Ripping off the poor?

A story that emerged today had me incensed. The Government is apparently considering replacing current interest-free social fund loans with interest rates of up to 2% per month - which is about the rate you'd pay on a dodgy store card. The alleged reason for this is that some people are taking advantage of the system by taking out loans that they don't need. As a result they are going to charge penal interest rates to people who do need loans!

One aspect of this story that is not well understood is that these loans have to be paid back over a fixed period out of what are often meagre benefit levels - especially for people of working age without children. Whilst the loan is being paid back, people are living below basic benefit levels - sometimes for years at a time. To add interest to this would be outrageous.

With rising unemployment, the number of people needing crisis loans and budgeting loans is going to increase dramatically, and already I wonder if the system can cope. One pensioner who contacted me this week had been told she could only get a £45 loan by going from South Gloucestershire to Weston-Super-Mare in person to pick it up. When I rang the DWP to pursue this I was initially told that all the people who know how the system works were 'manning the phones', especially in the run-up to Christmas.

I very much doubt that the Social Fund will cope with the big surge in demand that it is going to face in the coming months, but adding interest to injury doesn't seem to me to be a humane way forward.

PS Mind you, to hear the Tories shedding crocodile tears is a bit rich. In the early 1980s, people in poverty used to be able to get grants for essential items like cookers and fridges. It was the Tories who abolished these 'single payments' and replaced them with repayable loans. And the Tories set up a system which meant that in some circumstances you could be deemed 'too poor' to be allowed a loan! Something tells me that the Conservative party is unlikely to be the best placed to stand up for the marginalised and the dispossessed....