2023 round-up

Posted on by david.collings

A message from our Research Co-Directors

This year the Personal Finance Research Centre published 12 new research reports and 5 policy briefings. At the same time, our team have found time to respond to consultations and calls for evidence, write peer-reviewed journal articles, speak at conferences and on radio shows, and lead some of the projects that we’ll be reporting on in 2024.

All of this activity has the common goal of sharing our research as widely as possible and promoting our recommendations for changes to policy and practice that can improve situations for individuals and households.

In 2023, the cost-of-living crisis remained at the top of the policy agenda, and we spent the year researching its impact. Our Financial Fairness Tracker (in partnership with abrdn Financial Fairness Trust) has documented how UK households are coping. The 8th and 9th waves of the Tracker in May and October found ‘a new normal’ where some households are beginning to adjust to higher costs, but their overall financial wellbeing remains significantly worse than in 2020 and 2021. We also investigated the financial wellbeing of disabled people; considered the role that housing tenure plays in household finances; and collected first-hand testimonies from people who struggled with high energy costs last winter. In all our reports, we highlight the real-world implications of our findings and make evidence-based recommendations about how best to support those who need it.

As ever, collaboration has been a fundamental part of our research in 2023 – with other academics and research organisations, policymakers and practitioners, charities and civil society organisations, and – crucially – the lived experience experts and research participants whose views and experiences we seek to accurately represent through our work. Our thanks to everyone we’ve worked with this year.

If you haven’t already done so, we hope you find the time to engage with at least some of our research. And please do get in touch if you have any questions or reflections to share.

Wishing you all the best for the new year.

Sharon Collard and Sara Davies, Research Co-Directors

Research and policy

In 2023 we explored:

All of these outputs are available on our website.

🎉PFRC at 25🎉: UK Household Finance and Poverty Conference

Photo collage of peakers and delegates at the UK Household Finance and Poverty Conference in November 2023.
Speakers and delegates at the UK Household Finance and Poverty Conference in November 2023.

In November we hosted a one-day in-person conference to celebrate 25 years of PFRC, which was founded in 1998 by Professor Elaine Kempson. The conference agenda centred around three themes:

  • Reflections on the past, present and future of household finances through the lens of 25 years of impactful research.
  • The seen and unseen dimensions of poverty, with a focus on housing and energy.
  • Research into policy and practice.

Attended by over 80 delegates, it was a day of excellent keynote speeches, lively panel discussions and stimulating conversations. It was also a fantastic opportunity to catch up with old friends and colleagues and make new connections. Our thanks to everyone who joined us and helped make it such a great day.

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The financial wellbeing of disabled households in October 2023

Posted on by david.collings

By Jamie Evans, Katie Cross and Sharon Collard

Foodbanks and benefit inadequacy

The October 2023 edition of the abrdn Financial Financial Fairness Tracker shows an increase in the number of UK households that are facing real hardship, with 9% of all households having used a foodbank in the past six months (compared with 6% in October 2022). Worryingly, this rises to 20% among those receiving disability-related benefits (up from 12% in October 2022), suggesting that the level of benefit support for disabled people has become increasingly insufficient against a backdrop of rising costs. Even more concerningly, recent Trussell Trust research shows that 62% of people in disabled households referred to foodbanks were not receiving any benefits specifically related to their disability.

Figure – Proportion of those receiving disability benefits who have used a foodbank in the past six months


Notes: We define ‘disability-related benefits’ as those receiving any of: Personal Independence Payment (PIP), Disability Living Allowance (DLA), Adult Disability Payment, Employment and Support Allowance, and Carer’s Allowance. October 2023 sample sizes:; disability-related benefits = 912.

Cost of Living payments

During the cost of living crisis the UK Government has provided certain groups of people with Cost of Living (CoL) payments. These do alleviate some of the most severe forms of hardship faced by households. Citizens Advice, for example, reports decreases in foodbank referrals in the weeks following CoL payments being made; but impacts tend to be short-lived, with referrals ticking upwards in the following months.

A third (32%) of Tracker households told us that they had received a CoL Payment in the past 12 months, with 27% of these being ‘in serious financial difficulty’. Households receiving the low-income CoL payment were most likely to be experiencing serious financial difficulties (35%), compared with 31% of those receiving the disability payment and just 15% of those receiving the pensioner payment.

