Finance & Debt

Debt and its impact on health

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Responding to the debt crisis and its impact on health
by Simon Watts, Public Health Registrar on placement with GMPA

Turn2us logo for GM Poverty Action article on debtNew research based on a survey of 2,500 adults was published by Turn2Us last week revealing the levels of indebtedness which are now facing many residents across the UK:

•  One in three families are getting into debt as a result of the pandemic;

•  One in five people are now ‘always or most of the time’ running out of money before pay day; pre-Covid this number was closer to one in nine;

•  Younger age groups, those with a disability or those from a Black or Asian background are all more likely to run out of money before payday than other groups;

•  Of those surveyed who have accessed debt since March, nearly two thirds could only manage for less than a week if they lost their primary income source.

This shows how little financial resilience many people have. As a result, multiple sources of debt, which at some point must be repaid, have become increasingly relied upon.

The Office for National Statistics find that those in the most income deprived areas are likely to rely on debt more, and further analysis suggests average unsecured debt level is now a staggering £15,000 per household. This is less surprising when you consider the high interest rates associated with payday loans, which can exceed 1500% APR and that those lower income groups, who can’t access affordable credit options, pay an average of £527 more when they buy a household appliance. These are examples of the poverty premium, whereby if you earn less, your costs are higher.

And debt is not just a Covid related problem. The insolvency rate before Covid across most local authority areas in Greater Manchester was at or above the peak following the 2008 recession; we entered the pandemic in a bad position in terms of debt.

The impact of problematic debt is wide, leading to relationship loss, loss of your home, inability to get a home, or a phone contract. The legacy of having debt problems, even once the debt has been written off or repaid, is felt for a long time. The health impact of debt can be severe, with a review of the evidence on debt and health finding that debt was associated with depression and other mental illnesses and in some cases suicide, as well as physical health problems. Given that certain groups of the population (identified above) experience the biggest problems with debt, these negative health impacts are not evenly distributed and contribute to widening health inequalities between groups.

UK debt levels are a public health crisis. The Turn2us research makes several recommendations, including increasing funding for Local Welfare Assistance Schemes (LWAS). GMPA very much support this suggestion, as well as other recommendations in the report including reducing waiting time for Universal Credit (UC) and maintaining the £20 UC uplift, but we would also support further action.

Forthcoming GMPA research into LWAS highlights the excellent support offered by debt advice and money management teams across Greater Manchester; but these services are getting busier. A focus on prevention is needed that seeks to reduce the number of people entering debt crisis, but also ensures those whose health is suffering as a result of debt can access the right support. This isn’t just about helping those already in financial crisis, though that is important. It is also about lower income groups not always able to access affordable credit, it’s about responsible lending, illegal money lending, discussing the dangers of debt with young people and much, much more. And the approach needs to be consistent and coordinated across the city region, so that where residents live doesn’t determine their likelihood of getting into problematic debt.

Simon Watts for GM Poverty Action article on debt

Simon Watts

If you, or someone you know, is struggling with debt and money management, support is available from your local authority and other partner organisations. This website provides a useful directory of the support available, and you can find a range of information and advice services listed on the Maps of Support Services page of GMPA’s website.

 

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Sound Pound

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GM Community Credit Unions unite to unveil £15m support in Covid recovery plan
Press release from the Sound Pound Campaign

Eight Community Credit Unions have joined together to launch a Covid-19 recovery plan that will offer hope and £15m in financial support to millions of people across Greater Manchester.

The consortium, known as Sound Pound, wants to show communities across the city region that there is light at the end of the tunnel and that their local community credit union is there to support them at this time of uncertainty and financial hardship.

David Batten, chief executive of Hoot Credit Union in Bolton and chair of the Sound Pound consortium, said: “We have come together to launch this joint recovery plan and to pool the resources and financial support we have available. Together, we have a very clear objective to rebuild communities, support people and lend responsibly. And, by doing this, it will also provide a vital boost to the local economy.

“We want to encourage anyone who is struggling financially due to the impact of Covid to speak to their community credit union about their borrowing needs. By supporting local people and offering them credit, it will increase spending and keep our economy moving forward. It’s a cycle and, if we work together, we can keep going.”

