Changes to the Social Fund Crisis Loan Scheme from April 2012
Equality Impact Assessment
March 2012

Equality impact assessment for changes to Social Fund Crisis Loans from April 2012

Introduction

The Department for Work and Pensions has carried out an equality impact assessment on the proposed changes to Crisis Loan living expenses from April 2012, assessing the proposal in line with the current public sector equality duties.

This process will help to ensure that:

  • the Department’s strategies, policies and services are free from discrimination;
  • the Department complies with current equality legislation
  • due regard is given to equality in decision making and subsequent processes; and
  • opportunities for promoting equality are identified.

Brief outline of the policy or service

  1. Crisis Loans are intended for applicants who are unable to meet their immediate short term needs either in an emergency or as a consequence of a disaster. Crisis Loans for living expenses are available to cover two main situations, which are to help:
  • new benefit claimants to bridge an income gap before their first full benefit is paid (normally treated as an alignment payment)
  • people who face other situations in which their normal income has been lost, or stolen or is otherwise not available (these payments are normally the subject of a limit of three awards in twelve months).
  1. These are interest free loans that can help with immediate living expenses for a short period not normally exceeding 14 days or a specific item or service (in a disaster). It is a condition for an award that the loan is the only means of preventing serious damage or serious risk to the health or safety of the applicant or a member of the family.
  1. Access to the Crisis Loan application process via a national telephone network has significantly improved the customer experience for those in genuine need of help. Crisis Loan applications however, have almost tripled since 2006. This is primarily due to the increase in applications from single young people (which predated the current economic crisis), and it is also likely that telephone applications have made it easier for those intent on abusing the system.
  1. Since 2006, additional cash injections have been made to the Discretionary Social Fund loans budget to meet the costs of increased loans expenditure due to the recession. Whilst the Spending Review 2010 settlement maintained the core funding for the Social Fund, additional cash injections were considered to no longer be affordable. It has also become clear that the cash injections have primarily funded the increase in Crisis Loans. This means that without urgent action to limit demand there would have been a significant funding shortfall in 2011-12 that would have had to have been met from the Budgeting Loans scheme.
  1. To address abuse and ensure funding was still available for the Budgeting Loan scheme three changes to the Crisis Loan Scheme were implemented from 4 April 2011. These were to:
  • restrict access to Crisis Loans for items so that they can only be awarded to replace items lost or damaged as a consequence of a disaster, such as flooding.
  • lower the maximum Crisis Loan award that can be given for living expenses from 75 per cent of the weekly personal benefit rate to 60 per cent.
  • restrict Crisis Loans awards for living expenses, excluding benefit alignment payments, generally to three in a rolling twelve month period.
  1. From April 2012 further changes will be introduced. Firstly, to reduce apparent abuse of the system by non-householders[1] - we consider that Crisis Loans are relied on by this group in a way for which they are not intended and which can amount to abuse of the system. Many repeat applications are made by young, single men living in someone else’s home who, even if they make a contribution to costs, are not primarily liable for the cost of keeping the home going/maintenance of the home. Although Crisis Loans are payable only if they are the only means of preventing serious risk to health or safety, it is our view, based on observations from front line staff, that CLs are applied for by people who are not in fact in that position (as non-householders often have access to the support of family or friends).
  1. Further, people we call here “non-householders” do not need the same level of help from Crisis Loans as those liable for maintaining the home. We therefore consider that changes need to be introduced to achieve a better balance between the needs of individual applicants and the cost to taxpayers. The maximum Crisis Loan award that can be made for living expenses in respect of non-householders will be reduced from 60 per cent of the weekly personal benefit rate to 30 per cent. Homeless people, although not liable for housing costs, are likely to have extra needs and will continue to be eligible for a maximum rate for living expenses based on 60 per cent of the personal benefit allowance.
  1. Secondly, Crisis Loans that are awarded because Child Tax Credit has been claimed but is not in payment will be treated as alignment payments. This means that awards made for this reason will no longer be subject to the restriction of three awards in twelve months.
  1. These changes will help to reduce demand for non-alignment living expense Crisis Loan awards in preparation for the intended transition to new local assistance from April 2013. Non-alignment elements (excluding rent in advance cases) will be replaced by locally-based assistance which will be the responsibility of local authorities in England and the devolved administrations in Scotland and Wales.

