Tackling financial exclusion: A country that works for everyone? Contents

Appendix 5: Note on Committee visit to Coventry City Council and Coventry Citizens Advice: Wednesday 23 November

On Wednesday 23 November the Select Committee undertook a visit to Coventry City Council and Coventry Citizens Advice. The Committee met with a number of representatives of the local authority, advice sector, credit unions and the voluntary sector.

The following members of the Committee attended the visit:

Lord Empey, Lord Harrison, Lord Kirkwood of Kirkhope and Baroness Tyler of Enfield (Chairman).

The Specialist Adviser to the Committee, Professor Karen Rowlingson, was also in attendance. The following note provides a summary of key points raised during the visit.

Introduction from Coventry City Council

The Committee was welcomed to Coventry City Council by Cllr George Duggins (Leader of the Council), Martin Reeves (Chief Executive) and Gail Quinton (Executive Director of People). A great deal of work had taken place to try to integrate related services within the Council structures, to ensure a co-ordinated response to more challenging financial circumstances since 2008. This had included bringing together public health, education, adult care and children’s services within one Directorate. The West Midlands Combined Authority was also important in this regard, allowing labour market intelligence and responses to be co-ordinated and delivered across a functional economic area.

The Council had sought to support businesses opening locally in recruiting local people to fill new vacancies. The Jobs Strategy and Job Shop were important in this regard, and the Cabinet Office had taken an interest in this work. It was suggested that central Government departments—particularly the DWP and the Department for Education—needed to give greater emphasis to the fact that labour markets were local in nature and, accordingly, local circumstances could play a particular role in determining the extent and nature of financial exclusion in a particular area.

Local challenges and the nature of financial exclusion in Coventry/Warwickshire

Representatives from Coventry Law Centre and Coventry Independent Advice Service took the Committee through some of the challenges faced by their financially excluded clients.

The first point raised was the increasingly tight constraints faced by people living on benefits. The speakers explained that households’ expenditure was being stretched by increases in rent, utility and transport costs, while income was being reduced as a result of the overall Benefit Cap, size criteria in both social and private rented sectors and the reduction of all benefit income in real terms due to the freeze on benefit rates in comparison with rising prices.

The point was made that many people living on benefits are in fact financially highly capable, but that it is very hard to successfully manage such a low income without falling into debt. One representative said this was as sure “as night follows day”.

The Committee was shown a series of pre-recorded video interviews with clients of advice services in Coventry, discussing the issues they had experienced with the benefits system. It was also provided with written anonymised case studies. Issues that came out of these stories included repeated, poorly explained and sometimes erroneous use of Jobcentres’ powers of sanction; delays in administrative processes, particularly in regard to benefits for disability; administrative errors in the new benefit Universal Credit; rent arrears caused by the benefit cap; and incorrect entitlement decisions made by the DWP—for example, between July and September 2016, 88% of appeals against refusals of Employment and Support Allowance were successful.

The second aspect of financial exclusion was the effect of financial exclusion on those working on low incomes. The speakers noted that zero-hours contracts with the attendant precariousness and unpredictability of income, were on the rise; that this meant it was difficult for people to plan and make use of the direct debit system; and that this was very likely to be exacerbated by Universal Credit. The issue of Universal Credit was discussed in some detail. It was explained that, for people in low-paid work, the amount of Universal Credit they receive will be updated automatically in line with the previous month’s income. Thus, if a person had a month where they could not work as many hours as usual, their Universal Credit would only compensate for this in the following month. Meanwhile, the person would have suffered and might well have fallen into arrears—including rent and utility arrears—during that lean month.

The participants noted that the reduction in central government funding for local councils and the cuts to legal aid since 2010 had meant, in many areas of the country, a reduction in funding for local advice services and a dwindling in the local welfare services provided by local authorities in lieu of the DWP Social Fund. However, it was reported that Coventry City Council had been “very enlightened” and had ensured that funding remained forthcoming for advice services. Nevertheless, there had been some cuts to advice services, which had been countered by greater joint working.

Local initiatives and schemes to address financial exclusion

Representatives from Coventry Law Centre, New Central Credit Union and Coventry and District Credit Union outlined some of the local initiatives and programmes which had sought to address financial exclusion in the city.

Within Coventry a number of advice services had been brought together, since 2005, under one umbrella as ‘Advice Services Coventry’ (www.adviceservicescoventry.org.uk). Member organisations included Age UK, Coventry Independent Advice Service, Citizens Advice Coventry and Central England Law Centre. This allowed for a co-ordinated advice service with web-based referrals and an agreed split of casework and handover points.

Coventry Independent Advice Service delivered face-to-face advice and support to around 2,100 people a year; of these enquiries, 68% were related primarily to welfare benefits, and 15% were primarily debt related. The work of the advice service had brought over £2.1 million in financial gains and seen over £1 million of debt managed or written off in 2015. An important element of this work was the delivery of advice through community outreach venues, which enhanced access for those people who needed to use the services.

Central England Law Centre had been funded by Coventry City Council to provide a benefits appeal representation service, with over 400 people represented at appeals annually. Success rates from the work of the Centre were much higher than national averages, with an 84% success rate in Personal Independence Payment cases (compared with 60% nationally) and 63% success rate in Disability Living Allowance (compared with 58% nationally). This work had resulted in almost £2.5 million of gains annually in benefits restored, increased and backdated.

The Law Centre had developed a number of outreach methods which were intended to engage more directly with people who were in financial difficulty. One such approach was a service level agreement with the Whitefriars Housing Association, whereby the Law Centre was engaged to work with 200 customers of Whitefriars Housing each year, providing them with specialist debt advice.

