Photo of Jonathan Edwards

Jonathan Edwards (Shadow PC Spokesperson (Treasury); Carmarthen East and Dinefwr, Plaid Cymru)

To ask the Secretary of State for Work and Pensions what consultations his Department undertook with relevant stakeholders before laying the draft statutory instrument on the treatment of social fund loans in debt relief and bankruptcy orders; and if he will make a statement.

Photo of Steve Webb

Steve Webb (The Minister of State, Department for Work and Pensions; Thornbury and Yate, Liberal Democrat)

The Insolvency Rules were amended following a decision by the Supreme Court that deductions from ongoing benefit could no longer be taken to recover social fund loan repayments during the moratorium period of a debt relief order. The court also held that such deductions could not be made during a bankruptcy order.

There was no consultation on the change to the rules as it was decided that the social fund should be protected as soon as possible from the impact of debt relief and bankruptcy orders. This is because the social fund is cash limited and relies on loan repayments to be available for others in need.

A public consultation would have not only delayed the change process but would have imposed unnecessary costs.

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