Department for Work and Pensions
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Credit Unions to play key role in helping the vulnerable

Credit Unions to play key role in helping the vulnerable

DEPARTMENT FOR WORK AND PENSIONS News Release (EMP-114) issued by COI News Distribution Service. 1 December 2008

Giving credit unions and other third sector partners direct access to Social Fund money so they can better help those on low income who have difficulty accessing financial services is one of the options unveiled by Kitty Ussher today as part of a discussion on reforming the Social Fund.

Allowing third sector partners, such as credit unions, to deliver services to Social Fund customers directly, lets customers take advantage of the broader financial services these local organisations offer such as advice on money management and access to saving schemes.

Minister for Social Fund Kitty Ussher said:

"The Social Fund already provides a vital service to those on a low income, providing loans and grants for emergencies and the other unexpected costs of everyday life to those in need. What has struck me is in some parts of the country there is fantastic expertise and enthusiasm from a variety of external organisations including but not limited to charities, debt advice and credit unions that we could in theory work with, to make our service even better, making affordable credit available to more people and providing greater financial advice and support in difficult economic times. "

Organisations such as credit unions are experienced in helping people on low incomes and have proved successful in giving them a sound financial basis upon which to progress. The Government will investigate how they might work more closely with credit unions and other external providers to deliver the further financial services that Social Fund customers need.

Notes to Editors:

- The discretionary Social Fund is a cash limited system of one-off payments, mainly to people receiving Pension Credit, Income Support, income related Employment and Support Allowance or income-based Jobseeker's Allowance - although Crisis Loans are available to anyone without the resources to meet their immediate, urgent needs. In 2007-08 over 4 million applications for a discretionary payment were received and almost 3 million payments worth over £770 million were made.

There are three types of payment:

Community Care Grants To help vulnerable people live as independent a life as possible in the community or to relieve exceptional pressure on families. This is a flexible scheme where decisions are based on individual circumstances and needs. Generally, only the highest of priority needs are met. The main users are disabled people and lone parents.

Interest free Budgeting Loans To help people who have been on a qualifying benefit for at least 26 weeks to spread the cost of routine lump sum expenses like replacing household items.

Interest free Crisis Loans Available to anyone suffering an emergency or disaster where payment of a crisis loan is the only means of avoiding a risk to health and safety. Payments can be made for immediate living expenses or essential items.

* The Government is working to ensure that everyone has access to the advice and support they need to manage their money well. It commissioned the Thoresen Review in 2007 to propose how best to offer high-quality, sales-free advice or 'money guidance', which is tailored to people's individual needs and circumstances. The Government, with the Financial Services Authority, will launch a pilot Money Guidance service in the North West and the North East of England in spring 2009.

* Improving access to advice for Social Fund customers will be an important part of the Government's broader programmes to support financial capability and inclusion. The Money Guidance pilot service, and any future national service, will also be a vital source of advice for Social Fund customers and will help support money management skills and sound financial decision making.


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