Examination of Witnesses (Questions 90-99)
SIMON NUNN,
HELEN SCADDING,
KAREN STALBOW
AND DAL
WARBURTON
8 JUNE 2009
Q90 Chairman: Could you all identify
yourselves by name and organisation for the tape? You need, I
am afraid, to speak up because the microphones are not picking
up and whoever has to transcribe this at a later date will have
difficulty if you do not. So, Karen, would you please start?
Karen Stalbow: I am Karen Stalbow.
I am a Senior Regional Campaign Officer for Shelter.
Simon Nunn: I am Simon Nunn and
I am the Head of the South Region for the National Housing Federation.
Helen Scadding: My name is Helen
Scadding. I work for the national organisation of Citizens Advice
Bureaux and I am the Partnership Development Manager for the south-west.
Dal Warburton: My name is Dal
Warburton. I work for AdviceUK as their regional Development Consultant
for the south-west.
Q91 Chairman: Thank you all for
coming. Your evidence, collectively, has some common strands running
through it. Karen, would you start by setting out the nature of
the problems that you are seeing and how different they are from,
say, two or three years ago?
Karen Stalbow: As our briefing
summarised, there were high housing costs throughout the region
for quite some time. I think that they reached their highest level
during the third quarter in 2007. Obviously, in relation to income,
they required people to overstretch themselves to access housing.
The rate of repossession within the region has really rocketed
since about 2004—well over 10,000 orders were made in 2008.
Although those will not necessarily lead to repossession, they
are a very good indicator of what is happening. We consider that
to be one of the key issues within the region, as well as the
fact that it puts quite a huge amount of pressure on an already
pressurised social housing stock. We showed clearly that, at the
beginning of April 2008, over 160,000 households were on council
housing waiting lists in the south-west. This has risen by about
46% in five years. At the same time, supply has not been keeping
pace with that level of demand, and affordable housing delivery
has been quite low in the region. In 2007-08, only 5,570 affordable
homes were delivered. In a sense, we made very clear the dramatic
effects that the recession is having on the construction industry
as a whole. We know that building starts are very heavily down,
and, of course, affordable housing is very much tied in to what
developers can contribute through the increase in land values
when they build. We know that the national figure is about 60%
and that there is quite a strong reliance—local authorities,
certainly within the south-west, have been very successful in
using this as a mechanism for affordable housing delivery. There
is a risk to how much affordable housing can be delivered in the
current economic climate. Although there has absolutely been increased
funding, it falls within 2008-11, and we don't know what will
happen after that. A lot of the money has been brought forward
to enable grant flexibility, so we are not certain that we can
maintain the necessary levels of affordable housing delivery.
Those were some of the main issues that I think both Simon and
I highlighted in our briefing. I don't know whether Simon wants
to add to that.
Q92 Chairman: There is a progression
across to Simon at this point. Do you see any optimism in developments
coming out of the Homes and Communities Agency?
Simon Nunn: It is a mixed picture.
There are a couple of positives. First, as we said in our report,
the HCA in the south-west has been very responsive and was very
quick to be flexible and recognise the need for flexibility. Karen
has touched on this. I represent the housing association sector
and its ability to deliver the necessary affordable housing in
the south-west. As you probably know, the housing association
model relied upon cross-subsidy from market sales, low-cost home
ownership and, in recent years, the availability of quite cheap
credit. That took grant rates or subsidies on developments down,
in some cases, to 25% or 30%. Now, of course, that is not possible.
Housing associations' business plans are under pressure for a
number of reasons, and—understandably—that is making
them more risk-averse. First, low-cost home ownership has been
very hard to shift. The HCA has been helpful in converting low-cost
home ownership units to rented accommodation. Obviously, the opportunity
for market sales to cross-subsidise the provision of social rented
housing has disappeared altogether in the declining property market.
