It operates in branches across the West Midlands, and in April 2016 launched an online lending platform aimed to disrupt the online loans market by offering loans at a much lower rate than that of the established online lenders.

Street UK have launched a new Social Impact Report examining the extent to which Street UK is achieving its goal of creating greater financial inclusion. Key findings show that:

• Financial support is not restricted to having a solely financial impact in the borrower’s life. 79% of surveyed clients agree that getting a loan from Street UK had more than just a financial impact. These include improvements to their level of stress, overall health, self-esteem and relationships with family and/or friends.
•  An individual’s previous credit history will not always be an accurate reflection of their ability to repay future loans. 73.6% of the people Street UK lend to have a past default on their credit file, but over 90% of the loans advanced are repaid.
• Many people are struggling to meet the everyday costs that those on higher incomes can take for granted. Street UK loans are most commonly used for home improvements, Christmas and holiday expenditure.
• Short-term loans do not have to be expensive. They can be provided both online and on the high street for reasonable interest rates that cover the costs and associated risk of lending.
• social sector organisations need to signpost those who are most vulnerable in society and low income households to affordable finance to avoid the risk of them falling into unmanageable volumes of debt.

The platform was developed in partnership with London-based charity St Martin’s Partnership, and is also backed by social investment loans from Barrow Cadbury Trust, Esmée Fairbairn Foundation, and Big Issue Invest.

Work, for single parents, isn’t easy at the best of times. As both the main carer and main earner supporting their family, it can be tough to find a job that allows single parents to juggle childcare as well as pay the bills. But new research from Gingerbread shows that single parents are now also battling low pay, insufficient hours and job insecurity in today’s job market. The end result is that work is failing to provide the majority of working single parent families with the income they need.

No pay, no gain

Our latest report, The long road to recovery, reveals the gulf between a recovering economy and the real-life experiences of working single parents. Around two in five working single parents surveyed are low-paid.  A quarter had experienced a wage cut in the last six months alone.  And 30 per cent had experienced unpaid overtime in the last two years, for the first time.

“I am earning less per hour than I was four years ago”

Pay aside, many single parents simply can’t find the working hours they want and need – the proportion of single parents working part-time when they want full-time hours has doubled since 2007. Over half of non-working single parents surveyed said inflexible hours stopped them from applying for jobs all or most of the time.

And now single parents must deal with the job insecurity that has emerged since the recession. Around a quarter of non-working single parents said they’d left their last job due to hours or wage cuts, a temporary job ending or redundancy. And once out of work, the support provided is often focused on job search targets, rather than meaningful support to help single parents back into sustainable employment.

“I found myself just applying for jobs…that I’d already been rejected for, just to meet the quota they had set me”

Single parents are doing all they can to keep their heads above water, with many working multiple jobs and long hours to cover their bills. But, in the face of a long-term fall in wages, rising living costs and recent welfare cuts, it can feel like a losing battle. And no wonder, when single parents now need to earn more than twice as much as they did in 2008 to meet a basic standard of living.

A call for action

It’s clear that work is no golden ticket out of poverty. We cannot dismiss the problem of low-paid and insecure jobs as a rite of passage, just the first step on a long-term career path. As the Resolution Foundation found, people are too often trapped in jobs that offer little pay and no progression.   Single parents have been disproportionately hit by welfare cuts and there may be more on the horizon. As the safety net is pulled away, we need action now to ensure single parents can support their families.   Gingerbread wants to see the government improve support for single parents getting back to work, moving away from the ‘work-first’ approach that pushes single parents to take any job. We need stronger in-work financial support to soften financial barriers to work. And the government must work with employers to promote flexible working and tackle low pay and job insecurity.   The government wants to ensure the economy grows and to reduce welfare spending – when getting just 5 per cent more single parents into the workforce could save over £400m, why not make them part of the solution rather than risk isolating them further?

“I work 24-hour shifts and longer very often…I’m missing all the little important parts of my little girl growing up and it breaks my heart!  All this and I still fail to make ends meet…my cupboards are bare”

Sumi Rabindrakumar is Gingerbread’s Research Officer. Paying the Price is a research project being carried out by Gingerbread, with funding from Barrow Cadbury Trust and Trust for London.  The Long Road to Recovery is the second report from the project; you can read the report at www.gingerbread.org.uk/payingtheprice.

Jennifer Tankard, the director of advocacy and research at the Community Development Foundation and leader of the Community Investment Coalition, noted that the Consumer Finance Association, the trade body for payday lenders, has repeatedly expressed concern about the impact of regulation on the industry, arguing that a regulated and innovative financial services industry will be replaced by unregulated and illegal lenders.

While the number of payday loan providers may be declining, credit unions and community development finance institutions (CDFIs) are slowly scaling up and offering a wider range of services, such as short-term loans, at affordable prices. The government is investing £38m to support credit unions to modernise and grow. The Community Development Finance Association, the trade body for CDFIs, estimates that in 2013, almost 10,000 small and social businesses were able to launch and grow with a CDFI loan. These businesses created and saved more than 17,000 jobs, many in the UK’s most disadvantaged neighbourhoods.

