Practitioners’ briefing: The nature and extent of financial difficulty and what social landlords can do about it

Jim FearnleyHead of Research and PolicyMoney Advice Trust

Support for People in Financial Difficulty

Aims of presentation

• Money Advice Trust – where we came from and what we do

• A snapshot of the overall current debt picture• Social housing tenants and financial difficulty• How RSLs can use MAT to support tenants• Wider partnerships between RSLs and advice

services and other agencies

Background to MAT

• Set up 1991 following government-commissioned report

– Mortgage crisis– Rising levels of consumer debt

• Developing range of services– Service delivery – Training & second-tier support– Quality assurance – Policy and research – Fundraising – Common Financial Statement

Working in partnership with:• Advice sector• Government• Credit sector• Commercial debt advice sector• Other charities

How does MAT achieve its objectives?

Debt – the current picture

• Total consumer credit lending to individuals in July 2007 £214bn (increased of 5.3% in last 12 months

• Consumer credit lending grew by £1.1bn in July 2007.

• Average household debt in the UK is £8,856 (excluding mortgages). This figure increases to £20,600 if the average is based on the number of households that have some form of unsecured loan.

• Average interest paid by each household on their total debt c. £3,700 p/a (this equates to 9% of take home pay).

• Average consumer borrowing via credit cards, motor & retail finance deals, overdrafts and unsecured personal loans is £4,515 per average UK adult at the end of July 2007

Social housing tenants & debt (1)

2005 MORI debt report for DTISocial housing tenants:

• 62% of sample in arrears of credit commitments or household bills

• 44% of sample of those declaring borrowing “a heavy burden”, although were only 27% of sample overall

Social housing tenants & debt (2)

Overstretched (Kempson, 2006)• Those “seriously struggling & over-indebted”:

above average numbers of LA & HA tenants• Over ½ of those “struggling on a low income”

are tenants in social rented sector (2.5 x national average)

• Impact of fuel bills highest on low-income households, including LA & HA tenants

How RSLs can use MAT’s service

• Refer tenants to NDL & BDL• Negotiate training for staff• Use Common Financial Statement• Share good practice for wider dissemination• Access data & other research information

RSLs & financial inclusion initiatives

• Training staff in ‘problem-noticing’• Referrals to & partnerships with advice

services• Contracting with external advice services• Supporting tenants’ financial capability• Credit unions and the savings culture

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