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Crisis Loans

Volume 479: debated on Thursday 17 July 2008

To ask the Secretary of State for Work and Pensions (1) how many people were subject to a county court claim by his Department for defaulting on repayments of a (a) crisis loan and (b) budget loan in each year since 2003, broken down by the (i) on benefit caseload and (ii) off benefit caseload; and if he will make a statement; (215893)

(2) how many people have been subject to a county court judgment as a result of a county court claim by his Department for defaulting on repayments of a (a) crisis loan and (b) budgeting loan in each year since 2003, broken down by (i) on-benefit caseload and (ii) off-benefit caseload; and if he will make a statement;

(3) how many people have had items repossessed for defaulting on repayments of (a) a crisis loan and (b) a budgeting loan in each year since 2003, broken down by (i) on-benefit caseload and (ii) off-benefit caseload; and if he will make a statement;

(4) in how many cases his Department has taken action against people who have defaulted on repayments of (a) a crisis loan and (b) a budgeting loan in each year since 2003, broken down by (i) on-benefit caseload and (ii) off-benefit caseload; and if he will make a statement.

Where a person is in receipt of benefit, recovery is by means of deductions from benefit only.

Court action is only taken against those no longer on the benefit caseload. Such action is taken only should a voluntary arrangement not be possible, or if there is a default on that arrangement. The Department does not seek repossession of items in default cases.

The number of people subject to a county court claim by the Department for Work and Pensions for defaulting on Social Fund repayments is set out in the following table. The information cannot be separated between budgeting loans and crisis loans. No action has been taken to enforce recovery of outstanding loans through the courts since 2005-06.

Number of court claims and judgements in Social Fund cases

2003-04

6,009

2004-05

3,792

2005-06

1,076

As part of the Department's programme to bring increased focus to the management and recovery of debt generally, the decision was made to transfer, from 2005, the management and recovery of Social Fund off-benefit cases to the Department's specialist Debt Management unit. Referring the outstanding Social Fund loans to Debt Management has enabled the use of their specialist skills in pursuing recovery from customers who are no longer in receipt of benefit.

This transfer of cases to Debt Management is ongoing, and has already resulted in significant recoveries on loans from those no longer in receipt of benefit, without a need to refer for court enforcement.

To ask the Secretary of State for Work and Pensions how many and what proportion of crisis loan applications were alignment payments in each of the last five years; and if he will make a statement. (215923)

The available information is in the following table.

Crisis loan applications for Great Britain

Estimated applications for alignment payments processed

Estimated proportion of applications processed which were for alignment payments

2003-04

582,000

42

2004-05

586,000

44

2005-06

588,000

43

2006-07

603,000

42

2007-08

905,000

43

Notes:

Figures rounded to the nearest thousand.

Source:

The DWP Social Fund Policy, Budget and Management Information System (PBMIS) does not hold data on crisis loan applications by the reason for the application. However, the proportion of applications processed which were for alignment payments can be estimated from scans of crisis loan applications. Each such scan consists of applications processed in the relevant financial year and held on the Social Fund Computer System at the end of that year. (Each scan records the latest decision on each application; this may be an initial decision or a review decision.) These estimated proportions have then been applied to the numbers of applications processed obtained from PBMIS.

To ask the Secretary of State for Work and Pensions how many and what proportion of (a) crisis loans and (b) budgeting loans were being repaid at (i) 12 per cent., (ii) 10 per cent. and (iii) five per cent. in each year since 2003; and if he will make a statement. (215927)

The information is not available for budgeting loans before 2006-07; or for crisis loans. The available information is given in the tables.

Budgeting loans for Great Britain for 2006-07

Repayment rate (%)

Number of initial awards

Proportion of all initial awards (%)

12

434,000

33.4

10

297,000

22.9

5

324,000

25.0

Budgeting Loans for Great Britain for 2007-08

Repayment rate (%)

Number of initial awards

Proportion of all initial awards (%)

12

401,000

34.3

10

277,000

23.7

5

298,000

25.5

Notes:

1.Figures are based on (initial) awards made in each year, not on awards being repaid in each year.

2. Figures are for initial awards only. Awards made after review are not included.

3. The current standard repayment rates are 12 per cent, 10 per cent and five percent. These rates were introduced for applications received on or after 3rd April 2006. Some awards made in the early part of 2006-07 were for applications received before 3 April 2006, to which the previous standard repayment rates of 15 per cent. 10 per cent. and five per cent. applied.

4. When a standard repayment rate is used, the weekly repayment amount for a budgeting loan is calculated by multiplying the repayment rate by the weekly available income, then rounding to the nearest penny. For each award, the scan does not give the repayment rate, but only the weekly repayment amount and the weekly available income. The repayment rate calculated from these two quantities may differ slightly from the true repayment rate, because of the rounding of the repayment amount. To allow for this, the stated number of awards with a repayment rate of 12 per cent is actually the number with a calculated repayment rate of 12 per cent ± 0.05 per cent. Similarly, for the other standard repayment rates, 10 per cent ± 0.05 per cent and five per cent ± 0.05 per cent have been used.

5. Numbers have been rounded to the nearest 1,000.

6. Proportions have been calculated using non-rounded numbers.

Source:

Analysis of scans of the Social Fund Computer System (SFCS) taken at the end of each month, showing Budgeting Loan initial awards recorded on SFCS during the month.