However many of the credit unions and CDFI’s potential customers are not aware of their existence. Community projects such as Big Local and Community First are helping to tackle this. The £38m invested in credit unions is almost the same amount as the top five payday lenders spent on advertising in 2013 (an estimated £36.3m). The financial services market remains still distorted.

In an article in the Guardian, Jennifer Tankard summarises the need for tighter regulation of payday lenders and the scaling up of credit unions and CDFIs to serve poorer communities.

A change to the levy system is also one of a number of proposals put forward as part of a ground-breaking analysis of Britain’s household debt crisis. It comes just days before the FCA takes over as regulator for the consumer credit industry on 1 April – overseeing credit cards, payday loans and debt collection firms.  Under current FCA regulations mortgage providers pay the highest levy, used to fund financial education and debt advice for struggling borrowers, due to their lending the most amount of money.

However, a new ‘Harm Index’ developed by Demos to reveal the true impact of various debts – combining financial, emotional and social consequences – finds that mortgages are relatively stress-free when compared with other more harmful forms of borrowing.  Demos asked people to rank each of their debts based on their negative impact such as legal consequences, mental wellbeing and affordability. Mortgage debts were given a Harm Rating of just 23 out of 100. By comparison the types of debt that people felt had the greatest negative impact included Payday Loans (68), Council Tax Arrears (62), Utility Bills (57) and Doorstep Lending (50).

Demos polling of 1,775 adults also revealed:

• 88% of adults were in some form of debt, but the majority have never accessed any support to help with their money worries.
• The most common reasons for borrowing money were a one-off purchase (36%) and to cover an unexpected expense (34%). Almost a quarter of people (23%) had used debt to afford everyday essentials.
• Over three times as many young people than pensioners are bearing the brunt of increasing debt. 55% of 18-24 year olds, and 48% of 25-34 year olds, said that their debt had increased over the past five years, compared to only 13% of over-65s.

Britain’s £5bn of hidden debt

The Demos analysis reveals that total arrears, combining unpaid rent and council tax, and overdue utility bills such as gas and electricity, comes to £4.7bn – almost £200 per household. However, official debt figures for the UK currently ignore arrears, which Demos’s Harm Index classes as a high-impact debt, instead choosing to calculate only consumer credit such as credit cards and bank loans.

Figures show that 9% of people face rent arrears while 11% are behind on their utility bills – almost double the number who have turned to payday loans (6%). The findings led Demos to call for the official measure to acknowledge arrears in order to achieve a complete picture of the nation’s debt problem and ensure those struggling with arrears receive targeted advice.

The report also recommends:

• Giving borrowers a legal right to negotiate directly with their creditors before missing payments or reaching crisis point – something current lending systems often don’t allow.
• The FCA and OFT should replicate best practice used by utility companies to implement a ‘three strikes’ approach on less flexible forms of debt such as arrears and mortgages.

Jo Salter, a researcher at Demos and author of the report, said:

“It is only fair that lenders whose practices cause the most harm to individuals should either contribute the most to funding debt advice or take steps to minimise their negative impacts.

“There is a £5bn black hole in official debt statistics and our research shows just how arrears on rent, council tax and utility bills often have just as big a negative impact on people as payday lending.

“Deciding which forms of debt are ‘bad’ and need stronger regulation should not be based on industry definitions. It should be judged by looking at what types of debt cause people the most stress, disrupt their relationships with those around them, and undermine their capacity to help themselves – because this is the reality of debt problems.” You can read a blog by Jo Salter about The Borrowers report here.

Sara Llewellin, Chief Executive at Barrow Cadbury Trust, said:

“The Barrow Cadbury Trust welcomes this timely report on debt from Demos, particularly the focus on the individual and the recommendation that debt statistics should include unpaid rent, council tax arrears and overdue utility bills.

“Also of concern to the Trust is the impact of debt on an individual’s emotional resilience and quality of life as well as the communities in which they live.”

In the report the commission calls for a national strategy for advice and legal support, to replace the current piecemeal approach, which is failing to protect the poorest and most vulnerable.  It also calls for a £100m implementation fund – with half the money coming from central government, and half raised from other sources, including a levy on payday loan companies.  

Other recommendations include:

 – Creation of a new, cross-departmental ministerial post, to oversee implementation of the advice and legal support strategy;

– Restoring legal aid for housing cases so people can get help before they face imminent eviction;

– Urgent reform of the ‘safety net provisions’, introduced by the Legal Aid, Sentencing & Punishment of Offenders Act, which are proving unwieldy and unworkable.

