asked Her Majesty’s Government what plans they have to reform the Social Fund.

The noble Lord said: My Lords, it is my pleasure this evening to open this short debate on the important subject of the Social Fund. I fear, looking at the list of speakers, that it is the same small group of hard-bitten men and women who will man the barricades for the duration of this short session, but I hope that the Treasury Bench will accept that it is an important subject. I know that there are colleagues in other parts of the House who are also interested in the development of the Social Find.

I will concentrate my introductory remarks on the discretionary element of the Social Fund more than anything else. At the weekend, because I am a sad person with nothing better to do, I went back to the 1985 White Paper—the moment of glory for the noble Lord, Lord Fowler, when, as a young radical, he introduced the 1986 Social Security Bill. I was there to observe it. The 1986 legislation, introduced in 1988, brought in the Social Fund, and the 1985 White Paper set up the policy rationale for that fund. I shall sketch two or three things that were the policy objectives at that time. First, it said it would be better able, as a Social Fund, to respond to individual needs as they arose, as opposed to the system of single payments which had been in place since 1980. You could ask yourself whether, over the past 20 years, that objective has been met; it is questionable. Secondly, the rationale suggested that the Government would be able to consider developing the scope and operation of the scheme as experienced was gained. There have been some useful changes made since, particularly those in 2006 dealing with double debt and all the rest of it. Yet the case could be made that, in the 20 years since 1988, the structure of the scheme has not really changed as much as it should have done, and certainly not at much as its authors perhaps anticipated. Thirdly, the documents said that they hoped that decisions would be made locally by specialist officers with the minimum of formality. The personal advisers who are making these decisions now are certainly not local. I understand that they are being withdrawn to a system of 20 specialist benefit processing centres, so the locality of the original scheme is now in question.

The fourth aim—I like this one the best—was that Social Fund officers would, as part of their job, provide a focus for liaison with social services, social work departments, health authorities and voluntary agencies. That would be a land far from the reality of the everyday work of the hard-pressed people who are trying to deal with crisis loan applications these days. My initial proposition, then, is that the original founding principles and elements of the policy of the Social Fund have not been met. The Social Fund is not now doing what it was designed to do, nor what the noble Lord, Lord Fowler, and his team aspired to do when they put it into legislation. There is now a case for long-term change.

In fact, I have been waiting for some time for the department to bring forward long-term change because it was presaged by no less a person than the Chancellor of the Exchequer in the 2003 Red Book. It was clearly said then that the Government were considering the case for “further” change of the Social Fund. That was in 2003. We now have 2010 poverty targets, and we know the Government have a challenge in trying to meet those. We have got a brand new public service agreement dealing with socially excluded adults, a group that requires the services of the Social Fund. We have also, rightly, got a lot of heavy consideration of financial inclusion through the Thoreson review. We have had the interim review—I did not think it added up to much and I am looking forward to February or March when the final report comes through. Financial inclusion may well be a new element that the Social Fund moves into, rather than anything else. Yet still nothing has happened.

We have had no shortage of ideas; we have even had David Blunkett, a Member of Parliament, writing a pamphlet in October 2006 for the Resolution Foundation, Ladders Out of Poverty, which had a lot of good ideas—I commend it to the Minister as bedtime reading. Various Ministers have talked about seasonal grants—the last one I remember was Jim Murphy MP, when he was Minister, at the back-end of November 2006. I got excited about a story in the Observer for a short time because I thought that it was at least some evidence that there was something going on in the undergrowth of the department, and that if I just contained my patience something would emerge which would fit the bill in terms of long-term reform. I do not think we have seen anything. It would help me and the rest of the House enormously if, in this debate, the Minister said something about what the Government have up their sleeve in the future on where the Social Fund will be in five or 10 years’ time.

I want to spend most of my time this evening looking at more operational end resource issues; they are by definition more short-term, and deal with some of the pressures being experienced both within the Jobcentre Plus bureaucracy and by the claimants outside who are trying to get access to the services offered by the Social Fund. I am particularly concerned about crisis loans and community care grants.