Extra energy costs

Disabled households in the Tracker – many of whom are likely to have comparatively high energy needs – were among those struggling most with energy costs and anxious about future costs. Indeed, the most common extra cost faced by disabled people in our recent study with disabled people was energy or other utility bills (incurred by 78% of respondents), as one participant described:

“On any given day, it’s mandatory that I have power for: an electric bed (all night), an electric toilet (several times a day), an electric bath (once a day), an electric wheelchair (charged daily at nights), an electric hoist (used several times a day and permanently on charge), a lift (used frequently daily)… and that’s not including any ‘normal’ devices that folks use like kettle, internet, TV, heating and oven!” (Evans et al, 2023).

According to the Tracker, 6% of all households were behind with electricity bills and 5% with gas/other energy bills in October 2023. These rates were, however, double for disabled households (13% for electricity; 11% gas/other energy). Disabled households were also more likely to be paying for energy using a pre-payment meter (28% compared with 18% of all households).

Finally, Tracker data shows signs of increasing credit stress for disabled households, who were much more likely to have fallen behind on consumer credit than others (25% compared with 16% of all households).

Conclusion

Given the latest Tracker figures, it is unsurprising that three-in-five disabled households (59%) are worried about their financial situation in the next three months. Many disabled people will be further concerned by the rhetoric rising from the Chancellor’s Autumn Statement. The disability charity Scope said that the Chancellor had “doubled down on a plan that will ramp up sanctions and demonises disabled people”. This tallies with our earlier research, which found that seven-in-ten (71%) disabled benefit recipients had been made to feel guilty about applying for benefits, predominantly caused by societal stigma about doing so.

Our findings show that to help disabled people improve their financial situations requires four main things:

  • Better access to employment for those who can work
  • A benefits system that provides a proper safety net
  • Targeted support to reduce the costs of disability
  • Access to essential services and advice.

Read more:

 

How FinTechs can help reduce harm from gambling

Posted on by david.collings

By Sharon Collard
Please note: This blog discusses harmful gambling and its impacts.  

In July 2023, a team from the Personal Finance Research Centre, FinTech West and the lived experience-led charity Gambling Harm UK delivered a workshop to consider how FinTech can help reduce harm from gambling. This was a great example of ‘grounded innovation’ in action: bringing FinTechs together with people who have lived experience of gambling harms to focus on real-life issues and how to solve them.  

It highlighted useful products and services that FinTech firms already offer as well as opportunities for further innovation. Most of all, it showed the invaluable contribution that experts-by-experience like Gambling Harm UK bring to the table.  

We are grateful to Higher Education Innovation Funding for funding the workshop.  

Graphic showing a series of light bulbs, with one light bulb switched on.

Helping FinTechs understand the harms caused by gambling problems 

A key part of the workshop was Chris Gilham, Julie Martin and John Gilham from Gambling Harm UK sharing their own personal experiences, which illustrated the complex and messy nature of gambling problems and their serious long-term impacts.  

Chris told us about having been diagnosed with Adult ADHD just over eighteen months ago at almost 40 years of age, and how he has battled with his mental health since his mid-teens and using alcohol to cope. Then when he was 30 years old, having had no previous interest in gambling, he saw an advert and that day, he decided to try it. He explained that whilst gambling initially made him feel calmer, it wasn’t long before he was suffering from gambling harm. After almost five years of harm he finally found recovery following a two-day gambling binge, when he was planning to win and leave money to his family before ending his own life. Julie described the severe financial toll that her ex-husband’s gambling had on her and her children, meaning she had to work four jobs just to pay off loans he had taken out in her name, as well as the verbal, mental and sometimes physical abuse that she experienced. John (Chris’s dad) told us about his experiences as the parent of someone with a gambling addiction, how his life and that of his wife and family had been turned upside down and his role now supporting Chris in his recovery journey, including helping Chris keep tight control of his money.  

These real-life experiences really resonated with workshop participants – even if they had no experience of gambling harms. Our rich discussion touched on many issues including the links between ADHD and impulse behaviours such as gambling; the fact that there is no single reason for gambling problems; and the normalisation of gambling-like behaviours in online games that are so popular among children and young people, through features like microtransactions and loot boxes that are played to get an edge. John reminded us that 55,000 young people aged 11-16 in Britain are categorised as ‘problem’ gamblers – a term which stigmatises those suffering from this illness – with a further 85,000 young people estimated to be at risk of harm from gambling. 