Importantly, lender behaviour has changed, which has impacted
massively on low-cost home ownership, for example, where the demand
remains, but banks will simply not lend to low-income families
because they regard them as sub-prime—much against the evidence,
but there you go! Additionally, lending has become a lot more
expensive for housing associations in terms of raising the capital
to develop. There are those pressure points in the south-west
but we have a good working relationship with Colin Moulton at
the HCA. The HCA has been flexible and has been quite fast out
of the traps—in the south-west, maybe quicker than some
other regions. So developments are going ahead but, as Karen pointed
out, section 106 agreements have been responsible for the vast
majority of affordable housing. We have one in 14 families in
the south-west on social housing waiting lists, which is an extraordinary
figure. If we are not careful we are going to be talking about
one in 10 families quite soon I think.
Chairman: Before I go to Helen, Mr Drew
would like to ask a question.
Q93 Mr Drew: Can I concentrate
on housing? Is there some frustration among the two of you that
it is now clear that the way to regenerate the housing market
is entirely through public sector-led delivery? There is a great
myth out there that the private sector will be doing it and has
always done it, but that is simply not true. Are you conveying
that to the HCA and Government further up the chain, or am I wrong
in what I am saying?
Simon Nunn: No, you are right.
There have been those who have said that public sector provision—housing
association and even local authority provision—is the only
game in town at the moment. We have conveyed that nationally,
to the extent that much higher levels of public subsidy are required
if the Government are going to achieve anything close to their
targets around social housing.
Karen Stalbow: I would add that
public subsidy, if it is accessible to private developers, provides
an opportunity to maintain skills and jobs within the construction
industry. That would be incredibly valuable in preparing us for
the upturn because if housing starts go down even further than
currently, when the upturn does arrive it is going to take a very
long time to get back to the levels of housing delivery needed
to ensure that we are supplying enough housing to meet demand.
Helen Scadding: I made it clear
in my briefing that the Citizens Advice service across the south-west
and indeed the whole of the country has seen a significant increase
in client inquiries in the last year, particularly in quarters
three and four. The main area we have been focusing on in the
recession is inquiries about jobseeker's allowance and redundancy.
Employment is the third most common inquiry that clients bring
to bureaux and that tranche of inquiries has increased significantly.
While many people see citizens' advice bureaux as providing information
around debt, money advice and benefit take-up—and those
do make up more than 60% of our inquiries—they are increasingly
handling employment inquiries, not just from employees but also
small employers. That is one of the big highlights that we have
seen. The south-west and the east regions have seen the greatest
increase in inquiries about jobseeker's allowance and redundancy.
It will be interesting to see the extent to which that continues
into quarters one and two of this financial year. Some of the
broader points that we are particularly interested in exploring
with you today in the south-west include what we see as a lack
of a strategic approach within the region to financial inclusion
in general. That is quite critical for us. We are grateful as
a voluntary sector organisation for the opportunity to work on
social policy with a number of agencies within the south-west,
including the RDA, the Government office and some of our colleagues
you are seeing today such as Jobcentre Plus and other agencies
in the public sector providing direct services to the public.
One great concern we have is that there is no overarching strategic
approach to the delivery of services around financial inclusion
across the south-west. We are members of some of the sub-groups
of the taskforce. We have, for example, been asked to write a
report about financial capability, which is around encouraging
clients to have a preventive approach to their situation. Rather
than dealing with advice as a crisis management approach—something
difficult happens to you, you are made redundant, a life event
occurs, you have a serious illness—a lot more of our work
is put into skilling and giving competence to individuals on financial
capability. It is financial education in its broad sense. We are
particularly interested in working with the Learning and Skills
Council and with employers in a more proactive way. Those are
some of the key points that we are interested in exploring to
do with the economic recession and the impact of both regional
and national Government.
Dal Warburton: I echo what Helen
has been saying on the trends that we have seen, and the reports
that we have had coming in from AdviceUK members. People have
seen increases in demand for advice. In debt advice, for example,
we have seen increases of between 30% and 300% in inquiries, with
people coming in because they are worried about redundancy. Increasingly,
people are already on the margins of unmanageable debt and finding
that they are no longer able to service their debt-management
plans. The reports that we have coming in are that debt collection
is becoming more aggressive, and that it is potentially linked
into the fact that companies themselves are having issues with
cash flow; they are not able to be as flexible with people who
are defaulting or who are not keeping up with payments. One of
the strong pieces of feedback that we had from our members was
that the financial inclusion fund was a good way of distributing
resources to enable the provision of debt advice and financial
capability work. LSC-funded work wasn't such a good way of responding
to demand. It wasn't as flexible in terms of responding to demand.
