How welfare cuts are causing debt to spiral for social housing tenants
Professor Anne Power of the London School of Economics recently released the results of a two-year study of the impact of welfare reform on social housing tenants. The results reveal a precarious situation in which thousands of people are at risk of spiralling debt.
Welfare reform was ostensibly introduced to encourage people away from reliance on benefits and into work, but it neglected the complexity of the situation for most social housing tenants.
Both Power's study and separate work by the Joseph Rowntree Foundation found specific barriers to work faced by those in social housing. For example, a disproportionate number of single parents and people suffering with mental health problems live in social housing, and there's stiff competition for local, low-skilled, part-time positions.
More worrying still are the national trends toward lower pay and insecure, zero-hours contracts. These trends mean low-income workers cannot increase their earnings, budget consistently or even fall back on state support. Considering that spells without work are nearly twice as frequent among low-paid workers, it's no surprise that Barnados found low-income families increasingly turned to high-interest lenders to make ends meet.
In April 2013 the government decentralised council tax benefits to debt-burdened local councils, and cut the budget for these benefits by a further 10%.
The Institute for Fiscal Studies says the move has hit Britain's poorest families, including those in social housing, hard. As a result, Citizens Advice saw a 30% increase in people calling for help in areas where families previously had no council tax charges.
Caps on the exorbitant rates of interest charged by lenders may help prevent the many people increasing their debts at a rapid rate, but it will also deny thousands of people access to finance entirely: making them unable to pay bills at all.
At Dukes Bailiffs, we believe that we can help prevent the spiral by taking a more understanding approach to debt, and engaging with debtors to find a solution that works for both sides.
If you're concerned about your debt, you can get further help and advice from charities like the Debt Advice Foundation, Debt Support Trust, National Debtline or Step Change, as well as speaking to a trusted advisor via our Contact Us page.