First, the new Jobcentre Plus standard operating model is a good thing. I am in favour of the general principles behind the system that requires and enables people to make claims for their benefits by telephone, by and large. Yet this has been running over the last two or three years, and the more I look at it the more I come to the clear conclusion that there is a percentage of the claimant customer base that cannot reasonably be expected to successfully negotiate the telephony system we have. There are various estimates about how big a percentage that is, and my best guess—it is no more than that—is that something of the nature of 10 per cent of the client base of Jobcentre Plus are at risk of failing to properly access these services in the way that would be reasonable, unless other things are done in addition to what we have in the standard operating model at the moment. There are some real concerns in trying to deal with that operational issue.

We have got until March 2008 before the model is finally rolled out. The centralisation process has worked for the vast majority of people, particularly the service available to pension credit and all the rest of that, but there are emerging issues that are not going to go away, which suggests they are problems still to be addressed. If we need any evidence, the citizens advice bureaux report produced last summer, Not Getting Through, captures all the difficulties that bureaux advisers had in dealing with customers’ and claimants’ problems in accessing community care grants and crisis loans in particular. I also lodge as evidence to support my case the Social Security Advisory Committee’s Occasional Report Series No. 3, which raised some concerns about telephony services as well. These are serious people, they know what they are doing and they have put their finger on a real problem which is not going to go away unless we do something about it.

My first plea for operational and resource issues of a short-term kind is, then, to get a much higher level of efficiency across the board in how these crisis loans and community care grants are administered. I have access to Independent Review Service figures relating to community care grants for the period from 1 April to 31 December 2007. From this evidence, the Minister should not just accept at face value some of the target average figures, because the averages mask and disguise some really appalling delays being visited on some customers and clients, who are not in a strong position to be able to withstand the financial consequences of not having the money.

In the course of the initial decisions that the IRS received from April to December 2007, the headline total comes through that 68 per cent of cases were decided within 10 days. That sounds fair enough. If one looks behind that, performances within that 68 per cent range from 95 per cent in Northumbria, which is very good, to 21 per cent in Norwich which is not at all good. Looking at the longer target, 98 per cent of cases were decided within the 30 days. Again, Ministers might be lulled into a sense of complacency and think that that is not a bad score, considering that the system has not yet bedded in properly, but 11 offices achieved 100 per cent, which is really good and at the other end of the scale, Norwich again achieved 51 per cent within 30 days, which is only half.

Looking at review decisions—not initial decisions—the problem is worse: 40 per cent of cases were reviewed within the 10-day standard period and there was a range of 92 per cent in Lancashire West to 9 per cent in the West Midlands. Looking at the 30-day average for review decisions, 86 per cent of cases were reviewed within that period, with two offices reviewing 100 per cent within that time, which is great. Again, the worst performing office was Norwich which achieved 41 per cent in that 30-day target—I do not know what is going wrong in Norwich.

The figures get worse for November and December. The most recent figures are trending in the wrong direction. The outstanding work in Jobcentre Plus, according to the IRS, is at the review stage, but at the end of November 2007 Jobcentre Plus allegedly had 26,000 initial applications awaiting decision which is about two weeks’ work, as I understand it, and 11,500 outstanding reviews, which represents about six weeks’ work. Those are bad figures.

If the Minister is not prepared to take my word for it, I hope that he will look very carefully again at the review by Sir Richard Tilt, the IRS Social Fund commissioner, for 2005-06. Sir Richard Tilt is a very serious man and he has been doing this work for six or seven years now. In his summary of issues for consideration he lists certain points, but I do not have time to go through them in great detail this evening. However, seeing the kind of figures that I have just raised and having access to Social Fund inspectors who find individual cases that sometimes are much worse than the figures I have just quoted, Sir Richard is very aware of the difficulty. Three times in his set of 10 or so issues for consideration at page 7 in the 2005-06 annual report, he stresses the need to, “take urgent action”. He talks about the need to identify accurately the demand levels for crisis loans made by telephone, about which I have just spoken—as with community care grants—and taking urgent action to ensure that staff at Jobcentre Plus comply with the policy of accepting written applications for crisis loans, because there is some confusion about that. He goes on to suggest that we might introduce a facility of applying by telephone for reviews of crisis loan decisions at the earliest opportunity to try to cut down on some of the backlogs and delays. There is a menu of action for the short-term under the heading of more efficiency across the board in terms of the standard operating model in Jobcentre Plus.

