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3 April 2006

NORTHERN IRELAND SOCIAL FUND GETS £15.1 MILLION BOOST

A £15.1 million increase for the Northern Ireland Social Fund will provide extra support for some of the most needy people in society, the Minister for Social Development, David Hanson MP, said today.

Announcing the discretionary budget for 2006/2007, the Minister said: "I am pleased to say that there will be an increase of £ 15.1 million in the Northern Ireland Social Fund budget. This means that a total of £74.69 million will be available for those people who need help and support. This increase will help implement significant changes to the way the Social Fund Loans scheme is administered. These changes are designed to help simplify the rules and to make Social Fund Loans more affordable and easier to access.

"Access to the Social Fund is essential for the most needy and vulnerable people in Northern Ireland and I am sure that this increase will make a real difference."

NOTES TO EDITORS:

  1. The Social Fund helps people on low incomes with expenses that are difficult to meet from their regular income. It has two elements:

    The Discretionary Fund budget is funded by the Department of Finance and Personnel, and covers Budgeting Loans, Crisis Loans and Community Care Grants.

    The Regulated Fund covers Funeral Payments, Sure Start Maternity Grants, Cold Weather Payments and Winter Fuel Payments.

  2. Summary of April 2006 changes to loans scheme

    This is the first significant change since the SF discretionary scheme was simplified in 1999. The simplified budgeting loans scheme introduced from April 1999 introduced tests that ranked individual applications on the basis of length of time on benefit and the family composition. The amount of existing budgeting loan was taken into account but in a way that applicants found difficult to understand and decision makers found difficult to explain. Dubbed the "double debt" rule, its application meant that current budgeting loan outstanding was counted twice in the calculation. The rationale for this was entirely valid but complex.

    However, aside from this and other criticisms of the loans scheme in general (for example, high repayment rates), the simplified budgeting loans scheme has been generally well received and is quick and easy for applicants to access and for the Department to administer.

    The April 2006 changes therefore build on this success, introducing changes that address these previous concerns and as a result make the scheme even more transparent.

    The full changes from April

    The changes applying to both Crisis Loans and Budgeting Loans are:

    • The highest standard weekly loan repayment rate - 15 percent of someone's weekly available income - is to be reduced to 12 percent (the 3 standard rates are now therefore 5, 10 and 12 percent).

    • Applicants will be asked to repay no more than 20 percent of their weekly available income - a reduction from the previous 25 percent limit.

    • Applicants will be given longer to repay their overall loan debt - the normal term will be changed from 18 months to 2 years; and as now, those in financial hardship can extend their repayment term beyond the normal period and have as long as necessary to mitigate the hardship .

    • Applicants are allowed to owe the social fund up to a maximum of £1,500 in Crisis and Budgeting loan debt combined, instead of £1,000.

    The changes applying exclusively to Budgeting Loans are:

    • The eligibility test of 6 months on a qualifying benefit remains; however, the amount on time on benefit after this point and the number of additional members of the household no longer affects the amount of Budgeting Loan available.

    • One simple rule decides how much individual applicants can have as a Budgeting Loan: all eligible applicants have access to one of three maximum Budgeting Loan amounts depending on whether they are single, one of a couple or either with children.

    • As before, existing Budgeting Loan debt is taken into account against this maximum amount, but the policy is simplified so that existing debt is taken into account only once. This means that the previous "double debt" rule, which caused confusion for applicants, is abolished. More significantly, it means that most applicants making repeat applications can have a further Budgeting Loan much sooner.

    • In view of the easier access to a further Budgeting Loan when there is still debt outstanding, a further Budgeting Loan cannot be made for less than £100 (previously the minimum BL award was £30).

    • The amount of capital an applicant can have before it affects their BL award is increased from £500 to £1,000 (for working age applicants) and from £1,000 to £2,000 (for pension age applicants).

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