IT'S far removed from their key role of providing new affordable homes but housing organisations' work on financial exclusion has just as big an effect on the lives of the communities they serve. So today's announcement by financial secretary Kitty Ussher that the government is to relax the rules on credit unions has the potential to have a major impact.

At the moment credit unions have to prove that their members share a 'common bond', such as living in the same area. But Ussher confirmed that membership criteria will be liberalised and the common bond radically changed so that credit unions can provide their services to a wider range of people.

That could clear the way for more housing associations and possibly other landlords to run their own credit unions. In November, Inside Housing revealed that Riverside Group was carrying out a feasibility study into setting up a credit union for all its tenants and staff in anticipation of the change in the law. 

The legislative reform order announced by Ussher would also make it possible for groups, rather than just individuals, to become members and allow credit  unions to pay interest on members' deposits and charge the market rate for services such as chequebooks and money transfers. There could also be scope for housing groups and tenants to benefit from a change in the rules on cooperatives to remove the limit on risk share capital.

Associations are already involved in organisations like Change and the National Housing Federation is also pushing the financial inclusion agenda. It's early days yet but today's changes appear to open the way for an expansion of financial exclusion work in the poorest communities. Largely abandoned by the banks and prey to the eye-watering interest rates charged by doorstep lenders, they deserve an alternative - especially one that is in their landlords' interests too.

Posted by Jules Birch, June 30

Posted in Finance, Housing associations, Poverty

HOW bad is the housing debt crisis? For every family facing repossession, eviction or homelessness many more are struggling in the hinterland of debt struggling to make ends meet and a report published by Shelter today provides a sobering indication of the scale of the problem.

Based on a YouGov survey of almost 7,000 people, the charity estimates that 2.2m households (9% of the 25m households in Britain) spend more than half of their net income on housing and that 1m (4%) spend more than two thirds of their net income.

Unsurprisingly, these households are overwhelmingly concentrated at the lower end of the income scale. Among households earning less than £10,000 after tax, 38% paid more than half of their income on housing - one reason perhaps why the abolition of the 10% tax rate had such an impact.

More surpisingly, perhaps, is the fact that this level of spending on housing is not directly the result of rising house prices. Some 7% of homeowners spend more than half their income on housing compared to 15% of social renters and 24% of private renters.

The survey also revealed the often desperate measures people use to get by. Some 2.8m households had borrwed miney to help with housing costs in the last year, either from friends and family or official loans, and 4.1m had used their credit card to pay.

More than half of households - 13.8m - said they had reduced their spending to pay for their home. More than 6m had spent less on food, 3m had sold possessions and over 2m had spent less on clothes for their children. Again the problem was highest among private tenants, with 70% making sacrifices to pay for their housing.

Meanwhile, one in four households - 6m - say they are suffering stress or depression because of their housing costs. Those kind of figures are a stark reminder, if any were needed this week, of why housing policy matters. 

Shelter uses the report to call for a 12-point plan to make homes more affordable. Much of it is familiar stuff - support for 3m homes by 2020, repossession as a last resort, improvements to housing benefit - but it also calls for two long-term measures to help close the gap between housing haves and have-nots. 

It may seem unlikely that either of the main parties will reform property taxation and or act to prevent unsustainable house price rises by regulating mortgage demand. But is it any more unlikely than 3m new homes by 2020? Or any less essential?

Posted by Jules Birch, June 19 

Posted in Affordability, Poverty

SEVEN weeks after Caroline Flint stirred things up with her comments about worklessness and commitment contracts, the issue shows few signs of going away.

Speaking at a Housing Corporation stakeholder event last week, the minister said: 'The debate that I started a few weeks ago will continue over the coming months. And the more that I've talked to those working in the sector, the more impressed I've been with the work that is already going on to try and address these issues; social landlords are getting involved in a whole range of activities not just to tackle worklessness, but to overcome economic inequality and promote social mobility.'

The CLG press release accompanying the event was careful to leave that message until the end of lots of other detail. Most significant in the long term could be two new groups headed by independent experts 'looking at potential incentives, obligations and support for those entering social housing to help them take up employment'. Jane Slowey from the Foyer Federation will lead the 'incentives and obligations' policy group, while June Barnes will head the housing support group looking at the 'support tenants may need to move into work and how this might best be delivered'.