A couple of other things need to be attended to and they are more of a resource and budgetary nature. The discretionary part of the budget needs to be increased because we still have postcode and calendar lotteries. The Select Committee which I had the privilege to chair in 2001—the old social security Select Committee—made a special feature of that in its recommendations in 2001. The position has not changed and arguably it is getting worse. Postcode and calendar lotteries need to be wrung out of the system. That will require a fresh look at the way in which the budget is deployed.

Eligibility needs to be widened. I am saddened and distressed to discover that alignment payments are still being used. People who do not get an early benefit decision apply for a crisis loan because they do not have the benefit in time. That attacks the crisis-loan budget in a way in which it was never designed to operate, so that people who need crisis-loan help do not get it because others need help as negotiating their benefit payments has taken too long.

We really need to reduce some of the existing exemptions; for example, I have never understood why people cannot claim for a deposit for a house. People can claim for rent, but they cannot claim for a deposit which secures the tenancy and sometimes that needlessly leads to homelessness.

The final point I want to make on the operational issues that need to be considered in the short term is that the telephony and the system of application for Social Fund applicants, particularly those trying to get access to crisis loans and to community care grants, are just not working. I think all that background adds up to a compelling case both for urgent consideration of the short-term issues and remedial action in the longer term for fundamental reform.

My Lords, I congratulate my noble friend on securing this debate and highlighting these important issues which affect some of the most vulnerable people in our society. It is a pleasure to support him. He speaks with great experience and authority after his many years specialising in this area in another place.

I want to focus on the problems that people have in accessing crisis loans. They are very much at the sharp end; they are the casualties of our society. I want to highlight some of the aspects covered by Sir Richard Tilt in his report and I shall press the Minister on what action the Government will take to remedy the situation.

Crisis loans give immediate help with day-to-day living costs or help in an emergency, as the CAB points out, to people who really are in desperate need. I think it is fair to say that there is a very worrying trend of incompetence in how the decisions are made. The percentage of crisis-loan decisions that have to be changed has been rising steadily from 50.8 per cent in 2004-05 to 52.9 per cent in 2005-06 and to a shocking 58 per cent last year according to the most recent report. Can the Minister tell us why that is deteriorating? Does he accept that that is a completely unacceptable position? What action is he taking to deal with it? You can apply for these loans if your emergency could put the health and safety of you or your family at risk, as the DWP official guidance states. There were 1,448,000 applications last year. That is a lot of people in crisis and a lot of people with problems: 334,000 were initially refused.

From reading the commissioner’s excellent report, I believe that part of the problem is access. Although he acknowledged that Jobcentre Plus dealt with more than 1 million applications for crisis loans, the IRS has continued to receive complaints from all over the country about the difficulties that people face accessing the scheme. The main reasons for complaint were inability to get through on the crisis-loan telephone lines, despite trying constantly, officers refusing to accept applications made in writing or face to face and a failure by officers to record and issue a written decision if refusing an award, thereby preventing the applicant pursuing a review.

All the evidence indicates that difficulties that people experience getting through on the crisis-loan telephone lines are widespread. They did two samples. Between 1 November and 22 November 2006, only 10 per cent of the calls made were successful in getting through; 41 per cent found the line engaged; 5 per cent had no reply; 27 per cent got a recorded message; and 17 per cent were placed in a queue. Those are people in desperate need. When we come to the most recent figures—for February to March 2007—only 4.8 per cent of calls were successful in getting through and no less than 54.4 per cent got a recorded message. That is unacceptable. Can the Minister tell me what he is going to do?

The conclusion of the independent report states,

“there is considerable evidence to show that serious and widespread difficulties remain for people trying to apply for crisis loans”.

The Social Fund Commissioner suggests that,

“the Department takes urgent action to identify accurately the demand levels for crisis loans by telephone, provides the resources needed to meet that demand and publishes a standard for this service”.

