Experiences of people in need

Put your money where your mouth is – a stern challenge has been issued by Cuts Watch Cymru to the Welsh Government as the coalition releases its second report Crisis Loans: experiences of people in need, focusing on the Social Fund – the first area of the welfare system to be devolved from Westminster to the Welsh Government.

Crisis loans are interest-free loans given to anyone – whether or not they are on benefit – to meet their immediate, short-term needs in an emergency where there is a threat to health or well-being, or as a result of a major change in circumstances.

The Welfare Reform Act transfers responsibility for Crisis Loans and the related Community Care Grants to the Welsh Government which has been consulting on how to deliver its new responsibilities. About £10 million will also be allocated to the Welsh Government.

Cuts Watch Cymru, a coalition of charities and voluntary organisations working on the front-line of poverty in Wales, argues that the Welsh Government has a chance to make the new arrangements work much better for the increasing numbers of people who may face crisis, by focusing on flexibility, consistency and assessing on the basis of need when it assumes responsibility for Crisis Loans in April 2013.

Responding to the consultation, Cuts Watch Cymru does not discount the option of the Welsh Government topping up the loan fund as a demonstration of its serious commitment to helping the poorest people in Wales during times of extreme hardship and emergency.

Dr Victoria Winckler , Bevan Foundation, said, “With this being the first area of the welfare system to be devolved to the Welsh Government, it will really test its commitment to the people of Wales during these tough times. These loans are for when people have absolutely no money and their health or safety is at risk.  The Welsh Government has the chance to redesign a flawed system and deliver for the needs of people in Wales. It’s a test of how serious they are about supporting people in crisis”.  

At a UK level, there has been a significant increase in the number of people applying for a crisis loan – up 38% since 2007 – a number which is expected to rise as the impact of job losses, welfare reforms and public spending cuts start to bite. But the current arrangements have also come in for criticism for the way in which applications are handled, the perceptions of some applications being handled in an arbitrary way, and the accessibility of the fund.

One interviewee told Cuts Watch Cymru how despite being in dire circumstances, she was only awarded enough support to cover £5.75 worth of food for a week. Another participant in the study said that “On the phone, if they don’t like your voice, you might not get the loan.”
 
With some of the first changes to the welfare system and some of the big cuts, such as working tax credits, just coming into effect at the end of last week the demand for emergency loans is expected to increase.

Added to this the figures recently released by the food banks network in Wales show around 43% of those accessing a food bank have done so due to a change or delay to their benefit payment or the refusal of a crisis loan.

Stephen Doughty, Head of Oxfam Cymru, said, “We’ve heard bold statements and big promises on how this Welsh Government wants protect the poorest  people in Wales from the effects of welfare reform. We expect many more people to be in need of a crisis loan in the months ahead, which is why it is crucial the Welsh Government gets this right.

“We urge them to step up now and show us that they are not only prepared to put their money where their mouth is, but also to introduce a fairer and more transparent system, which treats people in very difficult circumstances with respect.

Cuts Watch campaigners want any new arrangements to be more flexible to meet people’s immediate needs, to provide support to reduce the re-occurrence of crises, and to be delivered fairly and transparently. They point to the unacceptably high number of applications that are initially refused only to be overturned on appeal under the current system.

Dr Victoria Winckler added “Fair and efficient administration of the new system is vital. It is unacceptable that so many people who are eligible for a loan – money that they have to repay – are wrongly refused help. Appeals waste money and precious time.  We want the Welsh Government to do much better when it takes over the system.”

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