Departments Directions Social Fund Guide

Part 3 - Crisis Loans

Direction 3 - The qualifying conditions

Definition of terms
Examples of crisis loan situations
Deciding if crisis loan is appropriate

Definition of terms

4650Individual people may be affected differently by the same situation, e.g. the ability of a fit person to cope with a particular set of circumstances may differ from that of someone who is chronically sick, so it is not intended to give a precise definition of terms such as:

emergency
disaster
serious risk to the health or safety

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Examples of Crisis Loan situations

4700You must have regard to all the circumstances of each case. The following examples illustrate some situations where help may be appropriate, but a crisis loan will not be automatic. A situation not mentioned is not automatically excluded, unless covered by a Department direction.

4701Bear in mind the purpose of crisis loans, particularly that they should be the only means of avoiding serious damage or risk to the health or safety of the applicant or member of the family, unless the need is for rent in advance when the applicant is leaving institutional or residential care and a CCG award is being made under Direction 4 (a) (i).

Disasters

4702A disaster generally means a sudden calamitous event or great misfortune causing loss of possessions or property. A CL can be considered for immediate short term needs as a consequence of a disaster. The need for help will generally be for a specific item or service, but all types of assistance can be considered - including day to day living expenses - as long as they are not excluded by direction 23. The mere occurance or the scale of disaster should not be considered in isolation from the applicant's resources and ability to cope with the needs arising. In these cases, however, consider first whether it may be appropriate to award a community care grant.

4703Disasters are events of great or sudden misfortune. The result will normally be significant damage to, destruction or loss of, possessions or property. However, where there is no effect on property, there will at least be an extreme situation causing severe disruption to the day to day life of the applicant and others. An example of this is an evacuation due to a chemical leak.

4704The effects of a disaster are generally felt by a whole community (eg street or larger geographical area). Examplesof disasters are:

flooding
gas explosion
chemical leak
fire

4705The list is not exhaustive, and can cover many other calamitous events. Bear in mind that some needs may be covered by insurance, the Local Authority or charitable organisations.

4706The DM should consider the individual circumstances and merits of the case carefully. The event does not necessarily have to impact on other homes and families. However, the event must have very significant consequences.

4707In most cases there will be no doubt that a disaster has occurred within the area covered by the Benefit Delivery Centre. For example severe flooding or gas explosions.

4708Large scale tragedies require a particularly sensitive response. Be aware that victims are especially vulnerable to emotional and psychological disturbance.

Incident affects applicant only

4709Some of these may require more careful examination of the evidence and fine judgment by the DM. For example, an incident involving a run away vehicle crashing into a single property may or may not be considered a disaster. It may be a relatively minor incident, with damage to a boundary wall. Or a more significant event resulting in significant structural damage to the house and temporary homelessness for the occupier.

4710Similarly a fire within the applicant's home caused by overheating a chip pan may or may not be considered a disaster. The severity of the event and the impact on the applicant and family must be considered. Foe example, minor smoke damage in the kitchen area and a cooker that no longer works may be the result of a domestic mishap, not a disaster.

4711A disaster puts the applicant/and or family into an extreme situation. It is an event of sudden or great misfortune with significant consequences. The DM should take into account the degree of misfortune and damage, and the overall impact on the applicant and/or family.

Inquisitorial role

4712If it is not clear from all the information provided on form SF300 that the expenses have arisen as a consequence of a disaster then further information should be requested to support the application.

4713The DM may find the following details useful:

were the emergency services called out, if so which services?
who/what has been affected and in what way?
has landlord/building society been informed of any damage?
is the accommodation still habitable?
were any other support services involved, if so which?

This list is not eshaustive.

Stranded away from home in a disaster

4714Consider help with such needs such as travel and overnight accommodation where an applicant is stranded away from home due to being caught up in a major incident.

Disaster imminent but not yet occurred

4715Consider the needs of individuals who may need help to alleviate the likely consequences of an imminent disaster. For example flooding is officially forecast to severly affect the home of a vulnerable applicant. The applicant seeks help with travel expenses to take him to relatives outside the area who can care for him.

4716These expenses can be considered as a consequence of a disaster even though the event has not yet occurred.

4717Consider if, as a consequence of a disaster, the need has to be met immediately, a community care grant or budgeting loan may be appropriate.

