Finance & Debt

Turn2us report

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Unforeseen life events plunge over 15 million into financial insecurity

A new report from national poverty charity, Turn2us, reveals how over 15 million people in the UK have experienced at least one life event in the past two years that has left them struggling to cope financially.

The research shows that women, disabled people, certain minoritised ethnic groups and young people, are the worst affected by the financial impact of life events, such as bereavement, illness, a relationship breakdown, or unemployment.

64% of women have experienced financial insecurity following a life event, compared to just over half of men (55%). In ethnic groups the figure was 76%, for disabled it was 72% and for young people aged between 25 to 34   75%.  For people aged 55 and over the figure dropped to 46%.

The publication of the charity’s report comes just weeks after the Covid-19 furlough scheme ended, and the £20 Universal Credit uplift was cut. Its findings show how life events can plunge people into financial insecurity, particularly those who are already struggling to make ends meet, and that there are barriers to people accessing the support they need.

Thomas Lawson, Turn2us Chief Executive commented: “In the absence of long-term solutions that prevent people being plunged into financial insecurity, we urge the government to mandate Local Welfare Assistance schemes, with an additional £250m of ringfenced funding each year. This will enable councils to step in and help prevent families from having to make difficult choices between putting food on the table and paying their bills, because of life events that are beyond their control.”

Karen Isaacs, a Turn2us co-production partner with lived experience of financial insecurity, comments: “After a car crash left me unable to work, I had to quickly find ways to support myself financially. My initial claim for Universal Credit was not straightforward and caused a lot of stress at a time when I was under so much pressure from all sides. With no job and no money to support myself, while also being in a lot of pain, my mental health was absolutely at breaking point. I felt completely without any dignity, especially at my age – in my 60s – when I should have been receiving my pension.

“Now over three years later, I am still struggling and still trying to get a job. Recent cuts to Universal Credit have made matters worse and it is almost impossible to get help from anywhere for people in my position. This means yet another winter and Christmas struggling for money and worrying constantly.”

The survey findings also suggest that shame and stigma are a barrier to seeking support. It also reveals the coping behaviours people use to get by: almost 50% of those surveyed relied on a credit card to cover day-to day-spending after the financial impact; 23% took out a payday loan; more than one third (36%) missed bills or debt repayments with 14% reporting missing repayments more than twice; and 9% had used a payday loan or another form of high-cost credit more than twice.

44% of the people who found it difficult or impossible to cover the costs of the life event did not seek support at all.

The life events research was undertaken by Turn2us to better understand the impact of life events on people’s finances, how they cope, and what measures they need to support them. The survey and interviews explored a broad range of events that have an impact on people’s finances in the areas of health, work, family, housing and legal circumstances. Read the full report here.

 

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Linklaters and the Real Living Wage

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By Matthew Sparkes, Head of Sustainability at Linklaters

Linklaters is a global corporate law firm with 5,000 people working in 31 offices across the globe. Half of our people work in the UK, either in the London head office or in a support office in Colchester, Essex. On top of the direct workforce, key suppliers to the firm – in security, catering, front of house, cleaning and so on – employ a further 300 people indirectly across both sites.

The Real Living Wage has become something of which Linklaters has become hugely proud and even a little evangelical. We started paying in 2009 and joined the movement – run by Citizens UK – as a Principle Partner in 2011. That reflects the very real passion we have for paying the Real Living Wage, not only because it is the right thing to do but also because we have seen some tangible benefits. These include the impacts on job satisfaction (higher), willingness to be flexible (much higher) and staff turnover (much lower). Many of those we indirectly employ have been with us for 5 or 10 years plus and genuinely feel recognised and rewarded as equals. This matters as those benefitting are often those individuals that visitors first meet on entering the building and the warmth of that welcome is something of which we are rightly proud.

Alongside the Real Living Wage, we also provide access to the staff restaurant, gym and other ‘perks’ equally to both directly and indirectly employed staff. We also promote the local credit union so that as well as access to a fair wage, anyone can access fair borrowing and saving. This all creates an important sense of equality across the firm no matter whether directly or indirectly employed. That was demonstrated by the way we treated indirect staff so carefully during lockdown with no furlough and all roles retained. The Real Living Wage has brought to life a culture of respect and a real sense of collegiality no matter what role is performed.

