No cookers or beds from April 1st

How is this protecting the vulnerable?

Changes to Crisis Loans – protecting the vulnerable

Urgent restrictions on Crisis Loans have been announced today in order to protect the discretionary Social Fund budget, which could run out before Christmas if current spending levels continue.

Crisis Loans were set up to meet immediate short-term needs in an emergency. Yet in the last seven years there have been over seven million claims from 400,000 regular users applying for 10 or more crisis loans. Since telephone claims were introduced in 2006 daily spend on the loans has tripled to £1million a day.

From April, the Department for Work and Pensions will no longer pay Crisis Loans for items such as cookers and beds, will limit the amount paid for living expenses and will set a cap of  three Crisis Loans for general living expenses in a rolling year.

Minister for Pensions, Steve Webb said:

“It is clear that the system is acting as a sticking plaster that isn’t addressing the real problems that people are facing. We need to ensure that crisis loan support is correctly targeted at those who need it most and ensure we can still afford to pay Budgeting Loans. That’s why we’ve taken urgent action today to protect the budget.

“We don’t want to leave people on low incomes without the safety net of interest-free Budgeting Loans and then turning to loan sharks for help.”

Budgeting Loans are intended to help long-term income-related benefit recipients cope with the cost of essential items like furniture and household equipment. If spending continued, money for them would run out by Christmas.

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