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David Blunkett’s description of the welfare state as a safety net into which people fall and remain conjures up images of the state as the hand that rocks a hammock for the indolent.

In a pamphlet for the Resolution Foundation, a new think tank, the former cabinet minister suggests the welfare state has created a legion of people who take their thumbs from their mouths only when they’re being fed and watered by the nanny state.

The social fund, a hardship fund that mostly provides loans for people who can’t afford expensive one-off items from their social security benefits, is part of the problem.

Mr Blunkett admits it falls ‘a long way short of meeting needs’. But grants (ie hammocks) are not the answer. Instead, he suggests creating a public-private fund that could be worth up to £3bn.

Alongside the usual hardship loans, the new fund would provide low interest loans for those wanting to start a business and promote saving and financial inclusion.

However, there is a catch. In order to access the fund, applicants would have to agree to set up an account and continue to save after their loan is paid off.

So, the loans adviser sends you to the savings adviser who gives you information on which account might be appropriate for you and sends you to a local credit union or post office or bank or community banking partnership or whatever to set up an account.

You make an appointment and set up the account. When you’ve got all the account details, you go back to the original fund adviser and prepare to fill in the application form.

At that stage you are told that you’ll have to agree to save £x a month after the loan’s paid off. Do you still want to continue or would you like to go away and have a think?

Ultimately it could, as Mr Blunkett argues, help people to change their lives permanently. But it could equally lock people in a welfare system that assumes they can’t be trusted to make the right decisions and therefore need the state to define their best interests and compel them to act accordingly.

That might make a lot of sense from a policy point of view but it wouldn’t be a way of raising aspirations or giving people more control of their lives - it would simply be yet another way of taking it away.

Susan Downer, assistant editor, New Start Online magazine

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