Proposals have been unveiled to reform the system of interest-free budgeting loans for those on income support – amid fears it is being abused.
Budgeting loans of up to £1,000 are available to help those on benefits meet one-off items of expenditure like payment of home deposits and the purchase or replacement of furniture. They can also provide financial help to claimants who have lost cash.
The number of loan applications has spiralled since the scheme was introduced in April 2004 from 674 loans totalling £264,763 to 1,119 loans awarded totalling £457,092.
Social Care Minister Chris Robertshaw said: ‘The scheme is clearly being abused by some claimants who are effectively using the department as a cash machine.’
Subject to Tynwald’s approval, loans for lost cash will in future only be available to an individual once in a lifetime and loans for other purposes once every two years.