Consultation and involvement

  1. The Department continually consults front-line Social Fund staff on the operation of the discretionary schemes. Conclusions based on feedback from staff are thatapplications from non-householders is an area wherethe system is exploited. This is because the majority of non-householders give “lost” or “stolen” money as the reason for making an application and often inflate the amount applied for with costs they are not responsible for. This results in more time consuming decisions which in the end result in a lower award than that applied for. Lowering the maximum amount available to non-householders will continue to provide those in genuine need with sufficient financial support to alleviate the crisis and will act as a deterrent for those people who use the Crisis Loan system to top up their weekly income from time to time. In assessing/monitoring the effects of the changes, further input and involvement will be obtained from other internal DWP stakeholders, and corporate IT.
  1. External organisations, such as Customer Representative Groups which represent the views of Crisis Loan applicants, will have the opportunity to discuss the changes with the Department from the date the changes are announced in March until their implementation in April; and may provide DWP with feedback following implementation.
  1. The Independent Review Service and officials in the relevant Northern Ireland Department (Northern Ireland runs a parallel Social Fund scheme) have also been consulted on the draft Secretary of State Directions.

Impact of the changes to the Crisis Loans scheme for living expenses

  1. None of these measures directly discriminates against the protected groups outlined at paragraphs 20-39.
  1. The rationale for lowering the maximum amount payable for non-householders from 60 per cent to 30 per cent is based on the following:
  • people living in other people’s homes do not have primary responsibility for the maintenance and running costs of that home.
  • in general they benefit from the facilities provided by the householder; such as cooking and washing facilities, heating and, in times of need, access to store cupboard food supplies.
  1. As a consequence non-householders do not require the same level of living expenses. The effect of reducing the maximum amount for this group means that they will generally receive a lower award for living expenses in order to alleviate a crisis than a householder. It is acknowledged that if someone living in another person’s home stops paying contributions, the householder may be unable or unwilling to provide support but, taking into account the purpose of Crisis Loans, the financial situation of the discretionary scheme and the potential impact of continued spending on crisis loans at the current rate, it has been decided that it is reasonable to adopt this approach.
  1. The change to treat Crisis Loan awards, made because Child Tax Credit has not been received, as an alignment payment is beneficial for all groups irrespective of whether they have one or more of the protected characteristics. In particular this change means that these awards will no longer be subject to the restriction of Crisis Loans awards for living expenses, excluding benefit alignment payments, to three in a rolling twelve month period.
  1. The change to maximum rates for non-householders is expected to have more impact on young, single men than on other groups. Otherwise these changes are not expected to have a particular impact on any of the groups identified by reference to the characteristics listed in paragraphs 20-39 below. They will apply equally across all groups irrespective of the fact that they may have one or more of the protected characteristics. In addition access to Crisis Loans or how the service is delivered will not change.

Impact on protected characteristics

  1. The following characteristics have been considered:
  • Disability;
  • Race;
  • Gender;
  • Age;
  • Gender reassignment;
  • Pregnancy and maternity;
  • Religion or belief;
  • Sexual orientation; and
  • Marriage and relationships.
  1. It should be noted that Crisis Loans for living expenses are intended to meet a person’s immediate short term needs rather than act as a replacement of normal weekly income and that the rules governing access to the scheme and the eligibility criteria will not be changing. Consequently, the maximum rates are calculated on the same basis for all applicants (i.e. their personal allowance rate) irrespective of protected characteristics (although the Crisis Loan award outcomes are not necessarily the same as claimants’ personal allowance rates are different. For example a family of four will have access to a higher Crisis Loan maximum rate than a couple). There has never been a differential in the maximum amount payable for living expenses because of special circumstances such as the applicant’s age or disability. Consideration of these falls within the domain of the income-related and disability benefit regimes. Crisis Loans for living expenses cover normal day-to-day expenses such as food and ongoing fuel in an emergency or disaster situation. In view of this the following assessments have been made as to the impact on the protected characteristics.

