Welfare Reform Bill

With this trio of amendments we now come to the subject of the Social Fund. Clause 15 inserts a new section into the Social Security Contributions and Benefits Act 1992, which in turn allows the Secretary of State to make arrangements with external providers to make social loans in place of the present arrangements with the DWP. The Official Opposition welcome the proposals and the interest that the Government express in having advance payments as a way of getting rid of the need for crisis loans to be made in certain circumstances. My noble friend Lord Skelmersdale and I have tabled these amendments to examine the operation of the new section and to seek assurances from the Minister. He will probably tell me that Amendment 126 is unnecessary because the Government propose not to allow external providers to impose any interest charges on those who receive loans from the Social Fund. They set out that position in another place and I expect the Minister will stick to it here; they do not intend that external providers should charge interest to people who are in need and receive social loans. However, the Government are proposing to take powers—although they do not have any intention of using them at present—to enable external organisations to make loans in place of the present arrangements in the DWP. We know that if the powers were to be used, the external organisations would be credit unions and similar organisations. I am happy to acknowledge that these are very worthy organisations, which would be well placed to make such loans. However, should that power be exercised and the credit unions and suchlike be called into action, they will be making loans from a somewhat different position from that of the DWP. I am sure that I do not need to remind noble Lords that such organisations face expenses which they normally defray from interest charged. Indeed, credit unions need to exceed their operating expenses. I therefore hope to use my amendment to ask the Minister for a little more clarity and detail on this, given that we now know that the credit unions and other organisations will not be able to charge interest. In other words, I am asking the familiar old questions: "How will this work?" and "How will the sums add up?". Amendments 129 and 130 are very simple and should be read as a pair. They refer to the repayments of external provider social loans. The Bill suggests that regulations may provide for the collection of repayments by the Secretary of State. My amendments suggest that rather than introduce new regulations the Government should make use of existing regulations. That is not a wholly serious proposal, but the point is that at least we know what the existing regulations are. If the Minister could give your Lordships a clearer idea of what the new regulations might be like, I should feel a lot happier withdrawing my amendment. I beg to move.