Renewed Calls To Halt Universal Credit Pilots

Housing leaders said rollout of Universal Credit should be halted until 2019 to avoid the “significant financial hardship” experienced by those in the current pilot scheme. Delays in payments by the DWP are causing significant hardship and driving people to foodbanks or illegal loansharks, according to the National Federation of ALMOs.  Research by NFA of the scheme found people living in areas that were part of the pilot scheme were experiencing higher levels of hardship as a result. The NFA has raised its concerns with the DWP and called on ministers to rethink. Read more on 24housing.

'Nine In 10 Universal Credit Tenants In Arrears'

Nearly 90% of social tenants receiving Universal Credit (UC) are in rent arrears because of a seven-week wait for the first payment. Research shows tenants have fallen into “shocking” levels of arrears since the scheme started to be rolled out nationally in April last year. A survey of 36 landlords found the proportion of tenants receiving UC in rent arrears was three times the sector average rate of 31% because of systemic problems with the scheme. It showed 89% of 2,000 new UC recipients were in arrears and, of these, 34% were subject to an Alternative Payment Arrangement (APA) which passes rent directly to landlords after accruing more than eight weeks of arrears. It also revealed tenants were suffering financial hardship, with some landlords reporting tenants turning to loan sharks to cover their costs during the seven-week wait for the first UC payment. Read more on the ARCH website.

Payday Loans Crackdown 'Will Hit the Poor' and Leave Families without Credit

A government crackdown on legal “loan sharks” will leave poor families without any access to credit, despite being unable to manage on their shrinking incomes. A study of the poorest families living in social housing in the Midlands, carried out by the Human City Institute think tank, found that the majority were in some form of debt. More than half (55 per cent) owed more than £1,000. The study found that benefit cuts, a slow job market and cuts in emergency hardship payments had made poor families more likely to depend on short-term loans. Read more on the Independent website.

Police Warn That ‘Relentless’ Bedroom Tax Is Turning People into Criminals

The government's controversial bedroom tax has come under fire once again, with concerns expressed by police chiefs that its victims are being forced to turn to crime and unscrupulous loan sharks. Cleveland and Durham's Police and Crime Commissioners (PCCs) believe the under-occupancy policy is piling financial pressures on families across the region, and have highlighted that, according to the government's own figures, 59% of tenants struck by the 'spare room subsidy' have been unable to meet their basic housing costs. Read more on 24dash.

Councils Sit On £67m in Emergency Help for Poor

A fledgling scheme to provide emergency help to the poorest in the country is in chaos, with £67m left unspent and record numbers of families being turned away. Figures indicate that by the end of January councils in England were sitting on £67m of the £136m that had been allocated to local welfare schemes. Half of local authorities had spent less than 40% of their funds. Analysis shows that under the new local welfare assistance schemes, four in 10 applications for emergency funds are turned down, despite evidence that many applicants have been made penniless by benefits sanctions and delays in processing benefit claims. The schemes were designed to help low-income families in crisis, such as those in danger of becoming homeless or subjected to domestic violence. Charities and MPs have warned that those denied help are turning to food banks and loan sharks. Read more on the Guardian website.

Government Scraps Fund For Crisis Loans

A fund aimed at providing support to people in crisis has been scrapped by the government prompting fears it could force vulnerable people to turn to payday lenders and loan sharks. The local welfare provision grant, which is mostly used to aid people who have short-term financial difficulties, such as benefit delays, will not be administered to local authorities in the 2015/16 year, according to the latest local government finance settlement.  The removal of the £172 million fund, which was also used to pay for foodbanks and housing-related support, means that councils have to administer the provision through their general funds. The development prompted concerns that people with money difficulties would fall through the net, with a ‘terrible’ impact for families. Read more on Inside Housing.

Council to Partner with Credit Union on Universal Credit

Wandsworth Council has agreed to enter into partnership with a credit union to help its residents cope with Universal Credit.  The flagship Conservative council is exploring the possibility of offering new financial services - including 'jam jar' type accounts - to help people manage their budgets under the new benefits system.  The council believes providing financial support services could help many claimants adjust to the changes – and prevent them turning to loan sharks or payday loan companies should they struggle to adapt to the new system.  Read more on the Wandsworth Council website.