All that detail did not stop the Mirror predicting that the plan amounted to 'job checks for single mums' or Shelter criticising the idea of making people in the greatest need 'jump through hoops' in the Guardian.

The fresh round in the debate came on the same day as the Housing Corporation published research by the Smith Institute on the life chances of people in social housing. The report looks at the lives of people born in 1946, 1958, 1970 and 2000 and concludes that since the 1970s living in social housing has become increasingly associated with disadvantage. 'The depressing conclusion is that social housing has become an indicator of risk for adult life chances, above and beyond what might be expected,' Smith Institute director Wilf Stevenson tells this week's Inside Housing.

But what now? The real issue - as it has always been - is whether 'options' really will be optional. Life chances are to do with education, the labour market, health and the benefits system as well as housing. Any conclusion to the debate that sees tenure in general, and security of tenure in particular, as an easy solution to the problem of worklessness really would be depressing.

Posted by Jules Birch, March 25

Posted in Politics , Poverty, Social housing

MORE than ten years after 'thinking the unthinkable' and only weeks before the nationwide launch of the local housing allowance, the government is to conduct a 'fundamental review' of housing benefit.

The review will focus on its effects on work incentives and the announcement was accompanied by a concession of no longer considering child benefit as income that will be worth an extra £17 a week to a working family with one child. That and other action to tackle child poverty have been broadly welcomed.

High marginal deduction rates have long been a barrier in getting people off benefit and into work - the unemployment or poverty trap. This year's Budget report [download chapter here] reveals that before the 1998 Budget  almost 1.2m people faced a marginal rate of more than 70%. Reforms including Wednesdays will see that number reduce to 380,000. However, another 1.9m people will still face a deduction rate of between 60% and 70%. That's more than private equity fat cats - or even their cleaners.

But housing benefit experts say there is a more fundamental problem: claimants perceive there to be even more of a trap than there actually is. And even when they are aware that they will still get some housing benefit when they are in work the system is so complicated that they don't know how much.

So any fundamental reform needs to start by making the system easier to understand. That's why the move on child benefit is a good start. The key to taking reform further, says expert Steve Wilcox, is to realise that you can't do it by addressing housing benefit alone. Any reform has to look at the way housing benefit interacts with tax credits.

So far, so good. But how does reform, and the broader aspiration of a new contract under which low-income parents agree to seek work in return for housing benefit, fit with the more controversial idea raised by Caroline Flint of commitment contracts for social housing tenants? In the world of rights and responsibilities it would be surprising if there were carrots without sticks but how far is the government really prepared to go before it creates a trap for itself?

Posted by Jules Birch, March 14

Posted in Housing benefit, Poverty

THE most forward-thinking housing associations have long recognised that work to tackle financial exclusion benefits them as well as their tenants. Initiatives such as Change and the campaign on energy prices by the National Housing Federation have the potential to make far more difference to tenants that any number of performance indicators.

So it's good to see the NHF going a step further yesterday by revealing a plan to create a network of financial exclusion champions at the launch of a new guide to help tenants manage their finances. As chief executive David Orr pointed out: 'These services have come about because one member of staff is passionate about helping tenants to manage their finances. I want to see this approach shared by the entire social housing sector.' 

However, it is also worrying that there are still some social landlords out there who apparently need convincing of some of the report's key messages. How could anyone fail to get Key Message 1, for example ('financial exclusion and poverty are issues which have a major impact on very many social housing tenants')?

Key Message 2 is the really important one. 'Taking action on financial inclusion and poverty can deliver business benefits for a social landlord' may seem equally obvious. Helping tenants early enough to avoid debt means you save staff time and they avoid rent arrears, which means you can avoid expensive court action and eviction and tenancy abandonment. 

Unfortunately, if the latest Ministry of Justice figures on possession actions are anything to go by, that's a message that is still not getting through to enough social landlords. Landlord possession actions and orders made fell through most of last year after the introduction of a new pre-action protocol for housing possession claims in October 2006. But fourth quarter 2007 figures show landlords made 4.5% more claims than a year earlier and the courts made 9.6% more possession orders.

Posted by Jules Birch, Feb 21

Posted in Finance, Housing associations, Poverty