The Sound Pound consortium is made up of Manchester Credit Union, South Manchester Credit Union, Stockport Credit Union, Cash Box Credit Union (Tameside), Unify Credit Union (Wigan), Hoot Credit Union (Bolton), Salford Credit Union and Oldham Credit Union. All eight have signed up to the initiative in order to provide support to their local communities.

David continued: “Credit Unions are ethical, not-for-profit financial organisations. They are there to put people first and to help anyone who needs financial support. Credit unions also help people to save for the future and become financially independent.”

Angela Fishwick, chief executive of Unify Credit Union in Wigan, said: “Our communities are really struggling right now. Many who never experienced debt or hardship before, are facing a very uncertain future and we can help. Because of the unique way that credit unions operate, we are able to lend money to help them with their day to day living costs and even help them save for a more secure future.”

Nathan Walters, member of Cash Box Credit Union in Tameside, said: “I first joined Cash Box because I wanted to start saving but they really came to my rescue recently when I needed urgent financial support. They are so friendly and helpful and because they are a part of my community they really understand me and my circumstances.”

David added: “Credit unions offer support to local people whatever their needs are. Whether they are a single parent struggling to make ends meet, are looking for a deposit for their first home or need some help with managing their finances and putting some money away. Credit unions are also there to support local businesses and we offer a range of support services to help them with the increasing pressures they are currently experiencing.

“Our Sound Pound recovery plan has been created to rebuild communities, support people and lend responsibly and it will play a crucial role in driving our local economy forward, helping all of us to build back better from the impacts being felt by our communities across Greater Manchester due to the Covid-19 pandemic.”

To find out more about the support offered by your local community credit union, visit the website

Soundpound logos for GM Poverty Action

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Welfare at a (social) distance

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Welfare at a (Social) Distance: Accessing social security and employment support during the COVID-19 crisis and its aftermath

By Lisa Scullion, University of Salford; Daniel Edmiston, University of Leeds; and Kate Summers, London School of Economics.

The Sustainable Housing & Urban Studies Unit (SHUSU) at the University of Salford, working with the universities of Leeds, Kent and the London School of Economics, is leading a large-scale national research project to understand how the working-age benefits system responds to the coronavirus crisis. Funded by the Economic and Social Research Council as part of UK Research and Innovation’s rapid response to COVID-19, this project will rapidly produce large-scale evidence to inform policymaking in the coming months.

As newsletter readers will know, the benefits system is crucial to supporting people during, and after, the COVID-19 crisis. With a growing number of new claimants, it faces two challenges. Firstly, to ensure people quickly get the money they need. And afterwards, that people are helped to quickly return to work or supported further if unable to work. This project will provide vital information on how we are meeting these challenges and where the system is struggling in order to help develop rapid solutions.

The project has three main components. We are conducting an online survey of 8,000 new and existing claimants, to provide a nationally representative picture of what is happening. Second, we are conducting four local area case studies in Leeds, Newham, Salford and Thanet, to identify how local support systems, including local authorities, third sector providers, and others, support claimants. Third, we are interviewing 80 claimants twice over the next year. These in-depth interviews will help us understand the details of claimants’ experiences.

This project is particularly important because of the ongoing and new challenges that the benefit system is facing. The coronavirus crisis has created a group of ‘new’ claimants, who might not have prior experience of the social security system: we need to understand how their experiences compare to those of existing claimants. Specifically, we need understand if support and income is reaching all claimants in a timely way, when the wave of new applications has put higher levels of strain on DWP processes. COVID-19 has also accelerated the shift to a digitalised benefits system – navigating this ‘virtual’ system often depends on in-person help for some claimants (from e.g. advice agencies) and the extent to which claimants can access support remotely is unknown. Later, claimants will need support to quickly return to work, while those who remain out of work will need ongoing
security.

Can you help us?

We are looking to speak to current benefit recipients from across England about their experiences. If you can help put us in touch with anyone currently in receipt of Universal Credit, JSA, ESA, or Tax Credits we would be grateful to hear from you. Interviews are treated confidentially and participants receive a voucher as a thank them for their time.

We would also like to hear from organisations in the Salford area who are currently supporting benefit claimants and are able to share their experiences of providing support during this time.