Q94 Kerry McCarthy: In your submission—and
Helen says it as well—the basic thrust is that there is
increased demand upon you, that you need to respond to that demand
and that you therefore need more funding. What efforts are being
made within the sector to collate people-shared views on the underlying
problems that lead people to get into a situation where they have
to come to you? Are there things in the way that the benefits
system works, or in how the courts, or collection and debt recovery,
works? If those obstacles were removed, would the demand on your
sector not be as high?
Dal Warburton: I could say something
about that.
Q95 Kerry McCarthy: Do you not
have the resources for that sort of work?
Dal Warburton: We would like more
resources to do that kind of work. A recently published report
from AdviceUK looked at the provision of advice services from
a systems-thinking point of view and the opportunities for dealing
with some of the systemic causes of demand—if you like,
what failure of demand is coming into advice services? Are people
coming into advice services for avoidable reasons—for example,
because they do not understand the letter that has been sent to
them or because of a particular practice in the collection of
rent arrears? That is something that we are investigating at various
levels. In Bristol, one of our local members is working with Bristol
City Council to look at how rent arrears advice is being dealt
with and whether the way it is being dealt with keeps people in
their home and enables them to find a way to pay, or whether it
is counter-productive.
Q96 Kerry McCarthy: Which organisation
is that? Bristol Debt Advice Centre?
Dal Warburton: Yes.
Kerry McCarthy: It's in my constituency.
Helen Scadding: I would say that
it's a bit of a mixed picture. We've done a lot of work around
tax credits—that aspect of the benefits system and how it
creates difficulties for a range of people. That is not just to
do with financial literacy; it's about how you put in an application
for the previous year. That is extremely difficult to do if you
are self-employed. You then have to pay money back if it is has
been over-calculated. To be frank, a large majority of people
using a voluntary service are often doing so because they have
reached a point of crisis. A lot of our advice to the public would
be to use agencies that Dal's organisation supports or bureaux,
earlier rather than later. Often people wait until they are in
a crisis before they recognise that they have not prioritised
their debts. Issues are often linked, which is another big problem
for the voluntary sector. People do not come in with a single
issue. Usually, if someone presents an issue with debt, it's because
a variety of things have occurred in their lives that need untangling
and supporting. There is a clear link, which we are all here to
represent, between employment, housing, family relationships and,
often, health in the wider family. A critical range of issues
come together.
Q97 Chairman: May I quickly pick
up on that? The evidence suggests that people don't come to seek
help until about six months after having been made redundant.
Therefore, could something be improved in the redundancy process—obviously,
this is a question for the unions and the employers—that
would encourage people, perhaps a little more strongly than at
present, to seek advice the minute they were made redundant? Would
that be welcome?
Helen Scadding: Absolutely. A
bureau in Liskeard is doing some innovative work with employers
who are thinking about making people redundant. It is saying,
"Look, think about short-time working. Think about limiting
hours, because there is a range of benefits. Do you know about
the working tax credit system?" They don't know, actually,
and they don't see how that could possibly keep people in employment.
That is just a small example of how working more directly with
employers—perhaps around an employee training scheme bringing
in modules for managing debt and looking at different housing
options, which is the sort of work that we do—is really
quite critical.
Simon Nunn: There is some evidence,
which we are picking up from our members, that there are delays
in getting interviews and applying for jobseeker's allowance,
which sometimes leaves people without money for four to six weeks.
That causes those people to start to come to the housing association
and money advice people with problems. I do not know whether you
have picked up any of that.
Helen Scadding: I have to say
that our working relationships with Jobcentre Plus are excellent.