How FinTechs can help reduce harms from gambling 

There is no perfect solution to help someone control their gambling. Blocks, self-exclusion schemes and other features can all be circumvented if gambling has become the most important activity in someone’s life and dominates their thinking, feelings, and behaviour. Nonetheless, the workshop highlighted a whole range of things that FinTechs are already doing as well as challenges still to be solved, such as joint accounts that give more control and protection. It also illustrated the invaluable contribution that experts-by-experience like Gambling Harm UK can bring to the table in terms of product ideation, design, and testing.  

Data-driven early intervention: Starling Bank described how it had a specialist team that proactively contacted loan customers to offer help where their underwriting team identified potential harm from gambling (or where they were in other potentially vulnerable situations), including links to external sources of support. It accepted that the message won’t always land well with customers but in its experience, there was more positive than negative feedback from customers. Saying the right things, in the right way is key, which Chris, Julie and Julie all confirmed was so important, means testing the language and training staff. Indicators of potentially harmful gambling might include applying for large loans late at night and multiple gambling transactions across several sites in a very short space of time.  

Enhanced friction and control features: At a time when it is quicker and easier than ever to set up a new bank account or take out a sizable loan, there is significant potential to give customers more control over their spending from the get-go. This might be a bank account where you have to opt-in to be able to gamble rather than opting out; or a non-gambling banking app with enhanced transaction monitoring. Through its personal financial management features, Moneyhub enables its users to set up spending flags across multiple accounts, making it easier for people to see what they are spending on different expenditure categories (such as gambling) where they may want to exercise more control and set spend limits. As Chris attested from his personal experience, tools to help people set up, and stick to, a budget can be an invaluable part of someone’s recovery from gambling addiction, ideally with a human element as well.  

Joint accounts: As an affected other, Julie highlighted the problems that resulted from having a joint account with her then-husband. He took her earnings and their savings from the joint account to gamble leaving her in dire financial straits, but Julie was unable to close the account without his permission. While joint accounts nowadays offer both parties easier visibility of the account data, for example via banking apps, in practice there may not be equal access or control if one partner is the victim of coercive control or financial abuse. Other research has highlighted the potential for a safer joint account using Open Banking payment initiation, but while the technology exists to build such a product, it is not yet available.  

Help to rebuild finances in recovery: John wanted to see financial services do more to support people with gambling problems to achieve sustainable recovery, by helping them rebuild their finances and their credit rating. Partly this is about raising awareness among FinTechs and other financial firms that gambling addiction is an impulse control disorder; and that people in recovery may be returning to a life they need help to cope with. 

In practical terms, it is about helping people build their finances so they can rebuild their lives, for example offering lower interest rates to people who have shown they can stick to a loan repayment schedule; allowing people to pay back debt over longer periods without penalising them; providing money management features such as ‘account sweeping’ to help repay debt or to start saving.  

Make gambling harms a normal thing to talk about: making it normal for us to talk about gambling harms and their potentially devastating impacts makes a lot of sense, given that millions of people in the UK are affected – not just the person who gambles but those around them as well. And taking the conversation to FinTechs and other financial services firms has the potential to stimulate even greater innovation for good.  

“Thank you so much for speaking to us in Bristol today. You really brought home how important it is for financial service providers to engage and to think bigger and better about how we can prevent and reduce harm and aid recovery. And for me most importantly, some immediately actionable insights which we can do something to address now in our own lending practices. Every step in the right direction, however, small, is very valuable in making change.” James Berry CEO, Great Western Credit Union. 

“Thank you for organising such a fascinating yet poignant discussion. Matthew Barr, John Dyer and I left energised planning how we at Moneyhub can do more to support those affected by gambling harm and how financial institutions can position themselves as a first line of defence to protect those who are vulnerable.” Jonathan Bell, Sales Director (Decisioning), Moneyhub. 

If you have been affected by any of the issues in this blog, you can contact the National Gambling Helpline which provides confidential advice, information and support by telephone and webchat free of charge.  

To find out more about the work of Gambling Harm UK, please contact John Gilham, CEO: john@gamharm.co.uk 

The economic impact of COVID in the UK depended on where you live

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Shutterstock/3DJustincase

Julie MacLeavy, University of Bristol; David Manley, University of Bristol; Jamie Evans, University of Bristol, and Katie Cross, University of Bristol

COVID brought rapid and lasting economic change around the world. But in the UK, the level of impact depended on where you lived when the virus arrived.

