On the margins: On the margins: financial exclusion, financial exclusion,

debt & social housingdebt & social housing

Dawn PrenticeDawn Prentice

HCI Public Affairs Manager

DAWN PRENTICEHCI 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 high-cost 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 CoxJoe 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’

•In-depth interviews with 252 social tenants

•Case studies of social tenants in debt from Trident Inclusion Money Advice Centre

•Review of UK personal debt, financial exclusion, likely effects of ‘austerity economics’

ON THE MARGINS - PERSONAL DEBT

•£1.5 trillion = 100% GDP & 3 times that 20 yrs ago

•OBR growth forecast depends on personal debt increasing by 40% by 2015 to £2.1 trillion

•Personal debt predicted as 175% household income from 160% over next 5 years

•Unsustainable: dependent upon expanded home ownership/increase in ‘sweating housing assets’

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 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

•One third of Trident’s tenants have had an ‘awful’ experience of high-cost lenders

•Half of Trident’s tenants experienced harassment of varying degrees

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:

HAs invest £160M annually

NHF’s ‘MyHomeFinance’

Trident Money Advice Centre

•Trident MAC helps 200-300 local people annually, increased tenants’ incomes by £312k last year and helped deal with £800k 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 ‘MyHomeFinance’ nationally

•All social landlords should provide some money & debt advice services

•NHF & CIH to further develop pooled services & knowledge bank on financial exclusion initiatives

•Greater use of furnished tenancies

•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: On the margins: financial exclusion, financial exclusion,

debt & social housingdebt & social housing