Crisis Loan Funding

Part of the debate – in Westminster Hall at 12:30 pm on 19th June 2012.

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Photo of Eilidh Whiteford Eilidh Whiteford Shadow SNP Spokesperson (International Development), Shadow SNP Spokesperson (Women), Shadow SNP Spokesperson (Work and Pensions), Shadow SNP Spokesperson (Agriculture and Fisheries) 12:30 pm, 19th June 2012

The right hon. Gentleman makes a salient point, which backs up the point I am making.

I want to look back a little further, using information that had to be obtained from the Government under a freedom of information request by a non-profit company called Full Fact. Looking at that, we can see that, in reality, prior to 2006-07 and the start of the banking crisis, the amount spent on crisis loans was remarkably stable between 2000 and 2005-06. During that period, the gross amount spent on crisis loans did not fluctuate—up or down—by more than 5%, and spending dropped in 2003-04 and the following year. Although overall there was a slight upward trend prior to 2007, it would be misleading to compare that with the dramatic increase in applications and expenditure once people started to experience hardship, as work dried up and costs for basic foods and heating started to rise. I am concerned that we are still in that position and that we can expect demand to continue to rise for as long as the economic turmoil continues.

I am struck by briefings from Citizens Advice Scotland and others that outline the wide range of circumstances in which people try to access the social fund. Those seeking crisis loans and community care grants include people moving into independent living and those who need basic furniture to set up home after a family breakdown or a period of homelessness. They also include people with employment problems, those with complex benefits claims, who are caught in the quagmire of the system with no immediate source of money for food or heating until their claim is resolved, and those who incur unexpected travel costs due to the illness or hospitalisation of a close relative.

Those eligible for crisis loans face a wide range of circumstances, but what they all have in common are cash flow problems, compounded by an underlying low income. That is a temporary state of affairs for some, but some others, such as those who are disabled or have long-term health problems, have little financial resilience to deal with unexpected costs. They have limited means to absorb financial shocks, such as the cooker or fridge breaking down or the aftermath of exceptional events such as burst pipes or a break-in. Burst pipe problems came home to me in the past couple of very severe winters. People living in homes that are not well heated are often those who would particularly struggle if faced with having to redecorate or get a new carpet. Such events are not only a burden on those on very low incomes, but on anybody living on a modest income who has to count the pennies.