He also suggests that,

“the Department takes action to ensure its staff comply with the duty to accept applications and issue formal decisions”.

There is worrying evidence in his report of extreme regional disparities in performance. I am not quite as sad as my noble friend Lord Kirkwood, but I, too, have done a little study and looked at back reports. Why was it that in 2005-06 only 22.5 per cent of crisis-loan decisions in the south-east were confirmed—in more than three-quarters of cases the office got it wrong—which is less than half the level in some of the better areas? In 2006-07, the correct assessment rate in the north-east, the best region, was two and a half times higher than that in the south-east. What is it about the south-east that makes for these persistently poor results? What action will be taken?

As my noble friend Lord Kirkwood said, there is an unfortunate randomness and unfairness, and I shall talk about that a little more. There is a postcode lottery in the way the Social Fund works depending upon where one lives in the country. It works very fairly, but why should it be as the independent review service reported to the House of Commons Select Committee? It said:

“The formula by which the budget is distributed to districts leads to significant inequity between different parts of the country. This contributes to wide disparity in decision-making and different outcomes for people depending on where they live. This can affect the amount of award and indeed whether an award is made at all”.

In the highest-demand areas, restrictions mean that even people who meet the highest criteria of qualifying need are not receiving payments or are receiving insufficient payments. Out of 78 Social Fund districts in 2006-07, only 23 were able to grant all high priority need applications without restrictions. It is not surprising that the House of Commons Select Committee concluded:

“We agree with the Social Fund Commissioner that it is ‘unacceptable that someone can qualify [for a Grant] and have the items assessed as high priority and still not get a payment because there is not enough money’”.

That highlights the most immediate and urgent problems that I want to take up, following my noble friend. I look forward to the Minister’s reply.

My Lords, it is now just 17 years since I last turned my attention to the Social Fund, so I am grateful to the noble Lord, Lord Kirkwood, for prompting me to look at it again. In one sense, nothing has changed since it was fully introduced in April 1988 by its insertion in the Social Security Act 1986, which was introduced by my noble friend Lord Fowler. I say that because it was, as it still is, severely cash-limited, even though, according to the Institute for Fiscal Studies, absolute poverty is now rising again. The Government regularly speak about financial inclusion and what they are doing to encourage it, but as things are at the moment, it appears to be failing the most vulnerable, the very people whom the Social Fund was set up to help.

I note an answer given by the Minister responsible to the Treasury Select Committee of another place on 16 November 2006. He said,

“the social fund does not punch its weight in terms of the financial resources the government puts behind it”.

That means even those resources that the spokesmen for the party on my right have described as, if not quite “disgracefully limited”, then verging on that. Later, the Minister said that he thought it was possible for the Social Fund,

“to do a good deal more in terms of sustainable support for people and more in terms of affordable credit lines than it does at the moment”.

The noble Lord’s Question for Short Debate is timely indeed, and both he and I will expect to hear what more is being done, given that a year has passed since those comments were made by the Minister.

It is not, to be fair, that the Government have been doing nothing over the past few years. They have abolished the double-debt rule whereby someone’s available budgeting loan award was his maximum amount minus—for some unknown reason—twice his existing budgeting loan debt, and have replaced it with a single-debt rule. However, I would be grateful if the Minister would tell me how that works. Does it mean that loans are cumulative, as they should be? In other words, can loans be taken out in tranches, up to the maximum allowance? The Government have introduced just three rates for the budgeting loan maximum amount: for single people; for childless couples; and for families, whether with one or two parents. They have increased the minimum budgeting loan that can be awarded from £30 to £100 and doubled the amount of capital an applicant can have to £1,000 for the under-60s and £2,000 to those over that age. They have also reduced the loan repayment rates and increased the loan repayment period. Lastly, they have increased the overall debt limit from £1,000 to £1,500.

