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Memorandum submitted by the Citizens Advice Bureau service (EE 21)
1. Executive Summary
The Citizens Advice service in the East of England welcomes the opportunity to be able to submit evidence to the East of England Regional Select Committee on 'The impact of the Government's response to the Global Economic Downturn in the East of England'.
Citizens Advice Bureaux are at the forefront of dealing with the impact of the economic downturn as it affects individuals and communities. We therefore have a significant of evidence base which informs our comments on the effectiveness of the Government's response.
The CAB service in the East of England operates over 380 sites and in 2007-08 delivered advice and information to 207,000 people on 774,000 advice issues.
Our evidence shows that interventions around supporting homeowners has had a limited impact and requires further investment in the provision of specialist casework.
Further measures that could be taken to provide sustainable growth in the Region are:
□ Activities to put more money in people's pockets particularly through welfare benefits take up □ Providing more support for people in debt, including improved debt recovery practices □ Improving access to free, independent and trustworthy advice □ Investment in preventative solutions such as financial capability/education
2. Introduction
2.1 About the Citizens Advice service
The Citizens Advice Bureaux (CAB) network is the largest independent network of free advice centres in Europe, providing advice from over 3,200 outlets throughout England, Wales and Northern Ireland. In 2007-08 16,500 advisers-three quarters of whom were volunteers-provided advice from a range of outlets, including GPs' surgeries, hospitals, community centres, county courts and magistrates' courts, and mobile services both in rural areas and to serve particular dispersed groups.
The Citizens Advice service provides free, independent, confidential and impartial advice to everyone, about their rights and responsibilities. It values diversity, promotes equality and challenges discrimination. The service aims:
· to provide the advice people need for the problems they face; and · to improve the policies and practices that affect people's lives
2.2 Citizens Advice service in the East of England In the East of England the Citizens Advice service is the largest third sector provider of advice, operating from 79 high street bureaux and providing regular outreach services from over 300 additional locations across the region including libraries, hospitals and doctors' surgeries. During 2008-09 206,792 people in the East of England were able to turn to Citizens Advice for help to resolve their money, legal, employment or other problems.
Those 206,792 people had 773,875 issues:
□ Debt 29% □ Benefits and Tax Credits 26% □ Employment 11% □ Housing 7%
3. Support to communities during the economic downturn
The CAB service in the East of England is at the front line of support for individuals and communities through the current economic downturn. Our depth and breadth of advice enables us to be able to track key recession patterns and report these in 'real' time. Our comprehensive coverage across the region enables us to drill down into our regional data to show any local variation in the effects of the recession.
Nationally and regionally during 2008-09 the CAB service saw an increase in people seeking advice.
The overall number of benefit and debt advice issues reported by East of England CAB increased significantly by 25.6% and 25.5% respectively during the period December 2008 to March 2009 when compared to the preceding quarter. Employment advice issues also increased during the same period.
Within the aforementioned overarching advice areas a number of significant increases were apparent. Most notably advice issues relating to Jobseekers Allowance rose 52.4% from 4,047 to 6,166 whilst issues relating to redundancy increased 24.8%, rising from 3,853 to 4,808.
Possibly reflecting the current economic situation statistically significant increases in advice issues were observed in a number of debt-related areas including i) catalogue & mail order debts, up 43.0%; ii) fuel debts, up 39.6%; and iii) unsecured personal loan debts, up 32.6%.
Bankruptcy advice issues increased by 18.0% while increases of approximately 25% were observed for issues relating to a) mortgage & secured loan arrears, b) hire purchase arrears, c) rent arrears to private landlords, d) bank & building society overdrafts, and e) credit, store & charge card debts, although none of these increases attained statistical significance.
These increases largely mirror increases across the wider CAB service over the same period, although comparison of per capita advice issues[1] indicates demand in the East of England for advice relating to Jobseekers Allowance, redundancy, and mortgage & secured loan arrears is higher than the national average.
Per capita advice issues-Jobseekers Allowance, April 2007 to March 2009, East of England bureaux vs. all England and Wales bureaux
Per capita advice issues-redundancy, April 2007 to March 2009, East of England bureaux vs. all England and Wales bureaux
Per capita advice issues-mortgage and secured loan arrears, April 2007 to March 2009, East of England bureaux vs. all England and Wales bureaux
4. The extent of Government support in the Region
The CAB service is playing an active role in the delivery of two key Government initiatives:
□ Additional Hours of Advice project-this project is the result of the additional funding the CAB service received in the pre-Budget report at the end of 2008. The objectives of the project include increasing access to CAB advice between February 09 to March 2010 □ Mortgage Support Schemes that include the Mortgage Rescue Scheme and the Homeowner Mortgage Support Scheme.