Our research shows that the economic difficulties experienced during periods of social restrictions were particularly stark for those in deprived neighbourhoods.

During the first national lockdown, for example, we found that 23% of people in the most deprived parts of the UK were unable to afford day-to-day expenses or to save for the future. Food bank usage was reported at 9%. In the least deprived places, those figures were 6% and 0.5% respectively.

The impact on employment followed a similar pattern, with 10% of workers from the most deprived areas experiencing a job loss in the early months of the pandemic, compared with only 4% in the least deprived areas. Overall, the people who live in the UK’s most deprived neighbourhoods fell further behind through the pandemic.

This corresponds with previous data that lays bare how being poor limits a person’s ability to cope with – and recover from – abrupt changes in economic conditions. Mostly, this stems from a lack of capacity to soak up financial shocks (having savings, for example) and from the nature of state welfare provision.

With COVID, the sudden restrictions placed on the labour market, alongside an absence of childcare, placed many in uncharted waters. Among them, single-parent households were much more likely to have experienced job loss or a reduction in working hours.

A report by the independent Women’s Budget Group found that the socio-economic effects of COVID were particularly severe for women with disabilities, women from minority ethnic groups, and women of migrant status. Again, this underlines how the pandemic exposed and amplified existing vulnerabilities.

In terms of emergency support, the temporary universal credit increase (which provided an additional £20 a week to the standard allowance) helped to reduce overall inequality. And the furlough scheme (plus similar support for the self-employed) reached many in potential difficulty – but not all.

Brought in to prevent potential mass unemployment and pay workers a replacement wage, these policies excluded many in the most precarious positions, including an estimated three million on zero-hour contracts, agency workers and the newly self-employed.

But those eligible for employment support were not immune from difficulty. About one-third of the 11.2 million workers furloughed saw their income fall below the official low-pay threshold. A further 6% ended up behind with their bills as a result of large income falls, high expenses and low savings.

Filling the gaps in state support were family, friends and community groups, many of which were set up in direct response to the pandemic. Informal transfers of money from these sources were common for those on the lowest incomes, regardless of where they lived.

Continued risk

This highlights a failure of state support to fully mitigate the effects of COVID restrictions for those facing financial, food and housing insecurity. Despite the government spending over £70 billion on emergency financial assistance, a combination of insufficient payments and problems of access left many reliant on informal forms of support. In addition, there is evidence that the stigma surrounding benefits put a lot of people off applying for help, even when they really needed it.

Our analysis found that working-age adults were more likely to have received financial support from family or friends (8%) than apply for universal credit (4%). We also found that this kind of reliance was more likely among those who had been furloughed than those who had continued working through the pandemic, and even more widespread for those who had lost their job, suggesting that the furlough scheme, while not perfect, was better than mass job losses.

High street without shoppers.
Empty streets in April 2020.
Shutterstock/Kristin Greenwood

Today, while the worst effects of COVID seem to be behind us, the risks of job losses, business failures and debt defaults remain. In the UK, recession is expected, inflation is high, and energy bills are soaring. Of particular concern are those for whom the pandemic has increased their financial vulnerability. They are not well placed to weather this coming crisis.

Rather than scale back state financial support, the government needs to ensure the poorest and most vulnerable are protected. In doing so, they would guard against the scarring effects of unemployment and debt.

There is also a role for targeted regional investment. The financial impacts of the pandemic were most keenly experienced by those in places with long histories of deeply entrenched disadvantage. Without help, the hardship and insecurity wrought by the pandemic risks becoming ingrained, and with it, the geographical concentration of poverty that our analysis has uncovered.The Conversation

Julie MacLeavy, Professor of Economic Geography, University of Bristol; David Manley, Professor of Human Geography, University of Bristol; Jamie Evans, Senior Research Associate, University of Bristol, and Katie Cross, Senior Research Associate, University of Bristol

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Disabled people are already cutting back on costs more than others – for many, the £150 cost of living payment won’t do much to help

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NDAB Creativity / Shutterstock

Sharon Collard, University of Bristol and Jamie Evans, University of Bristol

Even before the current cost of living crisis, disabled people were much more likely than non-disabled people to be in poverty and living on inadequate incomes. Now, spiralling living costs are adding to years of financial disadvantage. Our new analysis of YouGov survey data starkly illustrates the situation, showing that three in ten disabled households are in serious financial difficulty.