All these are positive measures, which we on this side of the House welcome, but—and it is a big but—they are useless if the people who need Social Fund loans cannot get access to them. Therein lies the problem that has beset the fund ever since its inception. The first problem is the uneven spread across the country of applicants and of the available finance in each social security office. Following Gershon principles, the Government are in the process of reducing the number of access points from the 120-odd social security offices that there used to be to just 20. They cover 23 areas, three of which are in London and one of which, for some unknown reason, is in Milton Keynes—perhaps the Minister could explain that one. That means that for almost all clients, access to the Social Fund officer has to be by telephone, as we heard from the noble Lord, Lord Oakeshott, who pointed out some of the difficulties that that entails. During my research updating my knowledge of this subject, I heard of one client who gave up after two hours on the telephone. That is not uncommon, but is clearly a disgrace and needs to be rectified. I say to the noble Lord, Lord Kirkwood, that the problem does not necessarily lie at the door of the potential client: it is much more likely to lie at the door of the administrative facilities and the equipment of individual offices.

This reduction of offices also means that Social Fund officers do not know the area from which the client is calling, so can no longer give advice about other appropriate sources of finance or whatever other help is required, as good officers were wont to do in days gone by, and the White Paper has suggested will become the norm. Furthermore, Leslie Strathie, the chief executive of Jobcentre Plus has confessed that telephone calls are neither recorded nor monitored. How does this help the client, or indeed those parliamentarians trying to understand what is going on? I have been told of a West Bromwich man who was unable to get through to the crisis loan number and spent the last of his money on fares to a jobcentre office to apply in writing, only to be told to keep trying the phone lines because written claims were no longer used, which is nonsense. That is totally unacceptable, and such statements can only be made because of a lack of training, or perhaps, in that particular case, retraining.

Talking of training the officers, like the noble Lords on the Liberal Benches, I ask why there is such variation in decision times. The IRS informs me that for cases received from 1 April to 31 December, 68 per cent of initial decisions on community care grants were decided within 10 days. That is an average figure, and we all know that averages are the mean of extremes. As the noble Lord, Lord Kirkwood said, in this particular case, performances ranged from 95 per cent in Northumberland to 21 per cent in Norwich. Why? Is it that are there not enough staff in Norwich, that the budget is inadequate, that staff are taking too long to make a decision, or what? I do not regard there being more applicants in Norwich—if there were—as an excuse. As we have heard, when in the same period these decisions went to review, 40 per cent were reviewed in 10 days, again hiding wide variations; performances ranged from 92 per cent in Lancaster West to only 9 per cent in the West Midlands. The same two questions apply.

The resolution of the levels of staffing is self-evident and can be dealt with; however, the question of money is not. I am not advocating injecting more money into the budget, but with only 20 area offices, the department should be able to do the same as I did when I was responsible in Northern Ireland. We had 21 or 23 social security offices—I cannot quite remember—and each one had already been given a monthly budget by the time I arrived. Inevitably, some offices overspent and others used nothing like the amount that they were allocated, so I took executive action to even this up by transferring money from the haves to the have-nots. Would that the Minister were working in a department where he had such power, but he clearly is not. Does he consider that that could become the norm in this country now there has been this drastic reduction in numbers of offices dealing with the Social Fund?

When a Social Fund application is refused, the would-be client turns to other sources of finance. Because banks are usually unwilling to lend money to such people for fear of non-repayment, almost their only recourse is to loan sharks and others with unacceptably high interest rates. They are often unaware of what they are getting into, even though annual percentage rates are published. The Institute of Financial Services published a study in 2006 saying that 79 per cent of the population did not understand the term “APR”, and, even more alarmingly, 50 per cent did not understand what “50 per cent” meant. If these figures are to be believed, and I have no reason to doubt them, that is hardly a plaudit for the expression “education, education, education”. What are the Government doing about financial education? The pressure on the Social Fund might decrease if people knew that they could afford other sources of finance. Those other sources include, but are not limited to, credit unions. These are, alas, not as numerous or as widespread as we would like. Will the Government seek to encourage their formation? The more available they become, the more we will encourage thrift in our society.

