Government announces possible outsourcing of the Social Fund!!!

[plumberjon]

Hi all

 

Just went online this morning and my home page is the BBC website.

 

Their first news story shocked me. We have a social fund which is for the poorest of the people in the country to have an interest free loan for essential items like beds and fridges etc.

 

The Government is now considering outsourcing this to local credit union companies and isn't ruling out the possibility that these companies could now charge up to 26.8% APR!!! Does this figure ring any bells with anyone?

 

If you're a BrightHouse or Wellcome Finance customer, then it may well!

 

Could this be their next possible business venture?

 

I regularly post on the Retail stores forum for BrighHouse, but thought this worthy of a general thread too, because I can see what's coming!

 

The link is below to the BBC site, please take a look:

 

BBC NEWS | Politics | Poor 'may face state loan charge'

 

I would welcome your views. Thanks

 

PJ

Edited December 21, 2008 by plumberjon

[Conniff]

The very first thing that springs to my mind is 'how much will the government make'.

 

Liarbour don't do anything unless it makes them a buck or two, so I would imagine that the facility would be 'sold' and not just transfered.

[plumberjon]

Yes and my fear is that if they are approached by the more nasty companies out there to do this, they will offer more money to the government , so they would turn a blind eye to the unscrupulous collection practises!!!

 

PJ

[Conniff]

Yes and my fear is that if they are approached by the more nasty companies out there to do this, they will offer more money to the government , so they would turn a blind eye to the unscrupulous collection practises!!!

 

PJ

 

I would think that goes without saying Jon.

 

Why would someone coming up to a £4million pension have any interest in the oinks and peasants on the street? Well of course they wont, the poor are the easy targets and the easiest to exploit.

[davethorp]

The vast majority of the time I've had to take a crisis loan has been as a result of the DWPs own incompetence with my benefit. For them to then charge interest on this is a bit of an insult.

 

A reform of the social fund system is required in my view though with the main change being a change to the rules to make them fairer on couples. At present two single people can borrow 2*£1500=£3000. A couple can only borrow £1500

[Lefty]

Hi PJ

 

Yes, I am watching this story with interest.

 

I have always thought a drastic overhaul of the social fund is well overdue, and high time the government provided a fair, affordable and manageable form of credit to the poor (and credit impaired) in the UK. It shouldn't have to be interest free, but it SHOULD be at an interest rate in line with a typical bank loan/overdraft.

 

It is becoming almost impossible to function nowadays without access to credit/credit cards of some nature or description. And 20% of the UK population is excluded from mainstream credit. This means, of course, they ultimate end up paying more for basic things.

 

Brighthouse reported pre-tax profits this year of £20.1 million pounds! 70% of that figure was drained directly from the UK benefit system. THAT IS A FACT!

 

http://www.retail-week.com/News/2008/07/brighthouse_profits_surge .html

 

Yes - let's overhaul the Social Fund, but let's NOT turn it into another commercial operation milking £Millions anually from the benefit system!

 

Cheers

Lefty

[midge61]

Seems they are trying to back down on this now!

 

From the Times

 

Ministers backed down over plans to charge interest on crisis loans offered to some of Britain’s poorest families today after a storm of protest.

Conservatives accused the Government of behaving like loan sharks with William Hague calling the idea “astonishing and outrageous”.

But work and pensions minister Kitty Ussher said the Government was “absolutely not” proposing charging interest on loans from the social fund, which currently pays out £500 million a year.

She said that ministers were considering involving credit unions in the distribution of the loans. But while credit unions are permitted to charge interest of up to 2 per cent a month on their own loans, they would not be allowed to do the same with Government products.

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Ms Ussher told BBC News Channel: “We are absolutely not proposing to charge interest on social fund loans. I think that would be the wrong thing to do.

“We do propose expanding the way that crisis loans work, to make them more available to more people, but we are not proposing charging interest.

“I think the confusion has arisen because one of the things we do want to do is explore partnership working with great organisations which in local communities do give affordable credit, such as credit unions.”

But the consultation document does not explicitily state that the Social Fund payments will remain interest free and it provides an estimate of the impact of charging interest on the crisis loans.

