Consumer champion backs debt prevention scheme in London

Area:

London

Programme:

Improving Financial Confidence

Release date:

22 8 2012

Money saving expert Martin Lewis is backing a multi-million pound Big Lottery Fund announcement aimed at preventing thousands of the most vulnerable people living in social housing across London from falling into the debt trap.

Big Lottery Fund (BIG) today announces £7.1m funding that will help tenants across the capital to become more financially aware, more confident in money management - and better able to access financial products and services such as a basic bank account.

People without access to basic financial products are facing a poverty premium as they pay more for everyday services – and not having a bank account can even act as a barrier to work as some employers require bank accounts for payment of wages or salaries.

Martin Lewis, creator of MoneySavingExpert.com, said: “Disgracefully it costs more to be poor.The poverty premium means, from household goods to energy bills, things are more expensive for those with little cash as they need to borrow to buy or don’t get the direct debit discounts others take for granted.

Martin continued: “Sadly we still don’t have compulsory financial education on the curriculum, and even then, more will be needed to help the financially excluded. This is even more important as the universal credit means many on benefits will have to take greater control of their own money management.

“The Big Lottery Fund’s Improving Financial Confidence programme is a good step towards that and should provide help and information to 150,000 people who find themselves without access to products and services like bank accounts or contents insurance. Hopefully it will reduce the risk of desperation driving people into relying on costly payday loans or even loan sharks.”

The RCJ Citizens Advice Bureau in Islington has been awarded £959,200 to deliver its project, Inspiring Financial Confidence for Young People in Islington Social Housing. Through a series of interactive and educational workshops, the project aims to provide around 4,000 young people in social housing with the skills and confidence to sustain successful tenancies and manage their finances effectively.

Features of the project include:

• The creation of a website and Facebook page providing access to advice services and signposting to financial products and services
• Targeted workshops for young people coaching on budgeting, welfare reforms and determining value for money when entering contracts or payment options
• A one-to-one support service for young people who have completed the workshops including cookery courses to encourage eating healthily on a budgetA mentoring project whereby young people will be paid to become financial champions promoting the project and where capable, delivering core activities to other young people. They will also have the opportunity to work with local private sector partners to gain employment experience and practice financial skills.

Research conducted by Homes for Islington (HFI) found that those in the age group 16-25 were almost twice as likely to have fallen into rent arrears within the first six months of their tenancy compared to other age groups.

Alison Lamb, Chief Executive of RCJ Advice Bureau and Islington CAB, said: “Despite its wealthy image, Islington is the 14th most deprived local authority area in England, with extremes of rich and poor. Levels of child poverty in Islington are the second highest in the UK with a high proportion of workless parents.

“The high take up of social housing in the borough means there are many young people in social housing as family members who will not yet have been exposed to the full range of financial pressures that come with responsibility for a tenancy. Working with young people at a pre-tenancy stage is a vital preventative action in order to equip individuals with financial tools to overcome the various hurdles they will face in later life.”

Yvette Owusu fell pregnant with her son Pierre when she was just 15 . He was born with a rare and chronic brain condition called hydrocephalus. This accumulation of fluid on his brain meant that a knock to his head – or ever participating in contact sports - could be fatal. As a baby he required surgery and has had to attend regular appointments at Great Ormond Street Hospital throughout his young life. Having split up from Pierre’s father before she gave birth, Yvette struggled to cope with finances on top of caring for her son, and was later diagnosed with depression.

Rent arrears accrued – Yvette, who secured social housing aged 19, was inexperienced in managing money as she had always received payments from social services and her housing benefit ceased following a dispute over whether Yvette had received letters regarding the arrears. She obtained a part-time job to help reduce arrears but couldn’t afford childcare so was forced to give up work, especially as her son was often ill due to his condition. This also affected her housing benefit and increased arrears and possession action was initiated. The intervention of Islington CAB resulted in Yvette’s housing benefit being backdated and her rent account going into credit, possession action was ceased, and the CAB assisted with the management of her other debts totalling around £600. Yvette, now 21, is now much more in control of her budget and her life.