The UK government has announced several measures that will provide some relief for many, including an energy price freeze and payments totalling £650 for people on means-tested benefits. All households will also receive a £400 reduction in energy bills via instalments spread over six months, and 8 million pensioner households are receiving a separate one-off payment of £300.

Disabled people who receive benefits that aren’t based on income (non-means-tested) will also get a one-off cost of living payment of £150. But while these measures are welcome, this amount is a fraction compared to the additional costs disabled people typically have to cover.

Disabled households often need to spend more on essentials like heating and insurance, as well as necessary equipment, therapies and support. In 2019, disability charity Scope estimated that disabled people in the UK face extra costs of £583 per month, on average. For one fifth of disabled people, this “disability price tag” was over £1,000.

Rising energy costs are particularly impacting households that need to run vital equipment. Wheelchairs, feeding and suction pumps, or ceiling hoists all need to be constantly charged. Some people may also need additional heating to stay warm to prevent pain or seizures.

Considering these already higher costs, it should not come as a surprise that disabled households are disproportionately cutting back or doing without compared with other households. We found that four in ten have cut back on overall spending in 2022, and half have already struggled to keep their home warm this year. Similar proportions have reported reducing their use of the cooker and shower.

Around one in ten non-disabled households report that rising costs mean they are eating fewer meals. This rises to three in ten among disabled households. A survey conducted by the charity Family Fund found that half of carers looking after disabled children have skipped meals in the last year. We increasingly hear about “choosing between heating and eating”, but there are concerning reports of some being forced to choose between heating and medication.

Many disabled households are already at a breaking point, even before we enter a more costly winter. There is nothing else these families can cut back on. The situation is so dire for some that for the first time in its history, the deaf-blind and complex impairments charity Sense is giving cost of living grants of £500 directly to families.

When work and benefits aren’t enough

Soaring inflation means that disabled people in employment are experiencing the same real terms fall in wages as the rest of the working-age population. Around half of working-age disabled people are in work, but many others are excluded from participating in the labour market.

There is a large gap between the rate of disabled and non-disabled people in employment, for many reasons including structural and discriminatory barriers. Disabled people are also underemployed due to the quality of jobs on offer to them, forced to take lower-skilled or lower-paid roles offering fewer or infrequent hours.

Across all UK households in serious financial difficulty, disabled households are much more likely to have no earners than their non-disabled counterparts. But with a quarter of disabled households who have two full-time workers currently in serious financial difficulty, work is by no means a guarantee of avoiding hardship. In-work poverty disproportionately affects disabled people.

Close up photo of a woman's hands against an old-fashioned radiator
Rising energy costs are particularly harmful to disabled households.
Zvone / Shutterstock

Disabled people are more likely to engage with the social security system. This is partly due to their lower employment rate, but also because there are benefits available to assist with the higher cost of living with a disability. State benefits for disabled people rose by 3.1% in April.

But, as is the case with earned income, rising inflation means that benefits are shrinking in real terms. For disabled households, this means substantial monthly financial losses.

Families with a disabled adult were among the hardest hit groups from changes to the social security system in the 2010s, with the inadequacy of provision for disabled people attracting widespread criticism. The process of applying for disability benefits has been described by disability campaigners and charities as complicated and inhumane.

For lower-income disabled households, these new cost of living payments will be insufficient or at best, a short-term solution to longstanding financial inequalities. These disadvantages are more widely corrosive, driving social exclusion, limiting agency and choice, and ultimately impacting people’s mental health and wellbeing.

To meet the scale of the crisis faced by disabled households, longer-term solutions – such as proposals for a decent social security system – are certainly needed if we are to avoid a further decline in living standards.The Conversation

Sharon Collard, Professor of Personal Finance, University of Bristol and Jamie Evans, Senior Research Associate in personal finance, University of Bristol

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Four things that cost more if you’re already poor – and some simple ways to help fix this

Posted on by david.collings
Shutterstock/Ink Drop

Sara Davies, University of Bristol

As the UK faces the sharpest increase in the cost of living in a generation, households across the country are feeling the pinch. Those already on low incomes are affected most, not just because they have less money to begin with, but also because they actually pay more to access essential goods and services than anyone else.

