Anger over plans to privatise social fund loans

3 Dec 2008 12:47 PM

PCS reacted angrily to plans announced yesterday by the Department for Work and Pensions (DWP) to contract out the provision of crisis loans to the private and third sector as well as credit unions.

The plans are part of far reaching changes to the Social Fund which include the merging of budgeting loans with crisis loans, making customers pay interest on loans, a new unspecified grants system and new arrangements for advance benefit payments.

The union warned that the plans would lead to the privatisation of the Social Fund allowing private companies to profiteer from loaning public money to some of the most disadvantaged in society.

Whilst supporting the principles behind credit unions, the union also expressed concern over their capacity to administer the Social Fund’s loan system.

Elsewhere the union branded plans outlined today, to force lone parents back into work once their child had reach the age of one, as unworkable and unnecessarily punitive.

As the economy shrinks the union urged the government to focus on supporting people back into work rather than bullying people into jobs which don’t exist.

The plans come ahead of tomorrow’s Queen’s speech which is expected to include the government’s controversial plans for welfare reform.

The union is part of the chorus of opposition to the plans along with, Compass, other trade unions, poverty campaigners and academics who are signing up to statement opposing the proposals.

Allowing private companies to profiteer from distributing public loans to some of the most disadvantaged in society is outrageous.

 

Commenting, Mark Serwotka, PCS general secretary, said: “Allowing private companies to profiteer from distributing public loans to some of the most disadvantaged in society is outrageous.

"Whilst we support the principles behind credit unions, we don’t believe they have the capacity to deliver the social fund and that they will be used as a trojan horse by the private sector.

"The department should recognise that public funds should be distributed by public servants who are publicly accountable and who have the expertise and knowledge.”

On welfare reform plans, he added: “People who rely on benefits should not be made to pay for economic circumstances which they neither caused nor can control.

"With unemployment due to rise to 3 million by 2010 what we need is a fairer, more just welfare state, not a harsher regime which punishes some of the most vulnerable members of society."