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Two new changes to Discretionary Social Fund Scheme (Crisis Loans) announced starting 9th April 2012

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John
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Work and Pensions<

Automatic Enrolment Timetable

 The Minister of State, Department for Work and Pensions (Steve Webb): On 25 January we issued details of the revised implementation timetable, reaffirming our commitment that automatic enrolment will start on time, from October 2012, and will apply to all employers.

We also said that we would publish a consultation document setting out the full detail of these changes, along with draft regulations and an impact assessment.

These documents will be published later today. The consultation will close on 4 May.

Discretionary Social Fund Scheme

The Minister of State, Department for Work and Pensions (Steve Webb): Last year I announced measures to manage crisis loan demand back towards pre-2006 levels, prior to reform of the discretionary elements of the Social Fund.

From April 2013 the existing crisis loans scheme will be abolished and replaced in part by new local provision by local authorities in England and the devolved Administrations in Scotland and Wales.

While the April 2011 measures have made a considerable contribution towards managing demand, further measures are required prior to the transfer of funding for the new

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local provision. I am therefore announcing two further changes to the crisis loan system.

From 9 April 2012:

For non-householders facing an emergency or disaster situation, the maximum crisis loan award in relation to living expenses will be based upon 30% of the appropriate benefit personal allowance rate, rather than the current rate of 60%. Householders and people without accommodation will continue to receive maximum awards based upon 60% of the appropriate benefit personal allowance rate.

Crisis loans awarded to alleviate hardship because child tax credits have not been received will be treated as alignment payments. This means that they will be exempt from the cap that restricts crisis loan living expense awards to 3 in a 12-month rolling period. (Alignment payments will be replaced by short-term advances from April 2013 and will continue to be administered by DWP).

Crisis loans for living expenses are awarded for two main reasons. To help:

A benefit claimant to bridge an income gap before their first full benefit or wages are paid; or

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A person who faces other situations in which their normal income has been lost, stolen or is otherwise not available.

A person who does not have to maintain their own dwelling because they are living in the dwelling of someone else (who is liable for costs such as housing costs, council tax and mains fuel) does not need the same level of crisis loan award to mitigate a serious risk to their health or safety.

The maximum living expenses award in an emergency or disaster for a person who is without any type of accommodation will continue to be based upon 60% of the appropriate benefit personal allowance rate to take account of their special needs.

These changes do not alter the requirement of the Department to consider an applicant’s need for an award, whether or not they are a householder.

John
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Crisis Loans – changes from April 2012<

On 23 March 2012 Steve Webb, Minister for Pensions, announced details of two changes that will be introduced to the Crisis Loan scheme from 9 April 2012. These changes are part of a programme of work prior to transfer of elements of Crisis Loans to local welfare provision, to be delivered by local authorities, from April 2013.

From 9 April 2012, changes are being made to:

  • The maximum Crisis Loan award in relation to living expenses, reducing it from 60% to 30% of benefit allowance rate for all non-householders. Householders and people without accommodation will continue to receive maximum awards based upon 60% of their benefit personal allowance rate.
  • Crisis Loans awarded to alleviate hardship because Child Tax Credits have been awarded but are not yet in payment will be treated as alignment payments. These awards will be exempt from the cap that restricts Crisis Loan living expense awards to 3 in a 12 month rolling period.

Email any queries on these changes to – oed.stakeholderteam@dwp.gsi.gov.uk<

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