 During its year-long inquiry, the Low Commission heard evidence from around the country:

 – Tameside, near Manchester – 5-week wait for appointments at local Citizens Advice Bureau; only 10% of those needing specialist help are able to be referred on (down from 50%);

– Gloucester: housing charity Shelter has closed its office, the CAB has gone into administration; while Gloucester Law Centre is still going, demand for immigration and debt advice has doubled, compared with last year;

– Birmingham: local CAB lost more than half its local authority grant (down from £590,000 to £265,000), plus £700,000 in legal aid funding;

 – Sutton: CAB has seen trebling of demand for welfare benefit appeal advice in last three years;

 – Swansea & Neath Port Talbot: CAB has had to axe 12 out of 36 staff posts because of 30% cuts in budget.

 Read the full report

The report, Maxed Out: Serious Personal Debt in Britain, finds that personal debt in the UK is close to its all-time high, currently standing at £1.4 trillion. Average household debt is £54,000, almost twice the level it was decade ago.

In the poorest ten per cent of the country, indebted households have average debts that make up more than four times their annual income, whilst average repayment amount to nearly half their gross monthly income. The rising cost of domestic energy and other household bills has led to fears that more households will be pushed into personal debt.

Alongside increasing household debt, the report finds increasing use of short-term high-cost credit such as payday loans, pawnbrokers, rent-to-buy and doorstop lenders. The market for such sources of credit is now worth £4.8 billion a year. Payday loans have received a particularly marked increase in business, increasing from £900 million in 2008/09 to over £2 billion in 2011/12.

Maxed Out highlights vulnerable groups who are disproportionately affected by large amounts  surge of personal debt, such as the elderly, ex-offenders, single parents, the unemployed, people dependant on benefits, households with the lowest incomes and young people classed as Not in Education, Employment or Training (NEET). People in these groups often find themselves in cycles of debt due to low financial resilience and a lack of savings.

Read the full report here.

Welfare reform, the ‘bedroom tax’, tougher sanctions for those receiving Jobseeker’s Allowance, reductions in council tax benefits, reductions in benefits; all happening at once with reduced funding to administer and/or advise those affected – for many the nightmare has just begun; and we haven’t even hit universal credit yet.

What seems to have been overlooked is that many people on benefits already live hand-to-mouth and change at this level is enough to upset the balance and literally send families and individuals lives into chaos; so a whole raft of changes introduced at once with more to come has been nothing short of catastrophic for many.

I’m not saying things shouldn’t change but change on this scale needs to be properly thought through and resourced; implemented at a realistic pace and most importantly, it must be fair.

The number of new food banks opening up and the caps being placed on the number of food parcels people can have shows the reality of the situation – I was on the High Street at the weekend and without moving could see four shops advertising loans or offering cash for goods – to me it’s the payday loan companies benefitting most from these changes and not the taxpayer.

Some statistics from Birmingham Settlement to demonstrate the point: last year for our biggest single advice contract we had 1200 contacts; in April and May alone this year we’ve seen 660 – that’s more than 50% of last years’ total in just two months. At the same time our funding has reduced and we have had to cut our delivery team from 12 to 8.

There has also been a significant increase in the number of people being referred from other agencies who are also struggling to cope – in the last six weeks two advice agencies near us have closed due to lack of funding.

Money advisers at Birmingham Settlement. Their time and resources are increasingly stretched.

We are advising people that they may have to wait up to three hours, sometimes more, and the fact that most people are prepared to wait says it all; some days we have to simply close the doors because we cannot see any more people.

There is also a real danger to staff struggling to maintain the service. I was in the corridor outside our offices with an adviser last week and he was stopped by an existing client seeking advice, once outside the building he was stopped again by another client – the pressure being placed on small responsive agencies (and their staff) like the Settlement is immense, and is not sustainable.

It’s interesting that Birmingham City Council recently said they had seen a 91% increase in rent arrears since the inception of welfare reform; and a couple of Housing Associations in the North East reported a 300% increase in arrears – and they have empty properties because people aren’t prepared to move into family accommodation – clearly there is a problem.

At Birmingham Settlement we see hundreds of people and it seems to me we’re penalising those who are least able to deal with the situation – it’s out of their hands.

I propose that a much fairer solution would be to send the bill to the housing provider or local authority. If this was the case, pressure would be taken off the people who literally cannot pay; whilst you could be assured the provider would work quicker to find an alternative solution or accommodation – and perhaps even plan for future needs? Obviously, there could be problems as the tenant could, in theory, be offered something totally unsuitable (think of an elderly or disabled lady with mobility needs on the top floor of a tower block), so there would need to be some safeguards. However, at least the problem would be addressed by those who have a voice or ability to influence – and it’s good to see some providers are beginning to stand up and use their position. The reality is that unfortunately our clients don’t have a voice. Who is fighting for them?

Government has said there is flexibility in the system, but the reality doesn’t seem to reflect this – and welfare changes are being applied across the board with little apparent discretion. Even if there was discretion – what allowances would be made and how would they be implemented? That’s another reason why we need to shift responsibility to the provider.

We often talk about inequality and the need to close the gap between the haves and have nots. Indeed, an independent inquiry by MPs recently concluded that the poorest and most deprived parts of the country are the worst affected by public spending cuts. Here in Birmingham we can certainly agree on that.