Questions remain over crisis loan funding


The SNP’s Work and Pensions Spokesperson, Eilidh Whiteford MP said urgent questions remain over funding and implementation of crisis loans and community care grants ten months before the schemes are devolved next year.

The Banff and Buchan MP was speaking after a parliamentary debate she led yesterday on the lifeline welfare support.

During the debate, Dr Whiteford urged the UK Government for clarity over available resources and greater detail on plans for the transition to the replacement schemes.

Dr Whiteford called on the UK Government to address the likely £5-£10million funding gap the Scottish Government will inherit following cuts to the schemes being implemented this year.

The SNP MP pointed out that cuts were being made at a time of recession, when economic turbulence, financial insecurity and high unemployment made the lifeline support in even greater demand.

The budget for community care grants in Scotland has been cut by 7% this financial year, after being frozen since 2005-06. The spend on crisis loans for living expenses is being pulled back to 2005-06 levels and is expected to be halved this year, at around 4.7 million in comparison to £10 million in 2009-10.

Parliamentary under-Secretary for Work and Pensions, Maria Miller MP agreed to write to Dr Whiteford with information on resources being made available for the administration of the replacement scheme.

Commenting, Dr Whiteford said:

“With just ten months to go before crisis loans and community care grants are devolved to Scotland, I am disappointed that questions over the funding and set-up of the new scheme are still not being addressed by the UK Government.

“The Scottish Government is planning for a replacement scheme with one hand tied behind its back. It still does not know what resources will be made available for the administration costs – I look forward to greater detail on this issue from the Minister in the letter she has promised.

“There was also a total lack of recognition from the UK Government of the funding gap the Scottish Government will inherit, following Draconian cuts to the schemes put in place this year. While demand for Social Fund support has risen dramatically since the start of the financial downturn, budgets have not kept pace with growing need.

“The growth in applications for crisis loans in recent years is clearly linked to the onset of the recession – and reflects the growing demand for the fund. It beggars belief to cut this lifeline support at a time when millions of people are living on the breadline.

“Cuts to crisis loans and community care grants are the cruellest cuts yet from the Tory-led government. They impact on the most vulnerable households at exactly the time when they most need a helping hand. By their nature crisis loans are a last resort, and so cutting their availability causes real hardship and drives people towards loan sharks and high interest lenders.  

“The devolving of funds for crisis loans and community care grants is to be welcomed – it will allow the Scottish Government to build a fairer, simpler system, better integrated with other aspects of Scottish welfare policy – but it must be properly resourced, and properly implemented.

“The UK Government must provide clarity over the resources to make sure the new system can work for all those who need it.”