The Law Centre also had two advisers embedded within the City Council Children’s Services department; advisers would make home visits to clients alongside the designated key worker. Over a three-year period 823 families had been assisted through this approach, with £1.1m worth of gains in weekly benefits and £896,000 worth of debt managed. This work had demonstrated the importance of ‘sticking with’ people, with engagement over the longer-term being an important factor in determining the success of these initiatives.

The Law Centre offered a ‘wish list’ for policy and practice around financial exclusion. This included:

There were two credit unions operating in Coventry—the New Central Credit Union (since 2000) and the Coventry and District Credit Union (since 1990). There was significant competition, with more than 12 high interest or payday loan companies in Coventry City Centre. Since 2014, however, New Central Credit Union had operated from a city centre premises, with five-days-a-week opening for cash, loans and memberships. This high street prominence and visibility—which had been supported with a Coventry City Council grant—was seen as an important factor in allowing the Union to compete with other high street lenders.

Basic credit union savings accounts were offered for people with no passport or driving licence, with benefits and wage transfers into the accounts also possible. Customers could also be provided with prepaid cards for access to ATM cash or online purchases. The Unions also offered budgeting accounts which enabled members to manage their money; these accounts could receive Housing Benefit payments and make payments of rent and council tax.

The Credit Unions offered loans to customers who might be ineligible for credit from high street lenders; typical loan member profiles included individuals with poor credit histories, the unemployed, single parents and those with very low disposable incomes. When loans had been agreed, repayment data was reported back to Experian on a monthly basis to improve members’ credit scores, increasing the possibility for enhanced access to a wider range of services in future.

Aspirations and possible solutions

Following this, the Committee received a presentation from Caroline Leighton, Chief Executive, Coventry Citizens Advice, outlining some of their core work in relation to financial exclusion alongside some of their more general work. Caroline explained that a wide range of clients seek their advice with a variety of complex issues that often leave them in financially excluded situations; more than 80% of cases had more than one issue.

Staff at Coventry Citizens Advice aimed to resolve these issues with face-to-face contact and, more recently, webchats and phone support. The introduction of these services had engaged a different group of clients, including those who were unable to make it to the Coventry Citizens Advice premises. It was suggested that some of the major causes of financial exclusion among their clients stemmed from barriers such as a lack of English-language proficiency, a low level of financial education and mental health issues. Clients experiencing these issues were also more likely to experience some form of digital exclusion.

Coventry Citizens Advice highlighted their support for credit unions in Coventry City Centre, stating that they were extremely important for the residents of Coventry; this built on earlier examples of Coventry residents expressing their support for credit unions in the area.

The presentation was followed by a roundtable discussion with input also provided by earlier speakers. A key theme arose around the need for financial education in addressing financial exclusion. A shift to early action was suggested as being a preferable route rather than fixing problems that arose further down the line. Coventry City Council spoke of their ‘Specialist Family Team’ and described how early preventative actions taken to help children could help them and their family in the long term with relation to financial issues.

Visit to Coventry Citizens Advice

The Committee then travelled to the offices of Coventry Citizens Advice, in order to meet with staff and volunteers. In 2015/16, Coventry Citizens Advice’s core service had provided advice to around 10,000 people on a total of more than 24,000 issues; this does not include additional cases dealt with under separately-funded projects. Of queries dealt with by the core service, benefits was the number one issue (30% of enquiries) and debt was second (22%), with housing (7%) third. Recently, the organisation had undertaken an extensive programme of work to support Syrian refugees who were settling in the city; Coventry had agreed to accommodate a relatively high number of such refugees, reflecting its historic focus as a city of peace and reconciliation.

A key issue which volunteers and staff regularly had to deal with concerned the complexity and difficulty of benefits claims and processes. A high degree of training and experience was required to successfully navigate the benefits system, and claim forms and documentation were not always easy to understand. Some clients’ issues could take up to two hours to discuss, meaning that this was a resource-intensive service. While the majority of staff providing this support were volunteers, there was a cost attached to training and supervision, and there were also some paid staff with particular levels of expertise (funded through a local authority core grant). Other staff were funded on particular projects by particular funding sources (such as PensionWise and the Big Lottery Fund).

Additionally, advisers were often approached by clients when particular benefit payments had stopped or reduced, with clients sometimes unsure of the reason behind this development. Advisers were then required to understand the history behind the claim, provide advice on whether the recent changes to payments were correct or appropriate and, if not, work with clients to address the situation.

Literacy was an issue for some people—not just those for whom English was a second language, but also for those who spoke English as their first language. This problem was exacerbated by official documents which were written in ways that made it difficult even for advisors to understand. Basic language education was therefore important, but an emphasis should also be placed upon official documents being written in plain English.

Citizens Advice Coventry was delivering an ongoing project alongside the Trussell Trust in which financial advice and support was made available in food banks. While this was an important outreach initiative, allowing the organisation to reach out to people in financial difficulty, it was not without some problems. Food banks often operated in large, open spaces, which were not particularly well suited to the provision of confidential advice. In addition, food bank users did not always want to be seen to be using the food bank, and were sometimes keen to depart quickly.

The organisation explained that its core services played a crucial role in identifying new issues that were arising. There had, for example, been an increase in single men under 25 coming through the door when Universal Credit was being rolled out. Citizens Advice then collated statistics on these cases nationally to provide evidence on trends in problems facing people.

Locally, Citizens Advice had helped to deliver or recover around £12 million a year for its clients; it was suggested that this increased income was largely spent locally, and helped to support local economic activity.

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