For further information about the project, or if you would like to be added to our project dissemination list to receive updates from the project, please contact:

Professor Lisa Scullion (University of Salford)
Dr Daniel Edmiston (University of Leeds)
Dr Kate Summers (London School of Economics)Welfare at a distance article logos for GM Poverty Action

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Low income families support

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Low income families need more support from the government
By Graham Whitham

At a time of great uncertainly for households up and down the country, GMPA has been supporting calls for the government to do more to protect families from poverty. This includes adding our support to calls from national charities, and through campaigns like the End Child Poverty and End Hunger UK.

A number of announcements over the last month or so will be helping some people. The government’s furlough scheme and increase in support through Universal Credit and Working Tax Credit will help. The government has provided extra funding to councils to meet increased demand for support with paying council tax. April also sees the end of the benefits freeze, with benefits uprated by 1.7%.

Although welcome, these measures are unlikely to be enough to stop the pandemic pushing many households into financial hardship, either in the short or long-term. There are additional measures GMPA would like to see, and we will be adding our voice to national campaigns calling for changes which will include:

  • Substantially increasing Child Benefit. This is the quickest and most efficient means of getting extra money into the pockets of families;
  • Ending the two-child limit that restricts benefit payments to the first two children in the household;
  • Scrapping the benefit cap that limits the total amount of support a household can receive through the
    benefit system; and
  • Providing extra funding towards council’s local welfare assistance schemes so that they can meet the extra demand for support over the coming weeks and months.

 

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More financial support is needed for young adults struggling with debt

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By Colin Gallagher, United Utilities

Financial management is an ongoing challenge for most people, but worryingly, far too few under 25s are seeking advice when they fall into debt, a new survey has revealed.

This is the feedback United Utilities heard from the money advice community across the region who attended its Affordability Summit at St George’s Hall in Liverpool.

The event – opened by Joe Anderson, Mayor of Liverpool – attracted debt advice charities, food banks, Credit Unions, Housing Associations and financial services to look at what more can be done to help young adults who are struggling with their finances, as well as continuing to support other people who are struggling with their bills.

Louise Beardmore, customer services and people director at United Utilities, said: “The survey showed that many young people are starting to build up debts soon after they turn 18 and very few seek expert advice on how to manage debt and borrowing.

“We’re currently helping more than 100,000 customers through our financial support schemes and since the last summit in January 2019 we have helped 13,000 people out of debt with their water charges but like others we want to do more. This includes having the right support for those under-25, building up debt now and worrying about money in their first few years of adult life.”

Iona Bain: Financial support for young adults aticle for GM Poverty Action

Iona Bain

Iona Bain, an independent financial writer, speaker, broadcaster and founder of the award-winning Young Money Blog also attended the event to emphasise how organisations could better target and engage young people on money management. She said: “Today, young people are thinking much more about their relationship with money. I have seen an explosion of financial apps, websites and books aimed at my generation since I started my blog 8 years ago. But as well as creating confusion, these resources do not always have younger people’s interests at heart, nor do they really solve the huge problem of financial inclusion.

“Responsible educators need to find a way to cut through the noise and offer balanced, independent and trustworthy advice so we can help those facing a financial crossroads. It’s by no means a given that young people who are starting work or higher education have to sink into intractable debt or start missing crucial bills.”

Louise added: “This is the third Affordability event we have organised. From our point of view, if customers, whatever age, are struggling with water bills, they are likely to be struggling to pay most of their household bills. It can be difficult for a single organisation to make a widespread difference and we believe that a collaborative regional partnership can go way beyond what any one organisation could do alone. We can learn from each other and look for other opportunities.”

Information on all the financial assistance which United Utilities can provide with water bills can be found here.

If you provide debt advice to people struggling with their household bills, please register for the Hardship Hub.  The Hub contains information on more than 500 support schemes provided by 300 organisations.

 

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Living Without

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Millions across the UK are living without household essentials

a press release from Turn2us, a national charity helping people who are struggling financially.

Turn2us logo for GM Poverty Action articleNew research from national poverty charity Turn2us reveals over two million households are living without essential household appliances such as fridges, freezers, cookers and washing machines.

