Tag Archives: debt

Universal Credit – “forcing many into debt”

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Jul 07 Dealing With Debt - Magnifying Glass

By Heather Cameron

“The biggest change ever made to the benefits system… is currently failing too many people and forcing many into debt.”

This is the conclusion of a new report from Citizens Advice on Universal Credit (UC). It warns that the roll-out should be paused to allow ‘significant problems’ to be fixed.

What is Universal Credit?

UC was introduced in 2013, with the aim of simplifying the benefits system, making transitions into work easier and making every hour of work pay. UC replaces six means-tested benefits and tax credits with one benefit, to be paid in arrears, as a single household payment, on a monthly basis.

The objective of UC is to help people on low incomes or not in work to meet their living costs. It affects a range of people, both employed and unemployed, disabled people with health conditions, single people, families, homeowners and renters.

Roll-out so far has been gradual but the process is to speed up considerably from October. By the end of roll-out in 2022, it is expected around 7.2 million households will receive UC, over half of which will be in work.

With such a significant number of people affected, it is imperative that the system works in their interests. But evidence from Citizens Advice suggests the system has a number of flaws that need addressing to prevent 7 million households from facing serious financial risk.

And this isn’t the first time similar conclusions have been reached.

Flaws

Back in February, a Guardian investigation found that policy design flaws in UC are pushing thousands of benefit claimants into debt. Former welfare minister Lord Freud also admitted to MPs that administrative problems and design issues with UC are causing around one in four low-income tenants to run up rent arrears, putting them at risk of eviction.

In 2016, an inquiry into UC and its implementation by the Public Accounts Committee highlighted the inflexibility of the payment systems which may cause financial hardship for some claimants.

Citizens Advice highlight three “significant problems” with UC:

  • people are waiting up to 12 weeks for their first payment without any income;
  • UC is too complicated and people are struggling to use it; and
  • people aren’t getting help when the system fails them.

The data shows that:

  • more than one in three people helped on UC by Citizens Advice are waiting more than six weeks to receive any income, with 11% waiting over 10 weeks;
  • nearly a third of people helped have to make more than 10 calls to the helpline to sort out their claim;
  • 40% of people helped said they were not aware they could get an advance payment to help with the initial waiting period for their first payment;
  • over half of the people helped borrowed money while waiting for their first payment; and
  • UC clients are nearly one-and-a-half times as likely to seek advice on debt issues as those on other benefits.

A recent report from the Joseph Rowntree Foundation similarly highlighted the issue of waiting time, arguing that it required immediate action.

While Citizens Advice support the principles of UC, it argues that pushing ahead with roll-out while these problems remain will only put thousands more families at financial risk.

Recommendations

In response to these findings, a number of short and longer term considerations were highlighted where action will be needed to help secure the aims of UC by the end of roll-out. These include reducing the six week wait for initial payment, improving the support available for those moving onto UC, and helping people achieve financial stability on UC.

The charity recommends that the roll-out is paused while the government addresses the significant issues that have been highlighted. If improvements are not made, it is argued that both UC claimants and the government will face significant financial risks, which will increase rapidly if thousands more households move onto the benefit later this year.

If you enjoyed reading this, you may also like our previous article on in-work poverty.

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Mobilising healthy communities: Bromley by Bow Health Partnership

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Ian Jackson of the Bromley by Bow Health Partnership was the guest speaker at the first Glasgow Centre for Population Health (GCPH) seminar series of the year.

The Bromley by Bow Health Partnership (BBBHP) is a collaboration between three health centres and other non-primary care partners in the Tower Hamlets area of London. The aim of the partnership – and the new primary care delivery model which comes with it – is to transform the relationship between the public and primary health care. This means considering the wider determinants of health when the partners plan and deliver care, rather than treating healthcare in a purely biomedical way.