Known as the “poverty premium”, it is essentially an extra cost of being poor. Much of this premium is driven by systems which effectively penalise low-income households for not being able to afford more economical ways of paying for everyday necessities.

I recently led a University of Bristol investigation, funded by the charity Fair by Design, which revealed that where people live has a significant effect on the extent of the premiums they incur. In the poorest areas of the UK, families pay up to £541 a year more than affluent families to access the same basic essentials.

Here are four things that can cost more if you’re already poor:

1. Spreading costs

Some household costs come with a choice of paying the full amount up front, or spreading the total over the course of a year. This can apply to anything from insurance to a mobile phone or a fridge. But the “choice” usually involves paying extra if you don’t pay in full. Faced with an unaffordable upfront payment, households without the means will naturally end up paying extra if they need to spread the cost.

Other bills are cheaper if you pay by direct debit. But if a household’s income fluctuates due to insecure work, then paying when you get the bill is the financially responsible, but more expensive, method.

In other words, poorer customers are given the illusion of consumer choice, when really there is only one option available.

2. Prepayment meters

Using pre-payment meters for gas and electricity, which have to be constantly topped up, typically costs households using them £131 a year more than paying by direct debit. This is because the standing charge is higher for pre-payment meters than other meters, although it is hard to see what the extra cost covers.

For our work we looked at one of the most deprived areas in the UK, where more than 11,000 households rely on electricity pre-payment meters, taking more than £730,000 a year out of the pockets of people in that community.

Certain groups are disproportionately exposed to this aspect of the poverty premium, including people with disabilities and those who are housebound. As energy bills hit record highs it’s the poorest households and most vulnerable who are already facing the worst consequences, with increasing numbers being pulled into fuel poverty.

When energy prices soared in April 2022, there were warnings that record numbers of pre-payment meter customers were “self-disconnecting” by not topping up their meters.

3. Higher insurance premiums

We found that low-income households often pay much more for home or car insurance because of where they live, or rather, where they can afford to live. Insurers factor in a perceived risk to vehicles and property, depending on the neighbourhood.

With motor insurance for example, taking the same profile of person and vehicle, the extra cost for insurance in a deprived area rose sharply from £74 on average in 2016 to £298 in 2019. Households in deprived rural areas where car ownership is a necessity are even more vulnerable to this premium than areas of higher deprivation in cities.

While our work suggests that the poverty premium for home insurance is less, unlike car insurance it is not a legal requirement. The UK’s financial regulator has warned that the cost of living crisis could force people to cancel or cut back on insurance costs, with potentially ruinous consequences – and if the worst happened low-income households would be unlikely to have the means to replace essential items.

4. Financial services

The poverty premium can even be seen in the very act of accessing money, through paying to withdraw cash from fee-charging cash machines or through higher-interest loans and credit cards. It is estimated that around 1,700 cash machines in the UK switched from being free to charging a fee at the start of 2019. These changes were more common in deprived areas.

Cash machine.
Get your money for nothing?
Pabkov

Since 2014, major regulation has dramatically changed the consumer credit landscape in the UK, with the number of high-cost, short-term lenders falling by almost one-third between 2016 and 2020. This has led to a recent surge in pawnbroking, where people use use items they own (such as jewellery) as collateral for short-term loans. With consumer borrowing rising sharply, there is a clear a need for access to affordable credit by low-income households to manage low or unstable incomes.

These four aspects of the poverty premium can be hugely damaging to already precarious household incomes. But they are entirely fixable.

The UK charity Fair By Design, for example, which campaigns to end the poverty premium, suggests various measures. These could include the UK’s financial regulator stepping in to stop the insurers charging extra for “non-standard” billing methods, and introducing a price cap on all forms of credit. It also recommends that the energy regulator should prevent companies charging customers more for not paying by direct debit.

Elsewhere there have been calls for changes to charges for different kinds of payment

With more households choosing between heating, eating or meeting essential costs, the need for action has never been more pressing. As the temporary £20 Universal Credit uplift showed, small sums can make a big difference to people on low incomes. Relatively simple actions by industry, government and regulators could significantly reduce these premiums, and make a huge difference to millions of lives.The Conversation

Sara Davies, Senior Research Fellow, University of Bristol

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Debt advice can be life-changing, but advisers can’t work miracles

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By Sharon Collard and Jamie Evans

Two years on from the start of the Coronavirus pandemic, at least 8.5 million people in the UK need debt advice from a regulated provider, fuelled by a cost of living crisis that is stretching the finances of millions of UK households to breaking point. Even so, our research suggests that only a minority of people who would benefit from debt advice will actually seek it – a conundrum that has exercised the debt advice sector, creditors, regulators and governments for decades. Where people do seek debt advice, the evidence shows that only a minority get all the information or help they feel they need.