Matthew Sparkes, Linklaters for GM Poverty Action

Matthew Sparkes

We now see the Real Living Wage as indicative of the firm we aspire to be. We are supporting the movement in Hong Kong, the US and Ireland, underlining our belief in its importance and our role in advocating in its adoption by City firms like ours. As a very successful business, it is hard to justify not sharing the rewards fairly and there’s no reason why that should only apply in the UK. Wherever you are, we believe that the benefits are clear, and I would urge anyone considering adopting the Real Living Wage to take that first step and join a movement that will bring advantage to your business as well as life-changing improvements to those who need it most.

More information about Linklaters.

 

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Local welfare safety nets

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The safety net beneath the safety net?

The North East Child Poverty Commission (NECPC) is calling for the Government to strengthen both the national and local welfare safety nets if it wants to build back better from the Covid-19 pandemic, after new analysis has revealed the dramatic decline in funding for ‘local welfare assistance’ in the North East over the last decade.

This new report from NECPC acknowledges and strongly echoes the recommendations made by GMPA on strengthening the role of local welfare assistance schemes (LWAS).

NECPC urges local authorities to use their full LWAS budgets each year and review how they communicate their LWAS. Also review the different routes for accessing their LWAS, with no scheme having online-only applications. To reconsider the practice of not providing cash awards, to promote dignity, choice and autonomy; to reverse the entrenchment of emergency food aid as a response to poverty and to consider working with other local councils to develop agreed minimum standards of LWAS. They also urge local authorities to undertake all of this work in ongoing partnership with VCSE organisations and local communities, particularly those with lived experience of socio-economic disadvantage, to co-design improvements to local welfare assistance schemes in the region.

To read the NECPC’s full report please go to the website

 

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Credit Union Awareness Month

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By Beck Golubows, South Manchester Credit Union
Sound Pound logo for GM Poverty Action
This October, the eight community credit unions of Greater Manchester, collectively known as Sound Pound, will be launching our first-ever Credit Union Awareness Month; getting people talking about one of the finance industry’s best-kept secrets.

Credit unions are financial institutions that are owned and controlled by our members; like community banks, aiming to bring financial inclusion back to the city region. We build the wealth of local people by providing low-interest loans and convenient savings accounts with a community-first ethos.

In Greater Manchester, there are 65,000 credit union members, some borrowing to afford their dream car, some setting up businesses, some saving for retirement, and some on low income who use credit unions services to pay for vital energy and food. In 2020, borrowers from the Sound Pound credit unions saved £13m in interest and charges, making them better off than they would have otherwise been. The vast majority of those who borrowed also spent their money locally, creating a financially resilient eco-system by driving the local economy.

The Covid-19 pandemic has altered people’s lives. For some, their bank balance has been hit hard due to reduced pay or redundancy. Credit unions have stood by those experiencing financial hardship, offering a friendly and human approach to provide financial help as well as referring people for additional support. Others have had time to focus on personal ventures and started something new for themselves. Credit unions have backed entrepreneurial opportunities and given them a fresh career path.

Throughout the pandemic, so much changed. People came together for support bringing positive energy. Sound Pound’s credit unions are determined to continue with this energy whilst building back fairer and giving more people in our communities better life chances through safe and honest lending, fair rates of interest and dedicated time to listen and understand their current circumstances.

Whilst the country focuses on levelling up, our key messages need to be amplified. In this spirit, our #HowsYourBalance challenge will be launched as part of Credit Union Awareness Month this October.HowsYourBalance for GM Poverty Action

The campaign challenges people to balance something on their body, take a picture and post it on social media – nominating three friends to do the same along with the hashtags #HowsYourBalance and #CreditUnionAwareness.  This has a fun double meaning; whilst asking you to balance something on your body, #HowsYourBalance also asks people to reflect on the state of their finances.

If you’d like to join in the fun, why not start it off yourself? Get the funniest, most challenging object you can find, balance it your body and take a picture, then post it on social media including the hashtags and challenging three friends to do the same. Alternatively, any time soon you could receive your nomination and get to show off your skills.

The Sound Pound credit unions will also be very active on social media over the month, sharing facts and statements about credit unions that you may have previously not known. Watch out for these and share them, you could be helping someone in need of credit find the cheapest and most sustainable option.

Happy balancing Greater Manchester!

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Employer views on UC

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New research project seeks employer views and experiences of Universal Credit
By Katy Jones, Research Fellow in the Centre for Decent Work and Productivity at Manchester Metropolitan University

Research and policymaking has largely ignored employer views and experiences of Universal Credit – the main benefit for people who are out of work or on a low income. As job creators, and those ultimately in control of the job opportunities claimants are seeking to access, this is an important gap. Exploring how employers engage (or could engage) with local employment services like Jobcentre Plus is also critical given ongoing recruitment struggles in key industries.