Edited image by Rebecca Jackson. Map via Google Earth

Edited image by Rebecca Jackson map via Google Earth

Effect of social determinants on health

In the 1890s Charles Booth created a map of London which categorized areas of the city of London depending on their levels of deprivation. The most recent Indices of Multiple Deprivation Report showed that those same areas considered deprived in the1890s are still facing the highest levels of multiple social deprivation and health inequality today. It is no secret that disadvantage has a negative impact on people’s ability to make the best choices when it comes to health. And disadvantage at a social level can have a significant influence on poor physical and mental health across a range of conditions.

More recent research conducted by Michael Marmot looked more closely at what determines health outcomes in populations, and the extent to which other factors influence people’s health, or rather their ability to be well.

He produced what is known as the 30/70 model: 30% of what determines your health is your genetics and improvements in pharmacology, the other 70% is related to other “external factors” including poverty, environment, culture, employment and housing. BBBHP has used this as the foundation for their primary care model, arguing that primary care providers are not just dispensers of medical products, but have a responsibility to contribute to people living healthier lives in their community.homeless

Social prescribing

One issue highlighted by the BBBHP was the significant number of people presenting at GP surgeries with “non-medical” ailments, or medical ailments triggered by “non-medical stimulus”. People were arriving at the practices and booking appointments because they were lonely and it gave them somewhere to go. Others were presenting with symptoms of depression, which on further investigation were found to have stemmed from issues around debt or domestic violence. A social prescribing service was set up by the partnership to try to tackle some of these non-medical conditions and improve the health of the general population by non-pharmacological means.

The social prescribing service, where GPs refer people to other local services for help, can be used as a replacement for pharmaceutical interventions, or be supplementary to them. GPs, or other primary care staff, may refer any adults over the age of 18 to one of over 40 partnership organisations. These range from walking groups to formal sessions with advisors in debt or domestic violence agencies, as well as art classes, community gardens and companionship services to combat loneliness. The organisations can provide help and advice on issues such as employment and training, emotional well being and mental health.Ölfarbe

The challenges of quality and funding

Maintaining quality in the provision of social prescribing is a particular challenge for BBBHP. They work regularly with trusted partners, particularly the Bromley by Bow Centre. However, there is no consistent quality check for many of the services from the health partners themselves. Evaluative studies and feedback sessions are used to assess quality and impact, and consider the scale of demand. And while it is acknowledged that more formal frameworks for assessing quality and impact of social prescribing services are preferred in formal assessments, in reality, word of mouth, participant feedback and uptake rates are used as a standard for quality as much as official feedback in a localised community setting.

A second issue is funding. BBBHP identified that finding long term funding was their main issue in providing security for providers and service users, as well as for GPs referring to services. Funding is vital not only to ensure the survival of the community groups who provide some of the referred services, but also to allow them to develop longer term partnerships and build capacity within the social prescribing service. The BBBHP works closely with the Bromley by Bow Centre, a key provider of support services for the local community, but like many services which rely on funding, they increasingly have to plan for tighter budgets.

blue toned, focus point on metal part of stethoscope

A final challenge for the staff at BBBHP was changing people’s expectations of primary care, and what it means to live well. Some patients were suspicious and reluctant to be recipients of “social prescription”, as this did not fit with the traditional expectation of what GPs should do to make people well. This can be a big change in mindset for some people, according to Ian Jackson, when people come expecting to be prescribed antidepressants but are instead “prescribed” a walking club or a debt advice service. He noted that the reaction from patients can sometimes be confused or hostile, and some patients do not even turn up for referrals.

Improving patients’ understanding of the benefits of social prescription, ensuring people attend referral appointments, and that social prescriptions have a long term impact is something which BBBHP are hoping to research further. They feel that looking at the long term impact of non-pharmaceutical interventions and how these feed back into the wider agenda of tackling inequalities is important to allow the partnership to continue to build healthy communities and save on primary care costs in the long term.

category-picture-community-development

Creating positive social connections to improve community health

Social prescribing and other associated projects have sparked new social connections. Members of the community have come together to form their own support groups. The Children’s Eczema support group run by local GPs and the DIY health scheme, which sought to educate and support parents who were anxious about minor ailments in children, have helped parents in the area to set up WhatsApp groups, organise coffee mornings and go to one another for support. Such initiatives are regarded by BBBHP as important in tackling wider, systemic social inequality in the area.

