On the margins: financial exclusion, debt & social housing
Dawn Prentice HCI Public Affairs Manager
DAWN PRENTICE HCI PUBLIC AFFAIRS MANAGER
ON THE MARGINS - INTRODUCTION • • Personal debt casts a giant shadow over low income communities & social housing Shared concern brought Compass, Trident Group & Human City Institute together for research Thank Stella Creasy MP for unflagging campaign against highcost credit & for writing ‘On the Margins’ Foreword & supporting our research Joe Cox of Compass & John Morris of Trident, questions at the end of the session
Joe Cox Director of Campaigns Compass
JOE COX COMPASS CAMPAIGNS DIRECTOR
ON THE MARGINS - AIMS • Snapshot of how high-cost lending affects low income households (incl. social tenants) & perpetuates financial exclusion • Open-up debate about functioning of high-cost credit markets, social justice, housing policy • Put forward general policy solutions & some for the social housing sector
ON THE MARGINS - APPROACHES • • • Findings from Compass ‘End Legal Loan-Sharking Campaign’ • Review of UK personal debt, financial exclusion, likely effects of ‘austerity economics’ In-depth interviews with 252 social tenants Case studies of social tenants in debt from Trident Inclusion Money Advice Centre
ON THE MARGINS - PERSONAL DEBT • • £ 1. 5 trillion = 100% GDP & 3 times that 20 yrs ago • Personal debt predicted as 175% household income from 160% over next 5 years • Unsustainable: dependent upon expanded home ownership/increase in ‘sweating housing assets’ OBR growth forecast depends on personal debt increasing by 40% by 2015 to £ 2. 1 trillion
ON THE MARGINS - GROWTH IN DEBT
ON THE MARGINS - DEBT & EXCLUSION • Debt major issue for low income households - lower access to affordable credit so pay ‘poverty premium’ on high-cost lending • • • One fifth of low earners have ‘heavy’ debt burden 1 in 3 have no savings Social tenants 6 in 10 of financially excluded
ON THE MARGINS - HIGH-COST CREDIT • Withdrawal of High Street banks from ‘high risk’ (low income) neighbourhoods • Low income households depend on high-cost credit of sometimes 1, 000% interest • Pay-day loans, rent-to-buy retail credit, pawn-broking & illegal money lending all on rise - fourfold increase in pay-day loans, threefold increase in pawnbroker business
ON THE MARGINS - GENERAL RECS • Need for wage & benefit levels to be higher (‘Living Wage’ rather than min. wage) - v. unlikely • Universal right to a basic bank account, roll-out of affordable credit schemes in all communities • • Passing of a Community Reinvestment Act Financial regulators new powers to regulate high-cost lenders & a levy on excessive profits
John Morris Chair of HCI
JOHN MORRIS TRIDENT GROUP CEO & HCI CHAIR
ON THE MARGINS - TENANT EXPERIENCES • Survey of Trident tenants showed many ‘living on the edge’ with relatively high debt to income ratio, reliant upon high-cost credit • • Debt repayments a large part of weekly budgets • Half of Trident’s tenants experienced harassment of varying degrees One third of Trident’s tenants have had an ‘awful’ experience of high-cost lenders
ON THE MARGINS - TENANT PRIORITIES • 50% want furnished tenancies (including white goods) to reduce need to seek credit • Over one third want social landlords to provide employment directly, create employment, training • • One third want social landlords to offer short-term loans 1 in 5 ask social landlords to help tenants start businesses & social enterprises
ON THE MARGINS - RESPONSES BY HAs • Housing Associations already provide a range of money advice, affordable credit options: ü HAs invest £ 160 M annually ü NHF’s ‘My. Home. Finance’ ü Trident Money Advice Centre • Trident MAC helps 200 -300 local people annually, increased tenants’ incomes by £ 312 k last year and helped deal with £ 800 k of tenants’ debts
ON THE MARGINS - TRIDENT’S RESPONSE • Fit-for-purpose vehicle - Trident Inclusion: • • • Money and debt advice, affordable credit Mortgage rescue & home owner support Furnished lettings Support for vulnerable groups Improving social mobility & life chances Research & development of good practice
ON THE MARGINS - RECOMMENDATIONS • • Roll-out of ‘My. Home. Finance’ nationally • NHF & CIH to further develop pooled services & knowledge bank on financial exclusion initiatives • • Greater use of furnished tenancies All social landlords should provide some money & debt advice services Increased community asset transfer to tenants
HARD COPIES OF ‘ON THE MARGINS’ REPORT AVAILABLE & at www. compassonline. org. uk www. humancity. org. uk QUESTION TIME…
On the margins: financial exclusion, debt & social housing
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