The #LivingWithout campaign report outlines the scale of appliance poverty across the UK.  It also highlights the financial, physical and emotional consequences experienced by people living without these basic essentials; especially families and individuals affected by more complex physical and mental needs.

The analysis highlights the true scale of appliance poverty in the UK, with at least 1.9 million people living without a cooker, 900,000 without a fridge, 1.9 million people living without a washing machine and 2.8 million without a freezer.  While the national scale is staggering, certain demographics are considerably more affected than others, such as private renters, the self-employed, single adults and households on incomes below £10,000. Some regions are also worse off, including people living in London, the West Midlands, Yorkshire and Humber and the North East.

Between 2017-2019, Turn2us surveyed over 10,000 service users and uncovered the impact of living without essential household appliances.

“It is expensive to buy food already cooked, [but we have] limited options at home without a stove and oven”

“My family have concerns over my weight loss, they cook me food to make sure I have eaten”

“I have incontinence because of my epilepsy and I am unable to wash my clothes like I should, I feel so embarrassed”

Tom Lawson Turn2 Us for GM Poverty Action

Thomas Lawson

The research and analysis from Turn2us shows that changes to welfare policy since 2010 has contributed significantly to the increase in appliance poverty.  The abolition of the Social Fund in 2013, which previously provided support for those living without essential household appliances, has specifically been identified as the single biggest erosion of help. Of the 100 grant giving charities Turn2us spoke to as part of this campaign, over 70% identified the abolition of this crisis fund as a turning point. As a result of this, Turn2us is campaigning to develop a new system of Local Welfare Assistance Schemes to adequately replace the Social Fund.

Thomas Lawson, Chief Executive at Turn2us, said: “Household appliances are not luxuries, they are essentials. Everyone deserves the simple right to store their own food, cook their own dinner and wash their own clothes. People who currently live without white goods face huge economic, physical and emotional penalties. We all want to live in a society where these social injustices are no longer tolerated.”

The report includes a series of recommendations including bolstering Local Welfare Assistance schemes, launching a Select Committee inquiry into Local Welfare Assistance schemes, raising awareness of alternatives to high-cost credit  and raising the Local Housing Allowance rate to meet average rents.

If you’re struggling without household appliances, such as white goods, you may be eligible for help. Find out more. The Turn2us website includes a Benefits Calculator to find out what welfare benefits and tax credits you could be entitled to, a Grants Search to find out if you might be eligible for support from almost 2,000 charitable funds, and a range of information and resources to help people struggling to get by.

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Debt Trap

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Ending the Great British Debt Trap

by Stephen Pennells, Jubilee Debt Campaign, Manchester

Last March I shared Jubilee Debt Campaign’s Great British Debt Trap campaign which tackles the continuing debt-poverty crises that unequally impact poor people with insecure incomes.

As the campaign launched, Wonga went into administration and pay-day loans capping is now saving families £150 million every year.   In the past year the Financial Conduct Authority (the FCA), the body that regulates the financial services industry introduced a cap on rent-to-own debt businesses (like Brighthouse) as we were demanding.

Instead of a £400 washing machine costing a potential £1,600 or beyond, the maximum a firm can charge will be capped at £800; still a lot of interest, but establishing the principle is a great step forward, and one that couldn’t have happened without thousands of people taking action. The FCA estimates that the cap could save consumers £22.7 million a year.

But there’s more to do. Updated statistics from the Money Advice Service indicated about one in four facing problems with debt and in Greater Manchester 397,600 adults are classified as ‘over-indebted’.   Manchester Central is the most indebted constituency with 32,300.  Many of these are parents so the impact of choosing between heating and eating will hit thousands of children in the region.

In the past year the FCA finished a big review called the ‘high cost credit review’ – a huge opportunity to make some real changes and get a cap on interest and charges across the board. But they didn’t take it. They didn’t introduce a cap on credit cards, overdrafts loans or doorstep lending. It’s not good enough. That’s why JDC is collecting anonymous stories of debt to present to the government and are calling on it to:

• End rip-off lending by capping interest and charges for loans, credit cards, overdrafts and doorstep lending;
• Launch a government inquiry into why so little action has been taken and to put pressure on the Financial Conduct Authority to act.