Gender

20.Single males making Crisis Loan applications are more likely to be non-householders within the amended provisions than single females or couples. (See table 1 below)

Table 1: Non householders by gender – based on applications for 2010-11
Type / Non householder / %
Couple / 10,510 / 4%
S Female / 51,650 / 21%
S Male / 185,140 / 75%
All / 247,300 / 100%

21.In the period April 2011 to September 2011 (see tables 2 and 3 below) 54% of Crisis Loans applications for living expenses were in respect to single males, 36% in respect of single females and 9% in respect to couples. The success rates were the same for couples and single females (81%), and slightly lower for single males (76%).Single males are therefore more likely to be impacted by this change than single females and couples. This is largely due to their household status and the increased likelihood of them being non-householders. We believe, however, that this change can be justified because there will still be enough help to carry a person through a crisis.

22.It is apparent from observations of operational staff that non-householders attempt to make repeat applications to the Crisis Loan scheme contrary to its purpose which is to provide help in an emergency - there is other assistance for normal daily expenditure.Repeat applications also have an impact on administration costs. It is acknowledged however, that if someone is living with others such as parents the parents might need their adult children’s help with paying the rent or they might be unwilling to keep them at home if they don’t pay, but it would be administratively burdensome and impractical to identify expenditure on a case by case basis. Non-householders (not just single males) have in general much lower living costs than householders. Overall the decision has been taken because costs had to be reduced and it is reasonable to reduce the maximum amount given to those with lower overall expenses (N.B. an exception has been made for the homeless who have special needs).Non-householders will however continue to be able to access the Social Fund Crisis Loan scheme in an emergency.

Table 2. Crisis Loan for Living Expenses based on applications by gender 2010-11
Category / Number / % of Total
Couple / 60,780 / 9%
Single Female / 241,930 / 36%
Single Male / 361,140 / 54%
Unknown / 310 / 0%
Total[2] / 664,160 / 100%
Table 3.
Crisis Loan for living expenses final awards & success rates by gender 2010-11
Category / Number / Success rate
Couple / 49,380 / 81%
Single Female / 196,970 / 81%
Single Male / 274,620 / 76%
Unknown / 240 / 78%
Total / 521,210 / 78%

Age

  1. In the period April 2011 to September 2011 (see tables 4 and 5 below) a small proportion of Crisis Loan applications for living expenses were made in respect of applicants under 18 years old (2%) and over 45 years old (14%). The largest proportion of applications were made in respect of applicants aged 18 to 24 (35%)
  1. Single males under age 25 are more likely to be non-householders within the amended provisions than single females under 25 or couples. Young people are more likely to apply for Crisis Loans for living expenses than other age groups but they have, in general, lower success rates than other age groups because there is often other means available to them, such as help from parents. Applicants aged 18 to 24 only had a success rate of 74% in the period April 2011 to September 2011 which is lower than the overall success rate of 78%.
  1. Although the change to maximum rates for non-householders is likely to have more impact on those under 25 and, in particular, young men of under 25, bearing in mind the purpose of the crisis loan scheme and the need to reduce spending, this is a reasonable approach to balancing the interests of applicants and tax-payers because they will still have access to crisis loans for living expenses and, in general, they have lower costs.
  1. We do not have data on how many pensioners are affected by the new policy. However pensioners are very low users of the Crisis Loan scheme. In the period April 2011 to September 2011, 1% of crisis loan living expenses applications were from pensioner applicants or applicants with a partner who was a pensioner.

Table 4: Crisis Loan for Living Expenses applications by age
Age band / Number / % of total
Under 18 / 11,230 / 2%
18 to 24 / 232,200 / 35%
25 to 34 / 201,800 / 30%
35 to 44 / 127,780 / 19%
45 to 49 / 43,260 / 7%
50 to 54 / 26,440 / 4%
55 to 59 / 14,270 / 2%
60 to 64 / 4,440 / 1%
65 to 69 / 1,360 / 0%
70 to 79 / 840 / 0%
80 to 89 / 110 / 0%
90 and over / 10 / 0%
Unknown / 410 / 0%
Total / 664,160 / 100%
Table 5: Crisis Loan for Living Expenses final awards and success rates by age
Age band / Number / Success rate
Under 18 / 8,320 / 74%
18 to 24 / 171,930 / 74%
25 to 34 / 159,540 / 79%
35 to 44 / 104,610 / 82%
45 to 49 / 36,170 / 84%
50 to 54 / 22,390 / 85%
55 to 59 / 12,120 / 85%
60 to 64 / 3,800 / 86%
65 to 69 / 1,180 / 86%
70 to 79 / 730 / 86%
80 to 89 / 100 / 92%
90 and over / 10 / 100%
Unknown / 320 / 79%
Total / 521,210 / 78%