In addition, some bureaux have had extremely positive responses from top tier Local Authorities who want to provide additional support to their communities
4.1 Additional Hours of Advice Project
Citizens Advice received £10 million in additional funding to increase support for people affected by the current economic conditions. £9.16m of this has been allocated to local CABx to increase their opening hours thereby helping more people.
In the East of England 36 bureaux are sharing funding of over £770,000 and will:
□ Help over 57,000 additional people □ Open for over 310 additional hours per week.
4.2 Mortgage support schemes
Citizens Advice Bureaux have been involved in the delivery of the two main mortgage support schemes within the Region, these being;
□ Mortgage Rescue Scheme □ Homeowner Mortgage Support Scheme.
The impact of these schemes at a Regional and National level has been limited. Both schemes though do provide further options for advisers to offer to clients and they have advice an integral part of their process.
4.2.1 Mortgage Rescue Scheme
This scheme began in January 2009 and it has been difficult to obtain an up to date picture of Local Authority participation. However, we do know that 8 Local Authorities were involved in the pathfinder projects.
In the last quarter of 2008-09 (January-March) bureaux in the East of England had advised 107 clients on the scheme. The table below shows these enquiries against other Regions and Wales.
A national survey[2] of the advice sector involving 500 Debtline callers and over 380 advisers reported that:
□ 73% of advisers that have tried to get clients accepted onto the scheme report problems □ 59% report problems concerning property in negative equity6 □ 46% report clients' homes being worth more than the limit for the scheme □ 44 % report that clients do not meet the priority need criteria □ 33% report that clients are not eligible for homelessness assistance □ 20% report that clients' lenders are unwilling to participate in the scheme.
Nationally, at the time of writing, only one person has been through the Scheme.
4.2.2 Homeowner Mortgage Support Scheme
This scheme only came into operation on April 21 and at the time of writing only 7 clients had been advised nationally on the scheme.
Our initial concerns are around lender sign-up (so far only Government backed banks are signed up) and the scope and the complexity and bureaucracy of the scheme.
4.3 Local initiatives
Some Local Authorities, recognising the key role that the CAB service has in supporting individuals and communities during the economic downturn, have provided additional funding to help residents through the recession.
Norfolk County Council used funds from the Local Authority Business Growth Incentive scheme to provide £125,000 in additional funding across the CAB network within Norfolk.
Suffolk County Council have provided £145,000 of additional funding over the 2008-09 and 2009-10 financial years as part of their package to support the community during the economic downturn. The outputs for the £50,000 provided in 2008-09 included;
□ Debt in excess of £8.6 million handled □ 58 clients helped with bankruptcy □ More than £280,000 of gains, for example benefit take-up, achieved on behalf of clients □ Homelessness delayed or avoided for at least 11 families
4.4 Preventative work through Financial Capability
The Citizens Advice Financial Capability initiative supports bureaux to deliver basic financial education in their local communities. This focuses on the skills and knowledge people need to make informed decisions about budgeting, borrowing and saving. An independent evaluation by the National Institute of Adult Continuing Education showed that learners' confidence in their financial skills increased by an average of 30% following training[3]
The East of England Development Agency has invested, through European Social Fund monies, in the provision of financial capability training and job search assistance for unemployed adults and frontline workers. Their investment runs for the next two years and is targeted on the financial exclusion 'hotspots within the region with outputs that include providing training for 800 unemployed and economically inactive adults and 400 frontline workers who support them.
Some local authorities are also ensuring investment into financial capability work. Breckland residents who are struggling financially are soon to get more help as Breckland Councils Financial Inclusion Strategy and Action Plan is finalised. The Strategy aims to build on the success that organisations are already achieving across the district and improve the lives of their residents by increasing their access to appropriate financial services/products, providing information and advice, promoting schemes such as bulk oil ordering to lift households out of fuel poverty and educating young people about the importance of budgeting.
5. Our recommendations
Based on our rising client numbers and our experience of existing support packages developed nationally and locally, we would make the following recommendations as to the additional measures needed to support individuals and communities thereby contributing to the sustainable growth in the region.
5.1 Putting more money in people's pockets
Too many people miss out on benefits and tax credits that could make a huge difference to their well being. The Department for Work and Pensions estimates that unclaimed means tested benefits nationally stands at up to £10bn. Take up figures for Housing Benefit are
between 81% and 87% but only between 63% and 69% for Council Tax Benefit.