Finally, I understand that most loans are for broken domestic appliances. Some offices, I am told, are giving loans of less than the replacement value of a bed, cooker or washing machine. It seems odd in this day and age that a refrigerator is still an excluded item—I understand that loans are not given for them. Why will the Government not take up the suggestion of the Social Fund Commissioner who believes that with their purchasing power, the Government could get permitted items considerably cheaper, even at cost? The client could go along to the shop or manufacturer of his choice, and the local Social Fund officer would be sent the bill. All the client would need would be the authority to purchase—up to, clearly, a certain limit. In case the Minister is frightened of a voucher scheme, recent research, I am told, has shown that more than 70 per cent of clients would find vouchers totally acceptable.

So there are several low- and no-cost things that the Government could be doing to improve the Social Fund. I wait, with eagerness, to hear what is being done to improve its operation, over and above what has been done in the past 18 months or so.

My Lords, I thank the noble Lord, Lord Kirkwood, for initiating the debate and for giving us an opportunity to discuss the Social Fund. I also thank the noble Lords, Lord Oakeshott and Lord Skelmersdale, for their contributions.

I will start by outlining the Government’s view on the Social Fund and reform. Noble Lords will know that the Social Fund was introduced over the period 1987 to 1988 to replace the old supplementary benefits single payments scheme. I am impressed that the noble Lord, Lord Kirkwood, was there at the birth of the arrangements. The scheme plays an important role in helping people on low incomes who are likely to have difficulty in coping with large one-off expenses. In particular, the discretionary part of the scheme provides a vital safety net for vulnerable people at times of pressure or crisis, as well as a budgeting tool for handling more routine expenditure.

Overall, during 2006-07 the discretionary Social Fund provided help in the form of more than 2.6 million awards, mainly to people on qualifying income-related benefits. We paid 1.3 million budgeting loans amounting to nearly £600 million, together with a further 1.1 million crisis loans amounting to a further £100 million. That was in addition to more than a quarter of a million community care grants at a cost of £140 million. From the start of the Social Fund until the end of November 2007, more than 35 million loans—worth more than £7.6 billion in cash terms—and more than 4.9 million community care grant awards have been made. Whatever the challenges of the Social Fund, it is clearly meeting need in significant measure. The Social Fund plays a unique role in giving our customers a source of both discretionary and regulated grants, and of interest-free credit. Unsurprisingly, it provides most assistance to people who are most vulnerable to financial pressures—lone parents and disabled people.

The Government have signalled a clear commitment to continue to help people on low fixed incomes to budget for their needs. We have made a number of significant improvements to the scheme. Between April 2003 and April 2008 we will have invested an additional £300 million in the discretionary Social Fund to provide more help to more people and make more improvements, particularly to the budgeting loans scheme. In 1999, the Government transformed budgeting loans from a wholly discretionary scheme, where applicants had to justify the need applied for and the priority of that need, to a scheme based on simple factual criteria that operates on a consistent basis throughout the country. We have built on these early changes, and in 2006, as has been acknowledged, we made further simplifications so that people could easily understand what they might expect to borrow and have a higher degree of certainty that they could get a loan. We recognised concerns about repayment terms and, as has been acknowledged by the noble Lord, Lord Skelmersdale, reduced the standard repayment rate from 15 per cent of benefit to 12 per cent, and extended the maximum repayment period from 78 to 104 weeks.

Jobcentre Plus has undertaken a significant programme of change to modernise its services to customers and to improve efficiency. As has been recognised, Social Fund delivery has been centralised into 20 benefit delivery centres, pulling together expertise and providing opportunities for standardising procedures and improving the quality of decision-making. Jobcentre Plus is also looking at how to remove the need for a customer to visit an office to sign paperwork. That will provide better customer service and, in many cases, avoid the need for a customer to travel. We continue to look for ways to make improvements to the scheme and to its operation, where we can.

Successive Ministers have made no secret of the fact that we want to change the budgeting loan element of the Social Fund to link it more closely with the Government’s financial inclusion agenda. Many of the people we deal with on income-related benefits—the people who apply to the discretionary Social Fund—are financially excluded. They have little access to, or confidence in, their ability to handle mainstream financial services. As we know, exclusion from mainstream financial services can impose costs on those who can least afford them. The poorest in society can pay very high charges for credit; we are aware of 183 per cent or more from some home credit providers, and much more where someone has to resort to loan sharks. That is totally unacceptable.