Disability

  1. We do not directly gather information relating to disability when considering a Crisis Loan living expense application. The definition of disability used in the tables below is based upon whether a benefit recipient has a disability marker on the administrative datasets, which is added by Jobcentre Plus advisers when a claimant states that they have a disability. Whilst we envisage that the data in the table below broadly represents the number of Crisis Loan applicants and recipients who are disabled, it should be noted that this is a proxy and may not capture all disabled crisis loan applicants and recipients.
  1. In the period April 2011 to September 2011 (see tables 6 and 7 below) 31% of Crisis Loan for living expense applications were made in respect of disabled people, while 66% were made in respect of non-disabled people and 2% were unknown. The success rates for disabled applicants (80%) are similar to those relating to non-disabled applicants (78%).
  1. We do not collect data on the proportion of crisis loan applications made by non householders with a disability. There is however, no evidence to suggest that non-householders with this characteristic are more likely to be adversely affected by reducing the maximum amount allowed for a Crisis Loan, than those without this characteristic. The Government does not envisage any adverse impact on this ground.

Table 6: Crisis Loan for Living Expenses applications by disability
Disability status / Number / % of total
Disabled / 208,260 / 31%
Not disabled / 441,050 / 66%
Not considered / 2,300 / 0%
Unknown / 12,540 / 2%
Total / 664,160 / 100%
Table 7: Crisis Loan for Living Expenses final awards and success rates by disability
Disability status / Number / Success rate
Disabled / 166,670 / 80%
Not disabled / 342,910 / 78%
Not considered / 1,980 / 86%
Unknown / 9,650 / 77%
Total / 521,210 / 78%

Ethnicity

  1. The definition of ethnicity used in the tables below is based upon the ethnicity marker held on the administrative datasets, which is added by Jobcentre Plus advisers based on the ethnic group stated by the benefit recipient.
  1. In the period April 2011 to September 2011 (see tables 8 and 9 below) 79% of Crisis Loan for living expense applications were made in respect of white applicants with some ethnic groups making up 1% or less of the total number of applications. Overall success rates were slightly higher for white applicants than other ethnic groups (except for applications made by those identified as of a Chinese ethnic group.
  1. We do not have figures for the respective proportions of non-householder applicants by ethnic group. There is no evidence of, and the government does not envisage any adverse impact on this ground.

Table 8: Crisis Loan for Living Expenses applications by ethnicity
Ethnic group / Number / % of total
White / 526,630 / 79%
Mixed / 13,480 / 2%
Asian or Asian British: Indian / 3,540 / 1%
Asian or Asian British: Pakistani / 5,700 / 1%
Asian or Asian British: Bangladeshi / 1,610 / 0%
Asian or Asian British: Other Asian / 1,760 / 0%
Black or Black British: Black Caribbean / 14,470 / 2%
Black or Black British: Black African / 10,570 / 2%
Black or Black British: Other Black / 3,680 / 1%
Chinese or Other Ethnic Group: Chinese / 140 / 0%
Chinese or Other Ethnic Group: Other Ethnic Group / 5,190 / 1%
Prefer not to say / 31,740 / 5%
Unknown / 45,650 / 7%
Total / 664,160 / 100%
Table 9: Crisis Loan for Living Expenses final awards and success rates by ethnicity
Ethnic group / Number / Success rate
White / 414,290 / 79%
Mixed / 10,400 / 77%
Asian or Asian British: Indian / 2,670 / 75%
Asian or Asian British: Pakistani / 3,970 / 70%
Asian or Asian British: Bangladeshi / 1,150 / 71%
Asian or Asian British: Other Asian / 1,290 / 74%
Black or Black British: Black Caribbean / 11,340 / 78%
Black or Black British: Black African / 7,970 / 75%
Black or Black British: Other Black / 2,850 / 78%
Chinese or Other Ethnic Group: Chinese / 120 / 84%
Chinese or Other Ethnic Group: Other Ethnic Group / 3,840 / 74%
Prefer not to say / 24,960 / 79%
Unknown / 36,370 / 80%
Total / 521,210 / 78%

Gender reassignment