Cash in hand

Social housing tenants are among those most affected by financial exclusion. A new report shows how a more strategic approach from landlords can make a huge difference. Neil Merrick reports

The CIH financial inclusion advisers project encouraged tenants to save with credit unions.

Helping tenants to improve their money management skills and save them cash continues to be a priority for social housing landlords in light of recent announcements about welfare reform and cutbacks.

Access to banking services and affordable credit; increasing take up of tenant contents insurance and helping tenants access the advice services they need are some of a number of initiatives that social landlords have developed.

A recent report from the Consumer Credit Counselling Service found that a quarter of people contacting the service with debt problems were on benefits and had an average debt of £15,000. Currently, around 2.5 million people borrow from doorstep lenders typically at rates of interest above 250% APR. A further 200,000 are estimated to borrow from loan sharks, moreover 60% of those that are financially excluded are social housing tenants.

A financial inclusion roadshow run by Wrekin Housing Trust.

The extensive work being done by landlords to help tenants manage their money is set out in a new report Improving financial inclusion and capability in social housing, published by CIH, which looks at achievements over the last two years in the sector. Two CIH financial inclusion advisers, Paul O’Connor covering England and Wales and Ken Dow in Scotland and Northern Ireland, were funded by Barclays and the Money Advice Service. Their aim was to help social landlords take a more strategic approach to financial inclusion, in some cases building on work already going on.

Wrekin Housing Trust is one of more than 200 social landlords to receive free advice and assistance under the project, which ended last month. When the trust introduced a financial inclusion and capability strategy three years ago, its aim was to provide services and support that would encourage a culture of self-help for residents. As well as developing a savings culture and giving access to affordable credit, Wrekin also recognised the risks that many tenants faced by not having home contents insurance.

Tom Gregory, home contents insurance adviser, explains why it was so important: ‘We found that over 70% of our tenants most at risk of debt and rent arrears did not have any form of home contents insurance. Most felt they could not afford it, and until they lost something valuable did not see the need.

‘We were particularly concerned because tenants in social housing nationally tend to live in areas where they are three times as likely to be burgled. But even more importantly, having been burgled and losing valuable items, tenants can be put in a much worse financial position and sometimes need to resort to high interest lenders, or even loan sharks to borrow the money to replace essential items.’

Wrekin has negotiated low, fixed home contents insurance rates for tenants, starting from 99p per week, with no excess and lower minimum levels of cover than those offered by banks and building societies. ‘To raise awareness and confidence in insurance products, we have invested lots of time talking face to face with tenants and local groups about the importance of such protection, and are now seeing a slow and steady uptake in home contents insurance,’ says Mr Gregory. ‘It’s all part of tenants taking control of their own finances and often means they start looking at other ways of saving money for the future too.’

Paul O’Connor assisted Wrekin with the review of its financial inclusion strategy and action plan and advised it on how to deliver financial capability workshops and get good attendance. At Newlon Housing Trust, an association in north and east London, he helped the organisation draft a financial inclusion strategy that supports ongoing efforts to promote a savings culture among tenants.

Residents in Islington and Tower Hamlets that save regularly with credit unions not only receive ‘top ups’ to their accounts but can borrow money at lower cost so that they are less likely to use doorstep lenders. The scheme is about to be extended to Haringey. Those that opted to join Islington and City Credit Union now have total savings in the region of £6,500, while the credit union has issued loans totalling about £8,000 to seven households.

Ketra Najjungo, regeneration projects officer at Newlon Group, says it was useful to have a financial inclusion adviser (FIA) on hand to review different ways of offering debt advice as part of an overall strategy. ‘It’s about helping people to improve their financial capabilities,’ she says.

Paul O’Connor believes one of the project’s great successes was setting up an online financial inclusion practice hub where professionals can exchange ideas and resources and showcase their work. ‘For many people who work in housing management financial inclusion is only a part of their day to day role,’ he says. ‘The hub is a good resource to help people keep abreast of positive practice and the latest news.’

As most social landlords have limited resources to spend on financial inclusion, the fact that the FIA service was offered at no cost enhanced its appeal. ‘Delivering successful financial inclusion initiatives is not solely reliant on pumping in extra resources. Working strategically with partner agencies and reviewing existing arrears policies and procedures can have a significant impact.’

About 200 housing providers received first tier advice, including help with financial inclusion strategies, while 53 were given additional practical support. It is hoped the FIA project will help housing providers identify the business case for continuing with financial inclusion work. In the meantime, two research projects are under way to look at the potential returns from such activities.

As the financial inclusion adviser project draws to a close, CIH is offering a new service to help housing providers overcome challenges posed by welfare reform and other pressures on tenants’ finances. The income and inclusion service, headed by Paul O’Connor, is designed to help landlords maximise rent collection and assist tenants to improve money management skills. It will also offer income management checks and in-house training, and help to set up partnerships between providers and commercial or charitable organisations.

He says the service, which landlords will be charged for, will be far broader than that offered through the FIA project. Priorities include reducing rent arrears and ensuring households have their finances under control at the start of a tenancy.

‘We need to make sure that systems and procedures are fit for purpose,’ he says. ‘It’s about making sure tenants have a bank account they can use and can borrow money effectively. It’s about taking a more holistic view to income management.’


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