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Public servants have challenged government plans to impose charges on emergency loans, designed to help local residents through the credit crunch. The Public and Commercial Services trade union, which represents Jobcentre Plus staff, said the decision to reform the Social Fund was ‘outrageous'. The union also claimed the plan, outlined in a Department for Work and Pensions consultation document, would lead to the de facto privatisation of the service. Work and pensions secretary, James Purnell, published his proposed overhaul of the Social Fund, which offers emergency loans and grants to people on low incomes who have difficulties getting commercial loans, on 2 December. The Social Fund paid out ‘crisis loans' to 1.4m people in 2007/08. A further 1.2m received separate ‘budgeting loans', which help people on benefits spread the cost of ‘lump sum' spending, such as new housing deposits. To widen the scope of financial services available to low-income families and benefit recipients, Mr Purnell is proposing to transfer responsibility for the fund to external partners, such as credit unions or charities. But, in order to remunerate new providers, the Government plans to allow them to charge between 1%-2% a month on future loans. Critics said the proposal could not come at a worse time, with thousands of UK households at risk of repossessions, unemployment and bankruptcy during the economic downturn. Mark Serwotka, PCS general secretary, said: ‘People who rely on benefits should not be made to pay for economic circumstances which they neither caused nor can control.' Mr Serwotka also warned the outsourcing plan was a ‘Trojan horse' designed to privatise the Social Fund. But a DWP spokesman said Mr Purnell had suggested the reforms because, ‘in its present form, the Social Fund is limited in scope as a basis on which to help the financially excluded'.

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Social Fund reforms are 'a Trojan horse' to privatisation says union

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