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Government scraps fund for crisis loans
A fund aimed at providing support for people in crisis has been scrapped by the government prompting fears it could force vulnerable people to turn to payday lenders and loan sharks.
The local welfare provision grant, which is mostly used to aid people who have short-term financial difficulties, such as benefit delays, will not be administered to local authorities in the 2015/16 year, according to the latest local government finance settlement.
Crisis loans schemes and community care grants, which were previously administered directly by the department of work and pensions, were localised to councils in April 2013.
The removal of the £172 million fund, which was also used to pay for foodbanks and housing-related support, means that councils have to administer the provision through their general funds.
The development prompted concerns that people with money difficulties would fall through the net, with a ‘terrible’ impact for families.
Dr Sam Royston, policy adviser at the Children’s Society, said: ‘[Families] will find it, I suspect even harder to find out what is going on in their local authorities because some will be providing schemes and some won’t.
‘Where those schemes aren’t provided, people will have very few places to turn to. In many cases it will be either charity provision, food banks, or it will be high-interest lenders such as payday lenders and in some cases loan sharks.
He added: ‘I suppose the only option is they don’t eat and they don’t put their heating on because they don’t have any money to pay for it.’
Karen Buck, Labour MP for Westminster, tweeted: ‘Staggering. Worse than staggering. Jaw-dropping.’
A DWP spokesman told the Local Government Chronicle: ‘Community care grants and crisis loans were poorly targeted and failing to help those most in need, so in April last year we transferred the funding to local authorities so they could deliver new local support as part of their existing services.
‘This was on a non ring-fenced basis to 2015. From April 2015, local authorities will be able to continue to offer this support from within their general fund.
‘Local councils are the best judge of needs and priorities within their areas, so it is right for them to choose how much funding to allocate to local welfare provision services and how to provide such support.’