Currently, primary health care in communities is focused on illness. This needs to change, according to BBBHP, with local community-based health delivery based as much around social health as biomedical issues. Through its social prescribing and other services BBBHP has aimed to focus on supporting people in a holistic way, tackling health inequalities as well as biomedical illness, to allow them to make good choices to improve their health.

If you’ve enjoyed this article, you might also like more of our blogs on health and wellbeing:

Rising household debt: a real risk to the economy?

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pink pig and coins

While household debt is still below its pre-crisis levels, it began to rise relative to incomes in early 2015 and remains high by historical and international standards, according to the Bank of England.

With the current uncertainty surrounding the economy following the EU referendum, there are concerns that household indebtedness could present a big risk to the UK economy.

So what do the statistics mean and just what impact could they have on the economy? A recent House of Commons briefing paper highlights the latest statistics and forecasts for household debt in the UK, including international comparisons, and the effects on the economy.

The statistics

The level of household debt more than doubled from £725 billion in early 2000 to £1,600 billion in late 2008. The global financial crisis resulted in a decline in the household debt-to-income ratio, however, from 168% at its peak in early 2008 to just over 140% in recent years. The levels of debt have increased again over the last couple of years, with annual rates of growth of around 3% recorded since 2014.

The Office for Budget Responsibility (OBR) forecasts that the household debt-to-income ratio will increase in coming years, peaking at 167% at the start of 2020, close to the pre-recession peak. However, this has been revised down on earlier forecasts, such as December 2014, when it was forecast to reach just under 184%.

Despite these increases, the costs of household debt is expected to remain low relative to household income, and much lower than pre-recession levels, due to continued low interest rates. As a result, the debt burden is more affordable for households.

Benefits

The negative effects of debt on individuals has been highly publicised, but low levels of household debt can also provide benefits to individuals and the economy, as highlighted in the briefing paper:

“It allows people to buy things, like a house, that they would not be able to pay for in one go, raising their standard of living. In other words, it allows people to smooth their consumption over time, including during periods when their incomes temporarily fall. This can provide stability to the economy.”

Consumer spending can obviously be good news for retailers and the high street and high levels of mortgage approvals is good for the housing market.

The paper highlights evidence that the accumulation of household debt from 1996 to 2003 contributed to economic growth, with indebted households adding roughly 0.35% points a year to overall consumer spending growth of about 4.5% per year over this period. So a total of 2.5% was added to the level of consumer spending from 1996 to 2003.

Nevertheless, higher levels of debt can make households more vulnerable if an economic downturn occurs. And as the briefing paper shows, the households most likely to have debt (excluding mortgages) are those in the lower wealth quintiles – who are already vulnerable.

Economic impact

As the Bank of England has warned, the ability of some households to service their debts would be challenged by a period of weaker employment and income growth, which could have a wider economic impact through reduced expenditure. And higher interest rates may also lead to further reductions.

This could then have a knock-on effect on businesses which, faced with reduced revenues, may have to cut back on costs such as labour costs by reducing wages or the workforce.

Indeed, research on the impact of household debt on the economy highlighted in the briefing paper suggests that large increases in household debt prior to recessions tend to lead to longer and more severe downturns. And this is as a result of households with high debt levels cutting back on their spending by more than other households during and after a recession.

According to a 2012 OECD working paper, high debt levels can create vulnerabilities by impairing the ability of households and companies to smooth their spending and investment.  The paper also found that when household debt levels rise above trend, so does the likelihood of recession.

Other research has also found that large increases in household debt have preceded more severe and protracted recessions. And recovery following a recession was found to be typically slower in countries that carry the legacy of a large private credit boom.

Final thoughts

So it would seem that perhaps a certain extent of household indebtedness is good for individuals and the economy, in terms of maintaining growth. But when it rises above a certain level in relation to incomes, the evidence suggests it becomes a serious concern.

And with the current economic uncertainty, increasing household debt isn’t something to be ignored.

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