The Public Accounts Committee's recently published its latest report on tax credits and recommended that HMRC should set take-up targets for both child tax credit and working tax credit and establish clear action plans for increasing take-up amongst claimant groups and in regions where take-up is lower.
There is a wide range of National Indicators that give a wider scope for Local Authorities and their partners to improve services and the quality of life in their area.
Take-up activities can be undertaken, for example, as part of;
□ NI 116: Proportion of children in poverty □ NI 124: People with a long-term condition supported to be independent and in control of their condition □ NI 139: The extent to which older people receive the support they need to live independently at home □ NI 187: Tackling fuel poverty - people receiving income based benefits living in homes with a low energy efficiency rating
And directly contribute to other indicators such as:
NI119: Self-reporting measure of peoples overall health and well-being
We would recommend that activities to increase take-up of benefits and tax credits are undertaken by all Local Authorities in the Region in partnership with the voluntary and community sector.
5.2 Providing more support for people in debt
Citizens Advice believes that all creditors, not just the credit industry, but also central and local government and utility companies, should improve their debt collection and enforcement practices. Debtors who are paying what they can afford should not be subject to further collection and enforcement action by their creditors.
In 2008-09, bureaux in the East of England advised on over 16,000 debt enquiries relating to Council Tax debt, and increase of 13% from the previous year. Administration practices by individual Local Authorities vary considerably and can have a huge detrimental effect on individuals and families.
A bureau in Cambridgeshire advised a lone parent with two children who had fallen into arrears with her Council Tax. Despite reaching an agreement with the Local Authority, she was referred to bailiffs for enforcement action as the Local Authority had not been crediting payments made to her account. The result was a visit from the bailiffs in an attempt to seize goods for the debt leading to undue distress to the client.
A bureau in Essex advised a lone parent with long term health problems who had fallen into Council Tax arrears and the Local Authority had instructed bailiffs to recover the debt. When the bailiffs visited the client they advised her she had nothing worth collecting so she 'would go to prison' and her son 'would be taken into care'. When the bureau tried to contact the bailiff firm they were rude and hung up on the adviser.
Council tax payers will receive a better level of service if billing authorities and local debt advice agencies work closely together. We would recommend the universal use of a good practice protocol which by setting down clear procedures and keeping them regularly under review, all parties can ensure that cases of arrears are dealt with quickly and realistically and complaints are handled efficiently.
This partnership approach is even more important at a time of economic uncertainty in order to ensure that taxpayers are able to pay their council tax bills on time, get the benefits to which they are entitled and those in financial difficulty get high quality debt advice.
5.3 Improving access to free, independent and trustworthy advice and support for people affected by the economic downturn in 2009 and beyond
The CAB service in the East of England is already responding to the economic downturn through opening for more hours, helping more people and encouraging people to seek advice as early as possible.
Mortgage Support Schemes are complex solutions that require specialist money advice intervention. This creates a need for both investment into specialist advice but also investment into the recruitment, training and support of advisers to carry out this role.
Local initiatives, such as the proactive response from Norfolk and Suffolk County Councils, are needed and we recommend that this good practice is replicated across the Region, to ensure that:
□ It is much simpler and quicker for people to be put in touch with an advice service that can help them. □ There are adequate advice services in local communities able to advise people before they lose their jobs. □ Advice is given to the 82%[4] of people that report they need debt advice following repossession.
Such initiatives also benefit from being developed in partnership with County, Unitary and District Council services so that local services are joined up for the benefit of the individual and community.
5.4 Further investment in preventative solutions
Rebuilding public trust and consumer confidence in financial products, both for borrowing and saving, will require significant effort and evidence of stability and trustworthiness. In the next two years, consumers throughout the United Kingdom will face a lot of money questions, not just on how to deal with debts but how to save for the altered financial future and on making informed decisions when choosing financial products. Improving financial capability and providing advice which is "on their side" would be invaluable to boost public trust in financial services and consumer confidence and support re-engagement in the market.
Building on the leadership shown by EEDA and Local Authorities such as Breckland District Council (and pending the outcome of the Money Guidance Pathfinder in the North East and North West), we would recommend investment across the East of England by Local Authorities in actions that address financial capability.
19 May 2009
[1] Per capita calculations based on 2001 Census population estimates [2] Mortgage and secured loan arrears: Adviser and Borrower Surveys April 2009. Advice UK, Citizens Advice, Money Advice Trust and Shelter. May 2009 [3] See www.financialskillsforlife.org.uk
[4] Mortgage and secured loan arrears: Adviser and Borrower Surveys April 2009. Advice UK, Citizens Advice, Money Advice Trust and Shelter. May 2009 |