were self-selected, rather than representative of views across Scotland.
The data was largely qualitative and the report highlights the nature of the responses and the themes that
emerged across responses.