4718Local Authorities are responsible for co-ordinating emergency and disaster planning within their area for both relatively localized disasters, e.g. widespread flooding, chemical leak into the atmosphere.

Day to Day living expenses

4719Day to day living expenses can be paid in an emergency or as a consequence of a disaster. Applicants do not have to privide a detailed breakdown of needs. This guidance does not specify what day to day living expenses cover but they will be mainly for food and groceries. Other needs that may come within the ambit of day to day living expenses are for example:

nappies
toiletries
cleaning/hygeine
money for pay as you go fuel meters

4720Remember that all living expenses are subject to the maximum award amounts in Directions 18 and 20. Direction 22 may also be applied.

Emergency travel expenses

4721If someone is stranded away from home without access to their regular means of support a crisis loan may be made for travel expenses in an emergency or as a consequence of a disaster. Consider if it is cheaper for the applicant to return home or continue the journey.

Loss of money etc

4722Loss of money may result from a variety of different circumstances. Any amount to be awarded will be subject to the maximum in Direction 18.or 20.

4723If a benefit cheque is not received or is lost before encashment this should be dealt with under the normal replacement rules. These provide for full replacement in most cases. The need to consider a crisis loan should only arise in a minority of cases where full replacement is not made because of strong doubts about the circumstances of the non-receipt or loss.

Living expenses for more than 14 days

4724Aneed may arise through loss of money which would have been expected to cover expenses until the next payment of regular income. This might include situations where, because if misfortune or management difficulties, the resources which are taken into account in the IS, ESA(IR), JSA(IB) or State Pension Credit(SPC) assessment are all spent leaving the applicant without funds to live on.

4726A crisis loan should normally only be made for living expenses for longer than two weeks where the indications are that the crisis will not come to an end within that period.

Hardship due to payment of regular income in arrears

4727Most IS, ESA or JSA and other benefit claimants will have resources from their previous source of income, e.g. last wages, to cover the period until the first benefit payday.

4728Similarly, for most people starting work the benefit payment arrangements will be such as to provide resources to cover the period up to their first pay day.

4729Some people may not have sufficient resources to meet their needs during these periods and a crisis loan may be appropriate in such circumstances. Payment will not normally be necessary for living expenses for more than 14 days.

Hardship due to compulsory unpaid holidays

4730Hardship may be caused exceptionally due to employers imposing compulsory unpaid holidays. A crisis loan may be appropriate in these circumstances.

Capital not immediately realisable

4731Occasionally someone might be without regular income but because of capital assets worth over £16000, e.g. property, there is no entitlement to IS, ESA(IR) or JSA(IB). A person in this situation who is not able to realise those assets immediately will be expected to raise money against them.

4732A crisis loan for living expenses will only be appropriate in these circumstances for a short period until the applicant arranges credit facilities. If no attempts are being made to realise the asset or arrange alternative credit facilities, a crisis loan will not be appropriate.

Fuel Expenses

4733Normally it is not appropriateto consider the award of a CL for a debt. However, sometimes part of an application for living expenses, applicants state that they need a fuel powercard or token for a pre-payment meter which includes an amount to:

make up for having used emergency credit supply on a pre-payment meter, and
cover forward/future consumption

4734However, fuel expenses to make up for having used emergency supplies of fuel as above are, in these situations, a current debt and help to pay them can be considered in a emergency or as a consequence of a disaster. Where appropriate they should be considered and awarded separately so that the customer does not need to meet these from the CL award for living expenses (which are subject to restriction under Direction 18. The cost of restoring a customers emergency credit supply can be paid in addition to the 60% maximum amount, see Direction 18 (4).

4735Thus where an applicant applies for a CL in respect of living expenses and indicates that this is to include the cost of fuel, e.g. a fuel powercard or a token for a pre-payment meter in an application for living expenses, you must identify as far as possible the amount needed for the fuel arrears and consider these as immediate short term needs for the cost of restoring a customers emergency credit supply.

Payments for board and lodging expenses

4736The homeless may be at particular risk if they have to sleep rough. This risk is often greater for the elderly or those who are not in good health. For all people, the risk increases when the weather is bad or a period of sleeping rough is prolonged.

4737Physical disorders, most frequently including acute respiratory infections, such as bronchitis and tuberculosis (TB), and hypothermia and even a form of `trench foot' can result from prolonged exposure to the cold and the damp.