It says: "In 2007-08 the average initial budgeting loan award was £433.30. The estimated average loan repayment for all loans was £10.54 a week. If interest were charged at 2 per cent a month it would take 46 weeks instead of 42 to repay such a loan at such a repayment rate with a total interest paid of £47.80."

The DWP proposal suggests that credit unions and similar organisations from the third sector would take over the provision of "credit to social fund customers". As well as "offering affordable loans", these organisations could also offer a range of other services. Any credit offered under these arrangements could attract interest charges from 12.68 per cent to 26.8 per cent APR.

Ms Ussher rejected claims that ministers were behaving like loan sharks. They were lending money at rates of up to 1,000% and ministers wanted to make credit more easily available so that people in difficulties are not tempted into their hands, she said.

Union leaders said any such plans should be dropped immediately.

Mark Serwotka, General Secretary of the Public and Commercial Services Union said: “These plans are scandalous.

“On the one hand the Government has spent billions bailing out the banks, yet on the other they are considering penalising some of the poorest with loan shark rates.

“These proposals go where even Thatcher wouldn’t and should be dropped.”

Chris Grayling, the shadow welfare secretary, said he had written to James Purnell asking him to drop the proposals.

He said: "I just don't understand why on earth the Government would come up with a plan like this in the middle of a recession, when unemployment is rising by thousands each week. Gordon Brown keeps criticising the Banks for charging excessive rates of interest. But when he thinks no one is looking, he does exactly the same himself. It makes him look like a loan shark, and is a real sign that he just doesn't realise that his economic policies aren't working, and that the economic reality out in the country is pretty grim."

[flyingdoc]

Isnt this interesting how all these changes are coming from the so calles SOCIALIST party??

[plumberjon]

It's good to see open discussion here. See the below link to the BBC's latest story:

 

BBC NEWS | Politics | Row over state loan charge 'plan'

 

Nothing quite like a Sunday afternoon winge eh?

 

PJ

[ErikaPNP]

And as per usual, the news reports don't contain all the information.

 

One of the things being considered at the moment is an overdraft facility on benefit, and another is immediate access to finances whilst a new claim for benefit is in process, (such as Income Support, Employment and Support Allowance etc) rather than having to wait until a decision is made and resorting to a Crisis Loan.

 

The entirity of Social Fund is NOT being outsourced, never was - only certain elements of it in order to assist the consumer. They cannot outsource the entirity of a public sector organisation as then it becomes entirely private sector which would mean they would do away with Social Fund altogether. They're not about to do that when they have spent X amount centralising Social Fund and setting up Specialist Benefit Delivery Centres.

 

The government only has so much money in the pot at the end of the day and it is clear that it is not enough to help those in need, so they are looking at other ways in which they can offer help to those who need it.

 

This is only one of the proposals being considered, no decisions have as yet been made.

[flyingdoc]

only certain elements of it in order to assist the consumer.

This government in my experience has never done anything in order to assist the consumer.

 

Perhaps if it werent wasting billions of pounds brown nosing the americans and killing hundreds of thousands of people in an illegal war based on a lie there would be money available to meet the needs of our social system.

[Conniff]

She said that ministers were considering involving credit unions in the distribution of the loans. But while credit unions are permitted to charge interest of up to 2 per cent a month on their own loans, they would not be allowed to do the same with Government products.

 

And why pray would the unions want to do that if there is nothing in it for them - is Brown after MORE slaves who work for nothing.

[plumberjon]

Minister's U-turn on interest charges for social fund after 'loan sharks' jibe | Politics | The Guardian

 

Seems a long way off now doesn't it.

 

But thought I would remind you of it all.

[sandysue103]

A review of the Social Fund is long overdue. My experience is that customers who are having difficulty budgeting are getting into even more trouble because they can't afford the social fund repayments. I also don't see how willfully spending your benefit on something you fancy is a crisis if you know that your benefit is the only source of income you will have for the week or fortnight. I don't think that there was ever the suggestion that interest be charged on SF products but they were thinking about outsourcing in some ways to credit unions. Personally, if they can't charge interest, why in the world would the CUs want to do this? There is an open consultation with all DWP staff members ongoing and everyone can have their say. I have. If you feel really strongly then maybe a letter to your MP. If you feel strongly enough!