Yvette, who hopes to work in the catering sector and is now looking for a job, said: “I needed help when I was younger and struggling with my housing. I had to grow up really quick. I didn’t know I’d gotten into a lot of debt because I didn’t know about finances. I had got my own health problems and my son’s and it’s hard to deal with everything.”

Metropolitan has been awarded £999,996 of Lottery funding to carry out its Lambeth Young Peoples Financial Advice and Confidence Education (FACE) project. Through a combination of one-to-one support, group sessions, peer mentoring and online tools, the five-year FACE project aims to transform the lives of many within Lambeth as well as providing a lasting legacy within one of the most deprived local authorities in the country.The target is for 70 per cent of tenants to reduce or avoid arrears and 80 per cent to sustain their tenancies for a year or more.

Sandra Ferguson, Head of Community Regeneration at Metropolitan, said: “Being awarded the bid couldn’t have come at a more crucial time as the FACE programme will be invaluable in managing the impact of welfare reform in Lambeth. Metropolitan and its partners in this Project are committed to working together to support young tenants in managing their finances and we are delighted to receive the funding from the Big Lottery Fund.”

Catalyst Gateway has been awarded £582,275 of Lottery funding to carry out its Ealing DOSH (Debts, Overdrafts & Savings Help) project. The project will improve the financial confidence of social housing tenants by delivering quality financial, advocacy and mentoring training to partner organisations and volunteer local residents enabling them to become mentors in the community. The training and learning opportunities will be in issues such as benefit entitlements, smarter saving and managing household budgets, enabling tenants to become non-reliant on money lending and credit shops.

Catalyst Gateway Managing Director Leanne Baxter said: “Despite the stereotypical view of Ealing as a leafy London suburb, the borough has some of the country’s most income-deprived areas. There is also a 54 per cent difference in average incomes between the richest and poorest parts of the borough. I am thrilled that Catalyst Gateway has been awarded this money from the Big Lottery Fund to provide crucial support to people in Ealing to better manage their finances.

“The main focus will be on training up local people so they can mentor others in their community to deal with financial worries and help build financial capabilities. We will also be offering help in innovative ways such as through Come Dine With Me dinner clubs where people can learn about budgeting their food bill more effectively. “

Hyde Housing Association Limited has been awarded £999,493 to deliver its Money House project in Greenwich. The project aims to improve the financial confidence of young people in social housing before they have built up debts, equipping them to cope with setbacks they may face as tenants, and especially identifying young people most in need due to leaving care or supported housing. These young people will now all be required to attend the Money House programme before moving into social housing.

Financial Inclusion Programme Manager Jahanara Hussain said: “The Money House will address a critical need to improve the practical money management skills and awareness of vulnerable young people by improving their financial confidence – 76 per cent of young people leaving care or supported housing have rent arrears, do not budget, preferring to spend money as they receive it. Of all tenants evicted for rent arrears in Greenwich, 22 per cent are between 16 and 25 yet they only make up seven per cent of the total tenant population. Our preventative approach will increase their financial stability and support wider social inclusion.”

Haringey Citizens Advice Bureau (Haringey CABX) has been awarded £1,000,000 to deliver its five-year MoneyWise project. As part of the project, Haringey CABX will develop an online financial health diagnostic tool, enabling people to define their current financial situation and seek avenues for support, and also be signposted to relevant benefits information, partnerships, employment and training opportunities. The project will also launch a pre-paid credit card initiative, through which clients can receive benefits and other income to pay their rent, utility bills or purchase goods.

The idea is to increase their confidence using financial products as many lack access to bank accounts, while providing an adequate safety net.

According to the most recent index of multiple deprivation, Haringey is the 8^th most deprived borough in England, with only Hackney, Newham and Tower Hamlets presenting worse figures in London.

Markos Chrysostomou, Director of Haringey Citizens Advice Bureau, said: “I am overjoyed on behalf of all the partners in being awarded the IFC grant from the Big Lottery Fund for the Haringey Money Wise project. We look forward to making a positive contribution to the lives of social tenants and others in Haringey by ensuring they are able to secure and maintain their tenancies and deal confidently with their finances during difficult times.”

Bromley By Bow Centre has been awarded £597,948 to deliver its transforming Tower Hamlets residents’ financial capability project.