4738Psychiatric disorders, often found in ex-psychiatric hospital patients and ex-prisoners, are also frequently made worse by prolonged homelessness.

4739The possibility of assault is common to all people sleeping rough but young people are also especially vulnerable to the risk of drug dependency, alcohol misuse and exploitation, e.g. prostitution. In addition, for young people, prolonged homelessness increases the risk of offending.

4740Take all of these factors into account when considering the question of serious risk to health or safety in relation to crisis loan applications for money to secure accommodation or living expenses made by homeless people or those threatened with homelessness.

Rent in advance and living expenses on leaving institutional or residential care

4741There is only one circumstance where a crisis loan may be awarded other than on health/safety grounds. If a community care grant is made to help a person return to the community after a period of institutional or residential care, a crisis loan may be made to cover a maximum of four weeks rent in advance.

4742Do not award weekly amounts in excess of the amount of housing benefit likely to be awarded. Local Housing Allowance (LHA) is a housing benefit scheme introduced by the Northern Ireland Housing Executive (NIHE) for tenants who rent from private landlords. The amount of LHA payable is based on the location of the property and the number of occupants within the property. To ascertain the amount of LHS payable, click here.

4743In such cases the CCG and any capital should be disregarded when considering the applicant's resources in calculating the amount payable.

4744Living expenses may also be covered up to the first payment of IS, ESA(IR) or JSA(IB) in such cases but only where the health/safety criterion is met. Staying in, or returning to, institutional or residential care should not be considered a means of preventing serious risk or serious damage to the applicant's health or safety but other resources should be taken into account. The disregard of any capital does not apply in the calculation of the amount awarded for living expenses.

People discharged from prison

4745Crisis Loan applications for discharged prisoners should be treated with particular urgency and sensitivity. Bear in mind the additional pressures and risks that prisoners face on returning to the community, for example the risk of re-offending if a prisoner is destitute.

4746Some people discharged from prison will not have sufficient resources to meet their needs until their first benefit payday. Where an application for living expenses is made immediately on discharge, establish whether the applicant already has sufficient resources from any discharge grant paid by the prison service. Do not automatically assume that an applicant has been issued with a discharge grant, as this payment is not made consistently to all prisoners, nor to all categories of ex-offenders. Where there is any doubt, for example the applicant does not produce form B79 Notification of discharge from prison, check the situation with the prison.

4747If paid, a discharge grant covers the period immediately after release. It is not a substitute benefit payment covering a specific period. Therefore people released from prison may still apply, and qualify, for a crisis loan at any time from the date of discharge to their first pay day.

4748If an applicant applies for a crisis loan for items following the refusal of a CCG, consider whether the refusal of the CCG application may have contributed to the emergency or disaster for which the applicant is seeking a crisis loan.

16 - 17 year olds claiming Job Seekers Allowance

474916 - 17 year olds who have established an entitlement to JSA or payments on account of such a benefit may wish to apply for a CL to cover the period until their benefit is paid.

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Deciding if a crisis loan is appropriate

4780Crisis loans are not restricted to people receiving IS, ESA(IR), JSA(IB), or SPC or payment on account of such benefits or any other social security benefit.

4781People receiving IS, ESA(IR), JSA(IB) or SPC or payment on account of such benefits may be able to get help with some expenses through CCGs or budgeting loans.(BL)

4782A crisis loan may be made in the circumstances described in para 4702 et seq. The list is not definitive, but illustrates some of the situations in which crisis loans are likely to be made.

4783Consider the individual circumstances of each application and decide whether or not the need requires immediate relief.

4784When an applicant moves into your office's area, it is important to establish if there is continuing entitlement to any benefits when considering a crisis loan. If there is a continuing entitlement the applicant should be referred to the appropriate benefit section for payment of that benefit. These payments should normally be treated as a resource as in Direction 14.

Third party payments

4785The award should normally be payable to the applicant. However, Decision Makers also have power to make payment to a third party who can provide, or arrange for the provision of, the items or expenses covered by the award. See Sections 138(3) and 139(5) of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

4786This power should only be used exceptionally, for example, where there is firm evidence that the award may not be used for its intended purpose. If you do decide to make such a payment, document the reasons fully, since a Decision Maker's determination to make payments to a third party can be reviewed like any other determination.

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