Safer Communities Overview and Scrutiny Panel 2 September Problem Debts and Loan Sharks Update

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1 Safer Communities Overview and Scrutiny Panel 2 September 2014 Problem Debts and Loan Sharks Update 1. Introduction 1.1. The Environment and Safer Communities Scrutiny Panel undertook a review of problem debts and loan sharks. It s report 1 was published in April 2012 and made eight recommendations including: to embed Financial Inclusion as a cross-cutting priority within the Council s main strategies and to look to establish or be part of an existing financial well-being partnership; to promote financial literacy within schools; to promote and support the use of credit unions; to support the work of the Citizens Advice Bureau and maintain collaborative working arrangements in respect of council tax debt Since the report was published, the Government has introduced a number of changes, through its welfare reform agenda, that has had the effect of reducing the level of support available to low income households and thus increasing the pressures on household income and debt. These reforms are summarised at Appendix Organisations within St Helens have been working closely to mitigate the risks associated with these welfare reforms and support the recommendations contained within the Scrutiny Panel s report This report provides a summary of the key activities undertaken to date to support the review s recommendations. 2. Welfare Reforms: 2.1. The Council has been working closely with partner organisations, in particular the Citizens Advice Bureau (CAB), St Helens Food Bank, Helena Partnerships and Job Centre Plus over the past three years to support residents and share good practice The Welfare Reform Group, chaired by Cllr Fletcher, and an operational task group meet regularly to review the impact that the various welfare reforms have had on residents The Welfare Reform Group s current priorities are: to develop a Financial Inclusion Strategy to prepare for the introduction of Universal Credit; and to prepare a borough wide Digital Strategy to support welfare reforms including the digital by default agenda. 1 Scrutiny Panel Report: april_2012.pdf

2 2.4. The Council, via data sharing, supported Helena Partnerships work with residents to mitigate the risks of rent arrears prior to the introduction of the social sector size criteria (aka Bedroom Tax ) and the benefit cap The Council s Discretionary Housing Payments (DHP) policy has been reviewed annually to ensure that funding is targeted to priority groups since applications for DHPs far exceed available funding. The Council fully spent its DHP funding allocation in 2013/14 and is on course to do the same in 2014/ The provision of Local Welfare Assistance was devolved to local authorities in April 2013 following the abolition of the crisis loans and community care grants. The Council in line with other authorities removed cash payments and replaced it with the provision of goods and services. To date, the Council has supported over 470 residents moving back into the community from hostel or supported accommodation Additional funding from the Local Welfare Assistance scheme has also been allocated to the Citizens Advice Bureau to support further debt and money advice. As reported as part the Scrutiny review, the CAB continues to access relevant trust funds that can be used to write-off debts. 3. Financial Inclusion 3.1. The Council in conjunction with the CAB and other partners are developing a borough wide Financial Inclusion Strategy. A Task Group has been set up to assess our performance against good practice (see Appendix 2) and formulate an action plan. A mapping exercise has been undertaken to assess the level of financial capability and financial literacy support available within the borough In addition to educational outreach work undertaken at schools, the CAB and partners have submitted a bid to the Big Lottery to fund EduCash to provide financial education for vulnerable people Access to financial products and affordable credit continues to be a concern. The Task Group will continue to work with the Credit Union(s) and high street banks to support residents in this area. 4. Universal Credit 4.1. Following the introduction of Universal Credit within St Helens, the Council has signed a Delivery Partnership Agreement with the Department for Work and Pensions to provide support to residents and the Department in the administration of Universal Credit A key objective of Universal Credit is to support financial independence. The scheme has been designed to make one monthly payment to the household, includes housing costs, which is adjusted as earnings rise or fall. To support the introduction of monthly payments the delivery partnership agreement includes for the provision of Personal Budgeting Support. This role will be undertaken by the Citizens Advice Bureau and Helena Partnerships Budgeting advances are available for claimants prior to their first payment (five weeks after application) and Alternative Payment Arrangements can be set up for

3 residents who already have rent arrears or are unable to manage their money on a monthly basis. 5. Council Tax Recovery 5.1. Council Tax has reviewed its recovery arrangements as a result of the introduction of the Council Tax Reduction scheme. This has included the introduction of additional reminders and final notices. Additional payment arrangements have also been put in place including the option to pay weekly by direct debit The Council Tax Section has been working with Enforcement Agents (Bailiffs) to agree new protocols following the change in legislation. This has included tasks to be undertaken during the compliance stage prior to a visit taking place. Existing arrangements with the CAB, as reported within the Scrutiny Review, remain in place. Appendix 1 Summary of Welfare Reforms and changes to Council Tax Appendix 2 Financial Inclusion Good Practice Contact Officer: Gordon Lee, Assistant Treasurer (Service Delivery), Tel:

