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The UK Social Fund - Coursework Example

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Summary
According to the findings of the paper "The UK Social Fund", it can, therefore, be said that the social fund system managed to organize budgetary expenditures in such a way that did discriminate on any basis the efficiency of the Income Support scheme…
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The UK Social Fund
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Extract of sample "The UK Social Fund"

The Social Fund: A Lifeline For The Poor - Or The Fund That Likes to Say No When the Social Funds intuition was introduced in 1988, it kept in view all the fundamental required funds needed for the economic survival of the Government as a social fund budget. On UK Government’s behalf, the social fund budget wanted to provide with all the necessities to those applicants who due to lack of insufficient income, lag behind financially and become a victim of social exclusion. ts have longstandingHence the Social Security Committee aimed at providing the best to confront the dilemma of a common applicant who is always feared to stand at the threshold of social exclusion. The first obstruction, which the Social Fund confronted to, was how to match up to those aims in the presence of limited cash availability which is not only separately administered but also it by no means affect the Income Support scheme. With such hindrances in the Social Fund schemes, it was not possible to remain committed to the aim at providing help to the most vulnerable people in the society. So, after calling the inquiry on 14 December 2000 and receiving many memoranda the Social Fund split up into two parts: 1. The Regulated Social Fund 2. The Discretionary Social Fund If we examine the Social Fund in the light of the helping the needy applicant, the facts cannot be ignored that whatever be the consequences of the fund, this system despite all the Acts and Regulations aimed at helping the poor, is causing difficulties and problems for those families who are at financial risks. However on the other hand, one can easily analyse to what extent the Government is facing crises in the funds injection. The Regulated and Discretionary Social Fund The Regulated Social Fund is responsible for Sure Start Maternity Grants (£300), Funeral Payments (burial/cremation charges plus up to £600), Winter Fuel Payments (£200 per household) and Cold Weather payments. The total budget for these payments in 1999-2000 was £815m 1. The discretionary Social Fund is responsible for awarding Budgeting loans, Community Care Grants and Crisis Loans while the Regulated or non-discretionary part of the Social Fund is divided into Funeral Payments, Cold Weather Payments, Sure Start maternity Grant and Winter Fuel Payments. 1. Budgeting Loans – 1.7 million applications and 1.3 million payments in 2003-04. Total expenditure of £484 million 2. 2. Crisis Loans – 1.4 million applications and 1.1 million payments in 2003-04. Total expenditure of £85 million 3. 3. Community Care Grants – 589,000 applications and 256,000 payments in 2003-04. Total expenditure of £118 million 4. 4. Funeral payments – 73,000 applications and 46,000 payments in 2003-04. Total expenditure of £47 million 5. 5. Sure Start Maternity Grants – 317,000 applications and 238,000 payments in 2003-04. Total expenditure of £120 million 6. 6. Cold Weather Payments – 418,000 payments in 2003-04. Total expenditure of £3.5 million 7. 7. Winter Fuel Payments – Paid automatically to 11 million people in 2003-04. Total expenditure of £1.9 billion 8. “Apart from satisfying the rules for an award from the Discretionary Social Fund you may still be refused, or offered less money, because of budgetary constraints. Payment of Budgeting and Crisis Loans can also be refused on the grounds that you are unable to pay the loan back” 9. “Social Fund loans are interest-free (in contrast to commercial alternatives) and repayment is automatic in most cases, so beneficiaries avoid penalties for non-payment, although repayment rates are high (in general, up to 15 per cent of a customer’s weekly benefit entitlement). In general, the Social Fund is reaching many people within groups most in need. For example, one-third of families on Income Support receive a Budgeting or Crisis Loan each year, the only interest-free formal loan available. Research shows certain groups, including lone parent families and disabled people are more likely to live on low incomes, and these groups benefit most from the Fund. Many recipients have longstanding illnesses or caring responsibilities” 10. “The Social Fund Guide gives advice on the amount to award. The amount requested should normally be awarded so long as this amount is within a range of prices considered appropriate for an item of serviceable quality. An exception to this is if the requested amount is outside this range, or due to pressure on the budget the district is restricting amounts of awards” 11. The question arises here that how can the Social Fund applications with 90 Jobcentre Plus districts, around 3400 staff with an estimated cost of £70 million throughout UK survive without sufficient amount of injection of funds? Today, in circumstances where injection of funds is limited and expenditures unlimited, there is a danger to the Social Funds scheme due to some of the threats mentioned below: “Some potentially eligible customers are not aware of the Fund because of its relatively low profile. For example, pensioners are less likely to use the Fund and take up is low amongst some ethnic minorities. Our survey found that only 47 per cent of people on low incomes are aware of the Social Fund, and many on low incomes are more likely to go to family and friends for help and some seek commercial credit, such as mail order. In addition, awareness of the Fund among some Jobcentre Plus staff who advise customers is limited, especially amongst those who joined from the former Employment Service, and in many offices staff do not tell potentially eligible customers about it as a matter of course” 12. “Poor awareness amongst customers about eligibility and the decision-making process can result in the Department receiving many applications, which have no chance of