JDC End the debt trepphoto of Rev P Davies for GM Poverty Action

The Reverend Patrick Davies

Politicians and leaders need to be encouraged to raise their voices, and reminded to keep on doing so.   With Debt Week 2019 falling during the General Election period, JDC set up an online action which meant hundreds of candidates were lobbied; several locally went out of their way to pledge support.

This campaign continues and JDC will gladly provide materials such as cards and petition forms.  JDC can be contacted via email or call 0207 324 4722.

 

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North West Hardship Hub

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New service puts debt support at your fingertips

introducing the North West Hardship Hub

Debt advisors across the North West are being encouraged to register for a new online resource putting hundreds of support schemes at their fingertips.

‘The North West Hardship Hub’ brings together financial assistance schemes from across the public and private sector to help the money advice community quickly and easily pinpoint the right support for people who are struggling with their household bills.

Supported by regional water company United Utilities and developed in conjunction with the money advice community, the Hub now contains information on more than 500 schemes from 300 organisations covering sectors such as electricity, gas, telecoms, water, local authorities and housing associations.

Jane Haymes, affordability manager at United Utilities said:  “The idea behind the Hardship Hub came about after we organised an affordability conference in Liverpool back in 2018. Debt advisors who attended the conference said what they really needed was a facility to help them quickly find debt support schemes from all the different providers across the North West without having to trawl all the different companies’ websites.

“A year later, with the support of the debt advisor community, the Hardship Hub was launched and it’s been a great success. The site now contains information on hundreds of schemes and is continuing to grow.”

Once registered, debt advisors can easily search to find what schemes are available in postcode areas so their clients get the support they need.

Said Jane: “The Hub has made it incredibly easy for debt advisors to find the right schemes for their clients. What’s really useful about the site is that the advisors can rate each scheme so that the providers can see whether their scheme is delivering the support it should be. I’d encourage all debt advisors from the North West to give it a go.”

Registration for the Hardship Hub is free, visit the website.

 

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Great British Debt Trap

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We were recently contacted by Stephen Pennells from the Jubilee Debt Campaign and we invited him to write for the newsletter to tell us more.

Ending the Great British Debt Trap
By Stephen Pennells, Jubilee Debt Campaign, Manchester

There are many causes of household poverty but one of them is the debt trap that faces people who don’t have the ‘Bank of Mum and Dad’ or savings to fall back on and find themselves forced to borrow at the most expensive rates when a crisis occurs.   This leads to another crisis.    Decent and dependable work, credit unions, and responsible debt counselling are needed, but so also are structural changes.

Although Wonga is in administration, they still take payments, while others eagerly pick up their business. Moreover, regulation of credit cards, overdrafts, doorstep lending, rent-to-own and other businesses remains light, both in terms of interest rates and conditions.

People who can’t shop around may pay considerably more for goods when they buy from BrightHouse or are lured by the perceived prospect of savings, into opening interest-charging accounts with high street stores.

Jubilee Debt Campaign, campaigning with others in the ‘End the Debt Trap Campaign’, demands an end to predatory and exploitative lending, a write-off of personal debt due to irresponsible lending and deep structural economic injustice, and changes in economic policy so that people don’t need to rely on borrowing to make ends meet.

Several Manchester councillors and local MPs (Andrew Gwynne, Mike Kane, Afzal Khan and Jeff Smith) have supported the campaign, as has the Dean of Manchester.

We’re calling on the Chancellor to end rip-off lending by capping interest rates and charges for loans, credit cards, overdrafts, rent-to-own and doorstep lending; and set out how the goverment plans to help families who are stuck in the debt trap.

JDC is a small NGO with a dedicated but overworked staff in London.  To change mindsets and break the chains of domestic debt snaring over 18% of Greater Mancunians, the campaign needs you not only to sign, but also to take it to family and friends, workmates, union and party meetings, religious congregations and community centers.  You can join on our website

Politicians and leaders need to be encouraged to raise their voices and reminded to keep on doing so.   JDC will gladly provide materials such as cards and petition forms or help with this and can be contacted by email or on 0207 324 4722.

 

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