07.03.11

Crisis Loans to be Cut

The Government is to cut ‘crisis loans’ available to needy welfare benefit claimants. The loans are designed to help the poorest people on benefits through difficult times.

From April, the rate paid for living expenses will also be reduced, from 75 per cent to 60 per cent of the benefit rate, and there will be a cap of three crisis loans a year for general living expenses. The loans will no longer be available to provide for items such as cookers and beds.

The emergency loans for long-term benefit claimants are to be restricted to save money, according to Steve Webb, the Pensions Minister. He said there have been more than seven million claims from 400,000 regular users applying for 10 or more crisis loans in the last seven years. And claimed that, without restrictions in place, the social fund budget could run out by Christmas.

He added: “We need to ensure that crisis loan support is correctly targeted at those who need it most and ensure we can still afford to.”

The move has been strongly criticised by charities, with one describing it as “cutting holes in the final layer of the safety net for families”, and others claiming it will leave many poor claimants with little option but to turn to loan sharks for cash.

 

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