4 Appendix 1 Summary of Welfare Reforms and changes to Council Tax 1. Housing Benefit 1.1. Social Sector Size Criteria (also known as the Spare Room Subsidy and the Bedroom Tax ) is a reduction applied to working-age social housing tenants who are deemed to be under-occupied. The eligible rent, used within the Housing Benefit calculation, is reduced by 14% if the household is deemed to have one additional bedroom or 25% for two or more bedrooms Benefit Cap: A benefit cap is applied, by reducing housing benefit, where a household receives greater than 500 per week, if they are a couple or a single adult with children, or 350 per week, for a single adult with no children. The cap does not apply to those in receipt of working tax credit, certain disability benefits and war / war widow(er) pensions Local Housing Allowance rates are used to calculate the maximum level of housing support within the private rented sector. They are now uprated annually based on the lower of the Consumer Prices Index or the 30 th percentile of the local market rent. In April 2015 the increase will be capped at 1 per cent. A shared room rate, which is currently 60 per week in St Helens, is applied to single claimants under the age of 35 years (previously 25 years) with no dependants. 2. Discretionary Housing Payments (DHPs) 2.1. DHPs provide applicants with further financial assistance towards their housing costs. The Government has substantially increased funding in part to mitigate some of the effects of welfare reform. The Council has a policy to prioritise applications against funding of 531,860 in 2014/ Local Welfare Assistance 3.1. The Authority has introduced a Discretionary Welfare Assistance Scheme 2 following the abolition of Community Care Grants. The Scheme provides support to vulnerable residents who require help to establish or maintain a home independently in the community. The scheme provides furniture and electrical items to assist people in setting up or maintaining a home. In addition to new items, successful applicants may be provided with a voucher to select refurbished furniture via a third sector organisation Funding is provided by the DWP for two years. After this period the grant will cease. Additional funding has been provided to the Citizen s Advice Service to support vulnerable applicants with budgeting and debt advice. 4. Universal Credit 4.1. Universal Credit was introduced in St Helens in July 2014 for new claimants who would previously have applied for Jobseekers Allowance. Universal Credit 2

5 payments will incorporate housing costs (where appropriate) and payments will normally be made monthly in arrears. The Council has signed a Delivery Partnership Agreement with the Department for Work and Pensions to provide help for residents including personal budgeting support. 5. Council Tax 5.1. Council Tax Reduction (CTR): Reductions in government funding, resulted in the Council introducing a CTR scheme in April 2013 that restricted maximum support available to working-age residents to 80% of their council tax liability Bailiffs / Enforcement Agents: The Taking Control of Goods Regulations has changed the way bailiffs (now known as Enforcement Agents) undertake their duties. The regulations prescribed procedures including the fees that can be levied at each stage of the process. The regulations include a compliance stage which takes place prior to a visit.

6 Financial Inclusion - Good Practice Appendix 2 Build financial capability through financial education Embed financial capability in primary schools, secondary schools, colleges, and employment provision as appropriate. Provide targeted and tailored education, information and advice to those who are taking on new financial responsibilities (for example, tenants, mortgage holders and those with a personal care budget) Provide information on budgeting and managing finances through a variety of formats that is appropriate and accessible to residents Build the financial confidence and capabilities of residents, particularly those at risk of financial exclusion, through schemes such as the Big Lottery Fund Reaching Communities programme. Encourage the banking sector to work with us to identify and signpost individuals in need of money skills and advice Plan and respond to Welfare Reform Raise awareness of forthcoming welfare reform changes. This will include: Identifying and contacting those who will be affected by future reforms to help them plan and manage the changes Providing regular briefings to front line staff to help them advise and signpost residents accordingly Provide benefits information and advice to ensure that residents are claiming all the benefits that they are entitled to Support residents to budget through financial education and by raising awareness of money management accounts offered by some credit unions. Support more people to become digitally included (particularly those who will be affected by Universal Credit) Give access to appropriate financial services and affordable credit Raise awareness of the risks of lending from a loan shark and how to report loan shark activity Increase awareness of appropriate financial products and services Promote energy efficiency and provide information on how residents can access the most competitive fuel tariffs Raise awareness of credit unions and promote membership amongst at risk groups, including older people.

7 Support the sustainability of credit unions by encouraging new customer groups to join, who can afford to make deposits and take out loans with a higher value than at present. Approaches will include promotion of payroll deduction schemes Work with credit unions to explore opportunities to collaborate, modernise and expand services Work with the banking sector at a local level to increase access to bank accounts and other mainstream products and services Ensure that high cost lenders operate in accordance with regulations Support the Illegal Money Lending Team to take action against loan sharks Give access to Money Advice and Debt Advice Commission free money and debt advice, in areas of greatest need, at times that people need it and in the most appropriate format Develop and implement a financial inclusion campaign that seeks to promote free, impartial money and debt advice and helps residents to take control of their finances. This will include:- General information for the whole community Tailored and targeted information for at risk people and at recognised trigger points Continued signposting through key partners such as children s centres and housing associations Have a network of trained community advocates to work with residents, particularly vulnerable groups, to increase access to money and debt advice Encourage a wider range of partners such as private landlords, banks, GPs and health visitors to work with us to enhance signposting to free money advice Support the third sector to work more collaboratively to increase its capacity to deliver advice Promote savings, assets and insurance Promote take up and understanding of pension, savings and insurance schemes Work with partners to promote a savings culture amongst children, young people and adults Promote payroll deduction schemes with credit unions to employers Encourage housing associations to introduce and increase the take up of home contents insurance schemes for tenants Support the operation of the Mortgage Rescue Scheme