Obviously, that service is under significant pressure and, as
you all know, it has taken on a large number of new staff. It
would not surprise me at all if in parts of the south-west there
was a delay in processing, because we have seen a huge increase
in the number of inquiries in relation to jobseeker's allowance.
Q98 Mr Drew: I'm intrigued, because
we were given a message that there is a tsunami of private indebtedness
out there. Given what we have been through in the last six to
nine months, I would have expected you to be overwhelmed. Now,
I'm not saying that your figures are anything other than deeply
concerning, but do you think that there are two things going on?
First, people are much more resourceful than we think. They have
hidden depths and reserves that get them through. Secondly, there
is a danger that we will have the recession and get through the
worst of it only for people to find jobs—perhaps not such
good jobs as they lost—and begin to realise that the indebtedness,
housing costs and other things they are obliged to pay for are
crippling them. I wonder what your take is on that, because I'm
not sure whether we are living through the depths. We may face
more difficulties later.
Helen Scadding: I think you might
have misinterpreted what we said. We have seen a 130% increase
in inquiries around redundancy, and as I said at the beginning,
we are not necessarily a service that people would turn to immediately
for employment-related issues. I'm not saying there isn't a significant
client crisis out there. We have bureaux—Exeter, for example—that
can normally manage their client numbers, but they have queues
like you might traditionally see in an area such as Hackney. That
is relatively new. We have a gateway system. We are trying to
give appointments to people rather than people queuing up outside
bureaux in the early hours of the morning to make sure that they
get an appointment. We are seeing that now. We were given additional
hours money. The financial inclusion fund is critical, but there
are very few FIF advisers in the south-west region. The additional
hours money was critical and really useful because it went directly
to the front line in additional hours for the bureaux—£10
million was given because of the recession. The type of local
authority money or Government scheme that goes directly to the
front line is critical for the voluntary sector. What we have
seen more and more is funding going into the infrastructure. We
are an infrastructure organisation to a certain extent. What I
believe is suffering very much is direct face-to-face front-line
advice.
Simon Nunn: I have an e-mail here
from one of our members in Bristol. It says, "We are getting
increasing numbers of people wanting help managing their finances.
It is often people who have been working and either lose their
jobs or have their hours cut so they cannot manage their usual
bills and expenses in the way they always have done. The advice
centre is inundated with people, so our tenants are having to
wait several weeks to get an appointment for more in-depth help
such as contacting creditors" and so on. Housing associations
are seeing a big increase in tenants approaching them for debt
and financial advice.
Karen Stalbow: I would say that
Shelter's services throughout the region are also seeing a dramatic
increase. I have the benefit of having our Regional Services Manager
here—Jackie Beech—who would be more than able to provide
greater detail on that. Is it possible for me to refer to her
to do that?
Chairman: Could we have it in writing?
Karen Stalbow: Yes, of course.
Q99 Mr Drew: May I come back in?
I always feel I am being provocative, but I think it can get a
lot worse and the danger is that you will not necessarily track
this in terms of just the recession. I suppose I would take it
forward. If people are indebted, how do we persuade them—as
you say, Helen—to seek help early? We need to try to prevent
them from getting in this mess. I suspect the problem is the combination
of factors. You lose your job, your health goes, there's a family
crisis. That's what really brings it all crashing down. That is
something you were saying, Dal, in terms of the advice structures
we need to put in place on financial capability. That is vital
to any message that we give out from our report.
Karen Stalbow: In a sense, the
process of indebtedness began prior to the recession. What is
happening within the recession is having further impact on that.
We know that in 2004 repossession figures were already beginning
to rise greatly. A lot of people questioned why that was necessarily
the case. The Legal Services Commission had a theory that it had
a huge amount to do with secondary debt and that people were taking
on debt with their homes as security, putting their homes at risk
as a consequence. We are now in a position where people have overstretched
themselves financially. Their housing costs in relation to their
income over quite some period have put people in a precarious
position with their levels of debt. That is being exacerbated
by the risk of unemployment and the health stress associated with
being in debt. We had quite a run-up to the recession. With falling
house prices and certain other factors, it is having greater impact,
so we are seeing people in a worse position than they may have
been in.
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