Our drive to modernise and improve the social fund is already benefiting those in greatest need.
Today, I am pleased to announce that the budget for the discretionary social fund will be more than £620 million for the coming year. That is an increase of almost £25 million over last April's allocation and includes a rise in the community care grant budget of £3 million. That will provide more help to grant applicants, especially families with children and disabled people. It contrasts with the £90 million Tory raid on the social fund that will hit hardest the poorest and most vulnerable.
I am grateful to my hon. Friend for that reply. I am sure that the increase in resources for the social fund that she has just announced will be widely welcomed. However, she will be aware that those who cannot get help from the social fund often face extortionate rates of interest when borrowing from elsewhere. Will she look at ways in which the social fund might link with other forms of low-cost credit, so that we as a society stop placing the highest costs on those who already have least?
I welcome my hon. Friend's observations. We believe that micro-credit, local credit unions and local exchange and trading schemes—LETS—all have a valuable role to play in assisting people on low incomes with access to borrowing small amounts. We are considering how all those provisions can interact sensibly with the benefits system.
As the Government intend to combine the Benefits Agency and the Employment Service to provide an integrated service for working people, what will happen, in that system, to the social fund, which caters to that group and also to a wider group of people in need? What assurance can the Minister give us that the fund will not simply fall through the cracks in the benefits system?
I can assure the hon. Gentleman that the social fund will not fall through the cracks in the benefits system. I remind him that the vast majority of the discretionary social fund is spent on people of working age, and we shall certainly ensure that in changing the system and its administration—when we separate the working age agency from the pensions directorate—the social fund is adequately provided for and administered.
Is not the social fund an example of the most basic necessary safety net that we have in our welfare system, as it provides help with furniture, cookers and even funeral payments? What does my hon. Friend think is the dogmatic motivation behind the Conservative party's proposing such an enormous cut in that benefit?
Taking £90 million out of the social fund would undoubtedly have a devastating effect because so much less money would be available to the poorest and most vulnerable people in society. The figures show that 50 per cent. of those who claim from the discretionary social fund are lone parents with children, so it is important to realise that the Tory policy of raiding £90 million from the social fund would hit the poorest and most vulnerable people hardest.