success, which is a poor use of resources. Even when they do know about the Fund, customers are not well informed about the types of award or how much they might receive. The Department does not provide routine or easily accessible information to customers about their debt position, making it harder for them to assess how much more they can borrow from the Fund, yet 54 per cent of Budgeting Loan refusals in 2003-04 (some 230,000) were because of outstanding Social Fund debt” 13. “37 per cent of Crisis Loan expenditure is on ‘alignment payments’, made to cover living expenses before people receive the first payment of benefit or wages. Where processing causes this delays, Jobcentre Plus should instead be making interim payments rather than drawing on the limited resources of the Fund” 14. “The Department recovers a high proportion of loans paid out, mainly through automatic deduction from customers’ benefit payments. It is improving its debt recovery procedures for customers not on benefits, amongst whom debt has risen from £90 million to £180 million in the last 5 years. But more could be done to improve recovery from people with outstanding debt who return to benefits. Under present arrangements, the Department cannot recover Social Fund debt from tax credits, which an increasing number of customers are receiving in place of benefits” 15. Today, the Social fund is in a position that if sufficient funds not injected; it will not be able to carry out the burden of the vulnerable in an efficient manner. Whether it is Regulatory Social Fund or Discretionary Social Fund, the Britain Government is gradually moving in the direction where lack of funds is its future. In the Discretionary Social Fund, the Government sets the total budget for the Discretionary Social Fund each year. When allocating Benefits Agency district office, a fixed sum for grants or a fixed sum for loans, Social Fund staff must have regard to the budget when deciding whether to make a payment and how much to award. Professor Gary Craig in UK Parliament, Third Report told the Committee: “Throughout the history of the Social Fund, the problem has been to manage inadequate budgets, and I think all the nuances and regulations and directions that have been introduced over the last few years are simply directed towards that goal, of actually ensuring that expenditure does not exceed allocations. Discretion is not used in a positive sense to respond to need, it is used in a negative sense to ensure that the budget is not overdrawn. 16” “The Social Fund was felt to have little impact on money management, as people could not see the direct link between it and changes in money management. Rather, the Social Fund loans or grant were used in emergencies when people were in need of the money. However, the Social Fund loans had become another established form of credit for the award three-offs and award strategists. Repayment of Social Fund loans was also not thought to have a direct impact on money management as it was taken out at source. This was generally appreciated and was often thought to be a small amount of money to pay each week and the size of the loan did not vary the impact of repayments, as recipients did not consider repayment in the long-term they were just concerned about how much they could afford each week. There were recipients who reported not missing this small amount of money after a while. However, there were occasions when respondents felt they had used the Social Fund to pay off overdrafts and loans, which were attracting high levels of interest, particularly amongst the men in the sample. Although the Social Fund was not felt to have much of an impact on how money is actually managed, using it was felt to save money in the long run. It also meant that people did not go for more expensive forms of credit” 17. “On the negative side, there were respondents who were worried that when they got the lump sum that they would waste it rather than spend it, but this did not materialise in practice. The deduction at source also meant that people did not always think about the repayments for the Social Fund when budgeting as the responsibility for paying it had been taken away. For example, one person said that he had forgotten to repay the Social Fund since starting work as he was so used to it coming out at source” 18. “The review of the current dilemmas to which the social fund is confronted to relates to efficiency and the achievement of objectives in turn gives rise to a number of questions which, in our view, remain fundamental to both the purposes and the effective operation of the social fund. These can be posed as a series of challenges, which need to be resolved in strategic planning for the fund’s future 19”. Some of the main dilemmas behind Social Fund are “efficiency vs. flexibility, Cash limits vs. need, Budgeting loans vs. community care grants, Rights vs. Discretion, Fairness vs. targeting and routine help vs. meeting heavy costs 20”. “For recipients that had started work and still owed money to the Social Fund, these repayments tended to be at the bottom of their list of repayments or general payments. Unlike other repayments, while recipients were in receipt of benefit their Social Fund loan repayments were taken out at source. Once respondents came off benefits a new repayment method was required, but generally was not set up. There were instances where respondents had received letters reminding them that they needed to continue repaying their loan, which they ignored because it was possible to defer payment or because they had forgotten about it” 21. References The UK Parliament, Social Fund. “Third Report” < http://www.publications.parliament.uk/pa/cm200001/cmselect/cmsocsec/232/23204.htm > Disability Alliance < http://www.disabilityalliance.org/unreg.htm > Journal of Independent Review Service < http://www.irs-review.org.uk/infocent/jourdig/pdfdig/digest32/irsd32.pdf > National Audit Office Reports < http://www.nao.org.uk/publications/nao_reports/04-05/0405179_Lit_Rev_ES.pdf > National Audit Office Report, “Running of the Social Fund” < http://www.nao.org.uk/pn/04-05/0405179.htm > “The Discretionary Social Fund and Money Management” < http://www.dwp.gov.uk/asd/asd5/summ2005-2006/241summ.pdf > Read More
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