In a similar way to legacy benefits including Jobseekers Allowance, Universal Credit requires claimants who are out of work to engage in job seeking and other work-related activities. It is underpinned by the UK’s long-established ‘Work First’ approach, which requires claimants to make a high number of applications and move into work as quickly as possible.

Critically though, Universal Credit is also an in-work benefit (it replaces working tax credits), and in an unprecedented move, may involve the introduction of “in-work conditionality” (IWC). This may mean that claimants who are in work must continue to engage with the Jobcentre and demonstrate ongoing efforts to increase their earnings (e.g. through increasing their hours/earnings in their current place of work or by taking up additional or alternative jobs elsewhere).

Employers and the opportunities they offer are critical to the outcomes of such policies, and associated programmes like Kickstart and Restart. And while job-search expectations are applied to claimants, Universal Credit may have implications for the way employers recruit, manage, retain and progress their staff. Do employers see agencies like Jobcentre Plus as a recruitment channel? Does the Work First approach help them to get the right candidates?

Now more than ever, we need to understand how our welfare system interacts with the labour market. More than 6 million people now claim Universal Credit, and areas like Greater Manchester have relatively high numbers of Universal Credit claimants compared to other Districts (326,978 in April 2021).

As the UK faces high unemployment, and new programmes such as Kickstart and Restart are introduced, it is critical that we consult with employers about how policies impact on their businesses and their important role in helping people to enter and progress in work .

A new research project will do just that. Led by Dr Katy Jones from Manchester Metropolitan University’s Business School and supported by the Economic and Social Research Council (ESRC), this important project will gather employer views of UC, how expectations placed on UC claimants may (or may not) impact on businesses, and how employment agencies like Jobcentre Plus can best work with the business community.

How can employers get involved?

The research team are currently looking for Employers (anyone with influence/power over recruitment and line management including Owner-Managers, HR managers, line managers) operating in Greater Manchester who are willing to take part in a confidential interview (face-to-face or online).

Employers from any sector can take part but they are particularly interested in speaking to employers in Retail, Hospitality and Social Care. Employers do not need to know anything about Universal Credit to take part – the researchers are interested in their insights and expertise as business owners and managers.

If you are interested in taking part, can help us to connect with local business communities, or simply want to find out more about the project, please contact Dr Katy Jones or Dr Calum Carson You can also follow the project on Twitter @UC_Employers

All responses will help towards a research paper which will be submitted to the government alongside suggestions for changes to the Universal Credit system.

 

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Universal Credit cut – Insult to injury

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NICs increase ‘adds insult to injury’ for families facing devastating cut to Universal Credit

New JRF analysis estimates that around 2 million families on low incomes who receive Universal Credit (UC) or Working Tax Credit (WTC) will pay on average around an extra £100 per year in National Insurance contributions under the Government’s proposed changes.

Peter Matejic, Deputy Director of Evidence & Impact at JRF said: “With inflation rising, the cost of living going up and an energy price rise coming in October, many struggling families are wondering how on earth they will be expected to make ends meet from next month.  Any MP who is concerned about families on low incomes must urge the Prime Minister and Chancellor to reverse this damaging cut to Universal Credit, which will have an immediate and devastating impact on their constituents’ living standards in just a few weeks time.”

Only three weeks ago 100 organisations across the UK, including GMPA, joined together in an open letter to the Prime Minister urging the Government not to go ahead with the planned £20-a-week cut to UC and WTC Credit.

JRF’s latest analysis shows the number and proportion of families who will be impacted by the cut to UC and WTC in each UK parliamentary constituency. See below the figures for the GM constituencies:

JRF Constituency data for GM Poverty Action

 

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Resolution Foundation report

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Number of young people receiving benefits increases

A new report by the Resolution Foundation

Resolution Foundation logo for GM Poverty ActionThe proportion of young adults claiming income-related benefits increased from 9% to 15% during the Covid crisis – a larger increase than any other age group. This was part of the overall increase in claimants, highlighting the vital role that Universal Credit – including the £20 ‘uplift’ – has played during the pandemic, according to new research published by the Resolution Foundation in late August.

Nuffield Foundation logo for GM Poverty ActionThe report – Age-old or new-age – funded by the Nuffield Foundation, examines the shifts in the number of people receiving benefits during the crisis, and how this varied for different age-groups. There was a staggering surge in UC claims, with 1.3 million more families receiving the benefit in the first three months of the pandemic and a further 600,000 since then.

As a result, the total number of families receiving a working-age income-related benefit rose by 1.4 million in the space of 12 months to 7.5 million in February 2021 and reversed a long decline in benefit receipt.