Supporting first time tenants and tenants moving in or out of employment, the project will transform the way properties are advertised by providing clearer financial information regarding the costs of maintaining a tenancy. The adverts will include information on utility costs, payment methods, budgeting, rental costs and council tax. All tenants will receive a ‘My New Home’ folder containing all the information required to maintain a tenancy, augmented through one-to-one support at open days and specialist advice at property viewings. As a ward, Tower Hamlets is ranked third in the country according to its percentage of residents living in deprivation. (Indices of Multiple Deprivation)

Dan Hopewell, Director of Strategy at Bromley By Bow Centre, said: “The borough has taken many strides in recent years to create opportunities for those who are seeking to move forwards. Tower Hamlets has the largest residential building programme in London, creating regeneration and the possibility that local young people can move out of overcrowded flats on older estates and start their own families and the last two decades has seen the creation of significant numbers of new jobs.

“However the lack of financial confidence at these moments of transition has serious consequences for those seeking to progress their lives. All too frequently community support agencies, housing providers and those supporting people to move into employment see first-hand the results of people not having the sufficient money management skills to cope with the additional complexities of running their own home or having dealing with the additional financial dimensions that being employed brings with it, such as budgeting for transport, lunches, clothing and perhaps childcare.”

Alison Rowe, BIG’s Head of the London region, said: “At a time when it is imperative that tenants take responsibility for their finances, given the current economic climate and recent changes in legislation such as the benefits cap and the introduction of Universal Credit, this funding will make a vital difference to those most in need.

“It will ensure that social housing providers, advice providers and local authorities can work together effectively to improve financial confidence among the most vulnerable and help combat the downward spiral of debt.”

Figures released this month by the Insolvency Service* show there has been close to a 10 per cent surge in debt relief orders since the same quarter last year. And the latest Department of Work and Pensions Family Resources Survey** published in June shows that 16 per cent of people on the lowest income (less than £100 a week) still do not have access to a bank account – compared to just three per cent of the general population. Some 14 per cent of young people do not have an account.

A full list of London projects receiving funding today:

Further Information

Big Lottery Fund Press Office: 020 7211 1888
Out of hours media contact: 07867 500 572
Full details of the Big Lottery Fund programmes and grant awards are available on the website: www.biglotteryfund.org.uk
Ask BIG a question here: https://ask.biglotteryfund.org.uk
Follow BIG on Twitter: www.twitter.com/BigLotteryFund #BIGlf
Find BIG on facebook: www.facebook.com/BigLotteryFund

Notes to Editors

• The Big Lottery Fund (BIG), the largest distributor of National Lottery good cause funding, is responsible for giving out 40% of the money raised for good causes by the National Lottery.
• BIG is committed to bringing real improvements to communities and the lives of people most in need and has been rolling out grants to health, education, environment and charitable causes across the UK. Since June 2004 BIG has awarded over £4.4bn.
• The Fund was formally established by Parliament on 1 December 2006.
• Since the National Lottery began in 1994, 28p from every pound spent by the public has gone to good causes. As a result, over £28 billion has now been raised and more than 383,000 grants awarded across arts, sport, heritage, charities, health, education and the environment.
• * Debt relief orders are an alternative to bankruptcy for people who do not own their own home on low incomes with £50 or less disposable income per month and with debts of less than £15,000. The number of debt relief orders made in the last quarter is almost 8,000. The latest Insolvency Service statistics can be found here: http://www.insolvencydirect.bis.gov.uk/otherinformation/statistics/201208/index.htm
• **The full Department of Work and Pensions Family Resources Survey can be found here: http://research.dwp.gov.uk/asd/frs/2010_11/frs_2010_11_report.pdf
• ***A consortium led by the National Housing Federation (NHF) produced the scoping document that helped inform the development of IFC. It is accessible here http://www.biglotteryfund.org.uk/prog_improving_financial_confidence_scoping_document.pdf
• **** Department for Business Innovation & Skills Interim Evaluation of the National Illegal Money Lending Project – Fina report – the evidence base.  Policis, 2010

http://www.policis.com/pdf/Illegal_Lending/BIS%20IML%20Evaluation%20Summary%20Report%20Final%2008102010.pdf

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