The Government’s financial inclusion strategy is about ensuring that everyone has access to the services that they need to manage their money on a day-to-day basis, to plan for the future and cope with financial pressure, and to respond effectively to unexpected events. There is a clear link here with our employment goals. We see work as the best route out of poverty for most people. However, there is a problem if they do not have a bank account that wages can be paid into. Starting work means that they lose access to budgeting loans; and they may see little prospect of reasonable low-cost alternatives.

The Government would like the significant resources that we have invested in the Social Fund to make a more effective contribution to helping people to overcome financial exclusion. The Government are trying to bridge the gap through helping to increase access to alternative forms of affordable credit for people on low income—whether or not on benefit. The noble Lord, Lord Skelmersdale, asked about the third sector. We recognise the valuable role already played by third-sector lenders in providing low-cost services and loans to financially excluded people. I am referring, as he did, particularly to credit unions and community development finance institutions, which operate on a not-for profit basis, especially in areas of high financial exclusion and deprivation.

However, coverage is limited and in many areas people do not have access to those services. There is need for a larger capital and consumer base for the sector to grow and become sustainable. The Government launched their financial inclusion strategy in 2004. As part of that strategy, £42 million was made available from the £121 million financial inclusion fund for a growth fund to help make more affordable loans available to more people on low incomes in areas of high financial exclusion.

Up to 30 November 2007, more than 53,000 loans worth more than £23.5 million had been made from the growth fund to financially excluded people. The Government’s financial inclusion action plan for 2008-2011, published in December, included a further £38 million to support the growth fund. That action plan also announced plans to conduct a feasibility study to look into whether the private and third sectors could be brought into partnership with the Government in delivering a reformed Social Fund budgeting loans scheme.

I believe that that could be a very important and significant step along the path to reform, but we must not underestimate the problems and the step change that would be needed. The study will need to assess a number of tough issues and we would have to be sure that any replacement scheme would deliver real advantages and would continue to provide the type of protection needed by the most vulnerable.

I turn now to some of the more specific points raised. All three noble Lords raised the issue of crisis loans and customers who are unable to make their application by telephone. Jobcentre Plus prefers to take applications for crisis loan living expenses by telephone. It is the quickest way for customers to have their application processed. However, Jobcentre Plus accepts that there are some customers who, for legitimate reasons, are unable to make the application by telephone and it will continue to accept applications made in writing and submitted through one of its offices. I acknowledge that that has not been the case in the past in every instance. Training is absolutely necessary to ensure that there is no recurrence of the instance to which the noble Lord referred.

My Lords, I understand that point perfectly, but will the department think carefully about the suggestion that applications for reviews might also be taken by telephone?

My Lords, I will certainly give consideration to that and raise it with my colleagues. Specifically on crisis loans, which were the focus of some attention from all three noble Lords, in October 2007, the monthly number of applications reached about 200,000, which is up from about 100,000 per month in April 2006. There has been a large increase in crisis loan applications. There has been a response to that. There has been a doubling of the resource deployed on the Social Fund by asking staff from the contact centre directorate to get involved. There has been improved messaging on telephony to ensure that time is saved answering customer inquiries once they get through. We have changed the opening hours of the telephone arrangements from 8.30 am to 4.30 pm and we have changed the internal processes, so that only a short call is needed once it becomes clear that a customer will not qualify for a crisis loan. That reduces the overall time. Clearly, we need to keep focused on those matters.

The noble Lords, Lord Kirkwood and Lord Skelmersdale, referred to the Norwich benefit delivery centre. All three noble Lords referred to the disparity of outcomes across the various centres. We are aware of the need for action in Norwich in particular but, in mitigation, should mention that that is a centre to which we have only recently moved that work. Therefore, to an extent, that might be seen as teething problems, but we are not complacent and need to ensure that there is good performance right across the piece.