In 2005, 72% of people lived in households that received at least one benefit, a figure that had fallen to 62% by the eve of the crisis. This fall was driven by the removal of Child Benefit from higher earners, the increase in the State Pension Age, and rising employment and earnings causing some families to no longer be entitled to welfare support. The Resolution Foundation estimates this figure has been partly reversed, with 64% of people now receiving benefit income in their household.

Focusing on which groups have been the main recipients of the pandemic benefit surge, the report notes that young adults (16 – 24 year olds) – the age group least likely to receive benefits – have seen the sharpest increases in support. The proportion of 25-29 has also increased sharply – from 17% to 24% per cent – while the share of 30 – 59 year olds claiming benefits has increased more slowly, from 22% to 27% per cent.

The Foundation believes that young adults have been hit hardest by the Covid-19 crisis and that it would have been far worse if not for the furlough scheme and while the number of families receiving benefits had dropped by some 130,000 by May of this year, the Office for Budget Responsibility expects the number of families receiving benefits to remain higher for the next two years than it was before the pandemic.

There has also been a potentially worrying rise in the number of older UC claimants, with 34,000 more people aged over 50 on the benefit since February 2021.

With record numbers of people now receiving UC, future decisions such as the future of the £20 a week uplift*, will have a bigger impact on family living standards across the country than ever before.

Alex Beer, Welfare Programme Head at the Nuffield Foundation said: “This research highlights the relevance of the benefits system to people of all ages, as well as the vital role it has played in supporting people and families through the economic crisis caused by the pandemic. However, it also shows that the level of support varies significantly across different age groups, and those differences should be taken into account by government when considering any changes to benefit rates.”

 

For information about how many people in the city region are in receipt of out-of-work benefits or in receipt of in-work support please go to the GMPA Poverty Monitor Social Security data.

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Community Savers

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Community Savers is a network of women-led savings groups which engage in regular peer support: sharing ideas, experiences and strategies for reducing poverty in their neighbourhoods, towns and cities. They have been learning from the approaches of a women-led movement called Shack/Slum Dwellers International since 2016 and work in alliance with Community-Led Action and Savings Support (CLASS).

Women have always played a critical role in community action in the UK (and across the world). Since the onset of austerity policies in 2010 which has reduced spending on public services and social support, women have been at the forefront of the battle to provide a safety net for the most vulnerable in our society. And now COVID.

The gendered nature of community action usually goes unrecognised. It is almost always unpaid, and the cost of activities are frequently shouldered by communities themselves.

This presents the Community Savers-CLASS alliance with a significant challenge. The Community Savers approach amplifies and builds upon the expertise and resilience of grassroots women leaders to make change happen. But this creates additional demands on women who are already shouldering many of their own community, family and work pressures.

Yet, being in the network also builds resilience and enables effective strategies to spread. Throughout the pandemic, savings group leaders have been able to fall back on their network for moral support, ideas and information, or just to offload when things get tough. Crisis resources have been shared between groups. Before COVID, groups were travelling to learn from each other’s projects and approaches, where a savings group set up in one place, a food project would replicate in another.

Women in the lead

Building on 30 years of SDI’s learning by doing, the Community Savers-CLASS alliance are attempting to build a genuinely alternative form of community-professional partnership.

Their work together is led by, for, and with grassroots women but protecting that principle requires constant dialogue, reflection and renegotiation. Where to find the time and space to have these discussions without needing to rush to school pick up, hospital appointments, food collections, or tonight’s campaign meeting?

In September, Community Savers & CLASS will be going on a 2-day rural retreat. They would like to enable four amazing women from each of the affiliate groups to attend but need to raise an additional £1,000.

If you can, consider helping them to reach their target by making a donation. You can also email for further
information.

 

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#KeepTheLifeline

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The National #KeepTheLifeline Campaign

As you are no doubt aware, in October the Government plans to cut the £20 a week (£1040 a year) uplift paid to those in receipt of Universal Credit and Working Tax Credit introduced at the beginning of the pandemic. For years before the pandemic, cuts and freezes to social security had already left many families living with constant financial insecurity.

This cut will have a huge impact on six million families and will be the biggest cut to the basic rate of social security since the modern welfare state began, more than 70 years ago.

Many charities, think tanks and leading organisations plus six former Conservative work and pensions secretaries   are urging the Government not to go ahead with this cut, which will further weaken social security support, cause severe hardship for families who are already struggling to stay afloat and generate a surge of people being pulled into poverty.

