Letter: Welfare on loan

Sir: You are right, in your leading article, 'Neglect that costs the poor dearly' (15 July), to criticise the Government's failure to reform the Social Fund. But you assert that the failure to implement the changes proposed by the Government's advisers, 'Lilley rejects call to reform Social Fund' (15 July), is a matter of cost. It is more than that. The Social Fund is a tiny part of the benefit scheme - some pounds 340m out of a Social Security budget of pounds 80bn. The reason why the Government refuses to reform the Social Fund is because it introduces the concept of a loan to welfare provision.

The Social Fund means that the state is no longer under a duty to guarantee cash payments, rather it offers temporary help during times of crisis or hardship. This establishes a different relationship between the individual and the state. It lowers expectations. And it fosters 'independence'.

The other aspects of a cash-limited Social Fund: priorities, fixed budgets, targets, which you are critical of, are more a reflection of the Government's method of public-sector management than of any underlying ideology, or way of saving cash.

Once the idea of a 'welfare benefit loan' has become established, the idea of a 'welfare state loan' can be more widely introduced. To an extent this has already happened - the Social Fund loan was introduced in 1988; since 1990 students in further education have been offered loans to 'top-up' their 'frozen' grants. Who next?

Yours faithfully,

JOHN F. PROSSER

London, E17