Big rise in crisis loans for people waiting for delayed benefits

Crisis loans to help the poorest in society cope with government delays in paying their benefits have soared since Labour came to power.

New government figures show that, when Labour came to power, 344,737 emergency "alignment" payments were being made and that this has risen to 486,031. Opposition MPs have condemned the rise and say they show the benefit payment system is in disarray.

Alignment payments are made in exceptional circumstances to people in hardship waiting for their first payment of benefit, which is paid in arrears. The cost of making these loans has gone up from £14m to £27m since 1997.

MPs believe delays in the benefit system are responsible for the increase in expenditure. They say that benefit payment chaos is also leading to genuinely needy people, who require other kinds of emergency financial help, being turned down for the loans. This year, 313,000 applications for crisis loans from the Government's emergency Social Fund have been turned down.

Almost 40 per cent of the Social Fund is now used for alignment payments, which can also be paid to those moving off benefits into work and who have yet to receive their first wage. Opposition MPs say that benefit payment delays are the reason for the growth and not more people leaving benefits and finding jobs.

The Social Fund's annual report for last year said that crisis "expenditure" has risen because of "a slight increase in amounts paid for alignment to benefit paydays".

The increase in loans to tide over benefit claimants was revealed by the Government after a series of parliamentary questions from Steve Webb, the Liberal Democrat benefits spokesman. Figures provided by the Work and Pensions minister Malcolm Wicks show an increase in claims every year since Labour came to power.

Mr Webb said that delays in the system were denying people in dire straits who should qualify for emergency help being denied cash. "It is criminal if people in genuine need are being turned away because of increasing delays in the system. The Government must act quickly to streamline the delivery of benefits and ensure that those in desperate need get the support that they deserve," he said.

Whitehall sources speculated last night that industrial action by staff at jobcentre plus offices over protective screens could have contributed to some delays in payments.