There is also an ongoing call on the Government not to discriminate against families receiving ‘legacy benefits’ such as Employment Support Allowance, Jobseeker’s Allowance and Income Support by not giving them this uplift.

Since signing a joint open letter to the Chancellor last September, an ongoing campaign led by the Joseph Rowntree Foundation (JRF), together with many organisations including GMPA, determined to prevent this cut, has been active.  If this is something you feel strongly about, there are many ways to get involved.

JRF have produced some very helpful tools.  You can read more about the campaign here and why this lifeline must be kept. 

•  There is a web page with information for Universal Credit and Working Tax Credit claimants including a template for writing to their MP.  A separate web page with information for legacy benefit claimants, again with a template for writing to their MP and a web page for supporters with write to MP instructions.

•  A ‘Campaign guide’ – for small organisations or leaders who are keen to get involved. It has details of the campaign, links to assets, write to MP guidance and suggested tweets.

•  A ‘Stakeholder toolkit’ – for larger organisations with networks.

What you can do to help

If you do one thing, write to your MP and/or request a meeting (see the helpful guide from the End Child Poverty Coalition for how to prepare). It is so important that MPs hear from as many different voices as possible about the impact of the cut – from charities, local leaders, claimants and supporters. We need them to know that this is a huge risk for families and communities, and for them politically.

Tell your network about the cut

Sadly, despite the severe impact this cut is likely to have on families, the complexity of the system and lack of communications means that too few recipients are aware it is due to happen and that it will affect them.

Raise the issue on your social media

Use the #KeepTheLifeline and help to keep this issue trending.

There are plans for a national day of action on August 17th.  Keep an eye on social media #KeepTheLifeline for more information. 

 

 

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BEESMART

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Manchester Credit Union introduces BEESMART

Manchester Credit Union (MCU) has recently become a Principal Partner of GMPA and we look forward to supporting them and the fantastic work they do in Greater Manchester to tackle the root causes of poverty. We believe everyone is entitled to a secure job which pays enough to live on, without constantly struggling to make ends meet.

As a business that shares similar values as GMPA, we would like to share some information about what we do and in particular, tell you about a free benefit that local employers can offer to their staff to improve their financial wellbeing.

MCU, a financial co-operative, started life in 1991 in Beswick as part of the council’s anti-poverty strategy, and we recently celebrated our 30th anniversary of providing savings and affordable loans to people who live and work in Manchester, Bury, Rochdale, Tameside, Trafford, Stockport and the High Peak. We have grown our membership to over 32,000 and so far this year have opened 1200 saving accounts and provided over 11,000 affordable loans to people in the local community who might struggle to access a small loan elsewhere without paying extortionate rates of interest.

Over the last 12 months, we have helped hundreds of members who have been affected by the pandemic by offering payment holidays, reducing payments on loans and most importantly, keeping in touch with members so they know we are there for them to help them through this difficult time. Members who need to borrow from us are encouraged to save a small amount each week whilst they are repaying their loan, which helps them become more financially resilient for the future.

There can be no doubt that financial worries are one of the main causes of stress and it is becoming increasingly evident that this can translate into how an individual performs at work.  The impact of poor financial health can lead to a lack of productivity and absence from work. So how can responsible employers who care for their staff help them to build financial resilience?

Recent research by the Chartered Institute of Payroll Professionals (CIPP) has found that 55% of employees would like a savings and borrowings solution provided by their employer.  Sadly, many businesses do not offer such a solution but we can help as we provide a payroll service for local businesses called BEESMART.

This is a free benefit with no risk to employers. Staff are encouraged to save regularly by having a sum of money deducted from their payroll. We will place the funds into a savings account on their behalf and also provide free life savings insurance on those savings. Saving directly through your pay is proven to make it easier to save regularly and having something put by for a rainy day can reduce financial stress which will in turn have a positive impact on the wellbeing of employees.

Staff will soon see their savings grow and have the comfort of knowing that their savings are covered by the Financial Services Compensation Scheme.  An additional benefit is that once employees are saving, we can then provide affordable loans which can often be more competitive than High Street Banks and payday or doorstep lenders.

BEESMART is a simple, safe and flexible scheme which will help people get back into a savings habit and there is no cost to an employer to set it up. We would encourage any local employer to contact us so we can help you support your staff.

We are on a mission to help our local community through the services we offer, and make people better off.

For further information on the services offered by Manchester Credit Union, please visit our website

If you are an employer in the Greater Manchester area and are interested in the BEESMART payroll service, please visit this webpage or email for further information on how to set it up free of charge.

Manchester Credit Union logo for GM Poverty Action

 

 

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