Universal Credit Will Push People Into 5,000% APR Loans

As part of the benefits system change, many will be shifted from getting their money weekly to monthly. Some will also be responsible for paying rent directly for the first time.  It’s likely to be a struggle for some on benefits for two reasons…

    *Financial capability issues amongst some benefits recipients. There are many factors that impact this: mental health, mental capacity, literacy, numeracy, educational achievement and many more. All of these make the process of effective budgeting more difficult to achieve.

    *Lower incomes make budgeting more difficult. The less you earn, the more difficult budgeting is. Less cash means any small unexpected expenditure disproportionately impacts the overall sum.

The DWP have asserted: "We are working with local authorities and the financial industry on how best to support individuals."   My suspicion is the most relevant part of the financial industry for this are payday lenders, the short term loan companies with APRs of up to 5,000%. When people have low incomes and no cash, they are sadly becoming the first port of call (or worse, illegal loan sharks).   The Government needs to engage in solutions to this – or money being paid out as a benefits safety net to those who need it will be going in the payday lenders or loansharks’ pockets instead.  Read more on the MoneySavingExpert website.

Council to Open Credit Union Accounts

A north London council is opening credit union accounts for all new tenants as part of a move to minimise the impact of welfare reform.  Catherine West, Labour leader of Islington Council, speaking before a Department of Work and Pensions select committee, said: ‘Every time we sign up a new tenant in council housing we give them a credit union account even though they may not know what it is at the time.  ‘By putting £2 in it opens up an account and helps deal with loan sharks prevalent on the high street. This is maybe something that can be suggested to all housing associations.’  The select committee was taking evidence as part of an inquiry into universal credit.  This, along with an average 10 per cent cut in council tax benefit, has led to fears that tenants may struggle to pay their rents.  Read more on Inside Housing.

Shapps Helps to Defeat 'Payday Loans' Cap

Housing Minister Grant Shapps has helped to defeat an amendment to the Financial Services Bill that would have capped the total costs that can be charged for 'payday loans'.  Shapps was among 266 MPs who voted against the amendment, put forward by the Labour MP Stella Creasy. Creasy has fought a long-running campaign against high street lenders such as Wonga and The Money Shop, branding them "legal loan sharks" for the high rates of interest they charge.  Read more on 24dash.

Loan Shark Warning Ahead Of 'Spare' Room Housing Benefit Cut

Plans to cut the housing benefit of tenants living in homes deemed too large for their needs, could lead to a huge surge in the number of people turning to loan sharks and doorstep lenders as they struggle to pay their bills, campaigners have warned. Tenants may face either downsizing to a smaller home to avoid the penalty or staying put and paying a much higher level of rent from their own resources. But even for those who do look to downsize there is by no means any guarantee they will find a smaller social home to move into. Around 180,000 social tenants in England are 'under-occupying' two-bedroom homes, but just 68,000 one bedroom social homes became available for letting in a single year (2009/10). Currently, around 2.5m people borrow from doorstep lenders at rates often in the region of 272% APR for new customers. A further 200,000 are estimated to borrow from loan sharks, who can charge anything up to 2,000% APR. A majority of those financially excluded are social housing tenants. Read more on the NHF website.

ALMO Rapped Over Loan Sharks Warning

An ALMO has been reprimanded by the Advertising Standards Authority for a leaflet warning about the activities of loan sharks. The regulator ruled the Stevenage Homes leaflet was ‘misleading’ as it suggested a company called the Money Shop was a doorstep lender and loan shark. It actually offers month-long pay day loans, which the ASA said did not come under either category. Stevenage Homes argued that it understood the type of loans offered by the Money Shop, and its leaflet made a clear distinction between loan sharks, door step lenders, and pay day loan companies. However the ASA ruled that readers could have considered the Money Shop was a door step lender or ‘unlicensed money lender who might use aggressive or threatening tactics in the conduct of its business’. Read more on Inside Housing.