Briefing: Support of last resort
Support of last resort: alternatives to local welfare schemes to prevent and relieve homelessness
Moving in to a new home should be a fresh start for families who have previously been homeless. But ideas of what makes a ‘home’ can be severely tested if families are forced to move in without basic household goods, such as a cooker, fridge, carpets or curtains.
At Shelter, we see far too many families move into new tenancies with few, or no, possessions with which to make a home, and too little money to buy them. Many families see little alternative but to take on risky and unmanageable debt, in order to secure these items essential to setting up a home. This exposes them to the risk of rent arrears, threatening their ability to make a success of their new tenancy, right from the start. Rent arrears can quickly lead to eviction and families facing homelessness again, with devastating impacts on their health, wellbeing and their children’s education.
If local welfare assistance is lost, or continues to be too restrictive, then there is absolutely no other emergency fund that is flexible enough to help people in financial crisis and prevent, or relieve, homelessness. Without this vital source of help (through grants or low-cost loans), families are forced to go without, to cut back on other essentials, or to resort to very high-cost, short-term loans with unfair consumer contract terms. Our Services report increasing numbers of clients prioritising payment to rent-to-own companies over their rent, risking arrears and homelessness.
This briefing examines the impact of the change from the Social Fund to local welfare assistance schemes. It analyses the support provided by existing local welfare schemes and assesses possible alternatives to them, including high-cost, short-term, lenders such as rent-to-own companies and pay-day lenders, and affordable credit schemes including DWP budgeting loans, advance payments and budgeting advances in Universal Credit, credit unions and microfinance initiatives, fairer loans from Community Interest Companies and social enterprises, and furnished housing schemes. It also analyses the suitability of furniture re-use schemes and mixed packages of support.
It is intended to act as a catalyst for further thinking and discussion about how best to support families in crisis situations, so that a bad situation does not become a disaster.
To take this conversation forward, and to ensure the sustainability of safety net support for families facing a financial crisis that might otherwise lead to eviction and homelessness, we set out the following next steps:
* With the future of so much of this essential support in doubt, there is an urgent need for the government to increase its understanding of the support currently available and undertake research to explore the likely impacts – on vulnerable families, local councils and wider public services – of families being left without it
* The government must provide sufficient funding to ensure that councils can afford to maintain their grant schemes, for families facing a financial crisis who cannot afford to make loan repayments and should allow more tenants to access advance payments from their benefits, including child tax credits and working tax credits (and the equivalent in Universal Credit). Repayments should be set at reasonable levels and take into account claimants’ ability to pay for essential household items
* The government must act to end the poverty premium, paying particular attention to markets and companies that operate in ways that are unfair to consumers
* Local councils which don’t already have partnerships with credit unions should examine how these partnerships might increase their ability to provide loans from their local welfare schemes. They should work together, and with other loan providers, to examine ways to incentivise loan repayments – both to increase the sustainability of schemes, and support families in growing their own savings pots and increasing their resilience to financial crises
* Local councils and housing associations should work together to develop models of mixed provision; combining individualised tenancy support, loans, grants and furniture re-use schemes. This could be achieved by councils replicating the model, or housing associations widening the reach of their schemes to include vulnerable local people who are not their own tenants
* Local councils and furniture re-use schemes should increase opportunities to work with big retail suppliers to provide essential household items free of charge to families who cannot afford to make loan repayments
* Organisations which have an interest in other aspects of local welfare schemes should continue to continue to work together to explore common ground and identify shared, sustainable, pan-client group solutions