Research shows that 1 in 5 tenants have turned to doorstep lenders in the last year – #povertyinwales
As universal welfare reforms roll out across Britain, Wales Co-operative Centre Financial Inclusion Project Manager Jocelle Lovell discusses the changes.
A recent survey has highlighted that in Wales nearly two fifths of private and portfolio landlords were not prepared for upcoming changes in Welfare benefits and the subsequent effect it may have on their rental income.
Startlingly, a separate pilot conducted by the Wales Co-operative Centre and Caerphilly County Borough Council suggests that private sector tenants are just as poorly informed and prepared as their landlords.
Welfare reform will affect the way that all claimants, including those currently receiving housing benefits, receive their payments. Each household will receive the benefits they are entitled to in one single payment that will be monthly in arrears
Many tenants of both private and social landlords will still say that they don’t pay rent as they have never been in receipt of the money and have never had to make a physical payment. There are also many tenants who are digitally excluded, and have no means of accessing the online services that will help them manage better or do not have the skills to do so.
Budgeting is an issue for tenants who are currently used to receiving payments on a weekly or fortnightly basis. Many tenants existing within a cash economy may soon find themselves in difficulty.
People who are already in or living close to the poverty line often don’t want the temptation of having the rent money in their pocket. Most people faced with the choice of paying rent or feeding or clothing their children will ensure their children’s immediate needs are met first.
The Welfare Reform and Universal Credit changes will be rolled out over the next few years. It is our belief that if more resources are put into pro active methods of engagement with ‘at risk’ tenants now it would be far more effective and offer better value for money to the public purse that dealing with crisis intervention at a later date.
Following a piece of work carried out in partnership with Caerphilly County Borough Council, early findings suggest that four out of five tenants are still unaware of exactly how the reforms will affect them. At least half of the tenants surveyed to date had no access to on-line facilities.
Working in partnership with staff from the local authority we were able to explain the effects of the reforms to each tenant. Wherever possible, tenants were advised on applying for additional funding and referrals were made to other advice and support agencies in the area, including foodbanks. Of the tenants visited over half had struggled to pay bills such as rent and utilities and one in five had turned to door step lenders in the past year. Each of the tenants faced different challenges – paying bills, paying rent, buying food, or buying clothing for their children, but most were already struggling with their finances.
We need a range of solutions to meet the needs of different people. Nobody should be forced into using a product or service that isn’t appropriate for them.
One of these solutions could be a Credit Union Rent Account as it offers peace of mind to the tenant that their rent will be paid and also removes the temptation to use the rent money to make up short falls elsewhere. Of the tenants visited 80% wanted to explore the idea of a Credit Union Rent Account as they felt it was the best way to protect their tenancy.
The Wales Co-operative Centre’s Tackling Homelessness through Financial Inclusion project is working with local authorities and landlords across Wales to promote this simple model.
In light of the changes to Welfare Reform and the cuts to public sector funding, there has never been a more important time for public, private and the third sectors to work more collaboratively in supporting people and tackling poverty.