On tackling arrears—the noble Lord, Lord Kirkwood, focused on this—community care grant applications rose during the summer months. Action was taken region by region to get those applications back on track. During October, the backlog was reduced from 24,000 to 13,500. The usual weekly intake is about 12,000, so an outstanding figure of about 13,000 means that we are nearly up to date. However, during November, there was another large increase in the number of crisis loan applications. Alongside the unusually high intake of community care grants for this month, that meant that we fell behind again. There are continuing challenges to meet the targets that we have set.

My Lords, I do not expect the Minister to answer at this precise moment, but is there not an annual pattern emerging? For example, what happened in November 2005 or 2003? Was it not foreseeable?

My Lords, my understanding is that the increase in crisis loan applications, in particular, was way beyond prior experience. Whether or not the pattern that we have seen in recent months will be repeated in future months remains to be seen, but we clearly need to monitor that.

The noble Lord, Lord Kirkwood, raised the issue of alignment payments. Of course we want to ensure that new claims to income-related benefits are paid as quickly as possible and that the minimum use is made of crisis loans in bridging the gaps. Jobcentre Plus has recently reviewed the guidance issued to staff on interim payments or payments on account, with instructions to ensure that those, rather than crisis loans, are paid when there is a delay in processing the main benefit. In addition to the written guidance, the process has been captured in the emergency payments component of the standard operating model.

The noble Lord, Lord Oakeshott, referred to the quality of decision-making. The Social Fund Commissioner’s report for 2006-07 raised as an issue the development of a quality assurance framework. We have been pleased to address that issue and in response set up a joint IRS and Jobcentre Plus working group to develop a new checking regime set within the context of a quality assurance framework. The framework was implemented in the Inverness and Newcastle benefit delivery centres in November 2007, with those sites acting as trailblazers, with full evaluation taking place before national rollout.

A number of points were raised asserting that there is a postcode lottery. There is no such lottery for budgeting loans, and since 1999 it has been possible to ensure consistent national outcomes by ensuring a national steer on the borrowing loan for budgeting loan awards, and making any adjustments needed during the year. That has meant that people in the same circumstances get access to the same award wherever they live. Crisis loans, which are of course payable only in cases of extreme urgency, are payable if other qualifying conditions are met irrespective of where someone lives, or the time of year.

The variation is most frequently raised regarding community care grants. We are keen to ensure that the availability of community care grant funding is fairly distributed between Jobcentre Plus operational units to achieve as consistent an outcome as possible in proportion to demand in those areas. In recognition of the concerns of the Work and Pensions Select Committee and the Social Fund Commissioner, my colleague James Plaskitt gave an undertaking to that committee to review the current methodology of allocating the budget. That work is currently under way, and we will feed back to that committee once it has been completed.

The noble Lord, Lord Skelmersdale, asked about fridges; they are not an excluded item. On whether people can borrow budgeting loans in several tranches up to the permitted limit, the answer is yes. I will look at the record, and if I have not covered each point raised, I will seek—

My Lords, I am not quite sure why we are so worried about the time, as I do not believe that we have had an hour yet. I did not hear the Minister respond at all to the significant point made about only 4.8 per cent of telephone calls being answered and the desperate problem of access to those lines. Can he please comment on that?

My Lords, I am sorry not to have dealt with that statistic, but I do not recognise it from the data that I have. On the current position, work has been undertaken on the whole telephony system, but I shall consult officials and write specifically to the noble Lord on that matter.

The Social Fund provides an important source of financial support, acting as a budgeting tool and safety net to help millions of people when they are at their most vulnerable. It helps them to cope with costs of large or unexpected items of expenditure. We have made significant improvements and will continue to look for further reforms. We want to support the Government’s wider financial inclusion aims—in particular, to help tackle disadvantage by ensuring opportunity for access to and use of the financial services products needed to participate fully in modern-day society and in the economy.

My Lords, before I move to adjourn, I was mentioning to my noble friend Lord McKenzie that his time was up because although I well recognise that we have not used the whole hour for this debate, it is time-limited. If we do not adhere to the time limits set then we are sometimes accused of not ensuring that the debate is properly organised. I say that by way of an explanation to your Lordships.

I beg to move that the House do now adjourn during pleasure until 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 8.21 to 8.30 pm.]