The Coronavirus Financial Impact Tracker was commissioned by abrdn Financial Fairness Trust in March 2020 to capture the financial impact of pandemic on UK households through a series of periodic cross-sectional online surveys conducted by YouGov and analysed by the University of Bristol’s Personal Finance Research Centre. Five surveys were conducted over the course of the pandemic, the last one in October 2021.

One of the things the surveys ask about is whether people sought debt advice from any free-to-use debt advice providers (such as Citizens Advice, National Debtline, StepChange Debt Charity) or fee-charging companies. Looking at the survey findings from October 2021, we see that only 5% of UK households said they had received any spoken advice about their financial situation since the start of the pandemic; 7% had received online advice (e.g. via by WhatsApp or webchat); and 4% had received both spoken and online advice (Table 1).

Not surprisingly, households in worse financial situations were more likely to have received advice over that period – 17% of households classed as ‘in serious financial difficulty’ had received spoken advice; 26% had received online advice and 13% had received both spoken and online advice (Table 1). That still means most households ‘in serious financial difficulty’ did not get any information or help about their financial situation from a debt advice provider, even though 93% of them said thinking about their financial situation made them anxious, 85% were struggling to pay for food and/or bills, and 55% were in arrears on at least one bill/credit commitment.

It could be that government financial support and payment deferrals from lenders helped many of these households weather the financial impact of the pandemic, but such assistance is unlikely to have resolved underlying debt problems. They may also have relied on self-help and obtained the information they needed from other sources that we did not ask about in the survey.

Table 1

We also asked advice-seekers whether they received all the information or help they needed from the debt advice provider they contacted. Almost half (46%) of all advice-seekers said they only received some of the information or help they needed; and a further 14% said they received none. This picture was amplified among advice-seekers who were ‘in serious financial difficulty’, where only a quarter (25%) said they received all the information or help they needed (Table 2).

Table 2

These findings raise some fundamental questions about why people aren’t seeking help who seem to need it; but also why most advice seekers are not getting all the information or help they feel they need – particularly those ‘in serious financial difficulty’.

Despite all the positive help that debt advice agencies provide, there are limits to what can be achieved for people in serious difficulties who have little or no spare income to pay back what they owe and for whom bankruptcy or debt relief fees may be prohibitive. In some cases, debt advisers may be able to do no more than confirm there is no real tangible help available or any recourse to additional financial support. This points to the need for wider reforms outside the debt advice sector such as adequate state safety nets, real living wages and better access to debt relief.

In addition, advice-seekers may need other services such as welfare benefits advice or legal help with their debts that debt advice services can’t offer. It could also be the case that people have expectations of debt advice services that exceed the reality of what these services can offer. Addressing these questions is important to ensure that debt advice reaches more people who need it and delivers good outcomes for the people who use it.

The impact of the Covid-19 pandemic on undergraduate student accommodation

Posted on by david.collings

By Katie Cross

Since 2014, we have surveyed undergraduate students at the University of Bristol to help us understand the impact that finances have on the experience of studying at the University. Our latest survey, conducted in May 2021[1], allowed us to ask students about their financial experiences of the 2020-21 academic year, more than a full year after Covid-19 first hit. As part of our survey this year, we incorporated several questions specifically on student accommodation, namely where respondents were living at the time of the survey, whether they had lived anywhere else during term-time, whether they had an adequate provision of study whilst at alternative accommodation and what impact Covid-19 had on their accommodation costs. We also allowed students to comment qualitatively about their accommodation experience.

Over the summer of 2020, Covid-19 restrictions were gradually eased: we emerged from the first national lockdown at the end of June with pubs, hairdressers and restaurants reopening in July, and in August, the Eat Out to Help Out scheme was introduced, to encourage us further back into pubs and restaurants[2]. In May 2020[3], the University of Bristol announced that it would be open to students from the start of the 2020-21 academic year, offering a blended approach of campus and online education; large-scale lectures would be moved online but face-to-face small group teaching and mentoring would go ahead.

With that in mind, many students moved to Bristol for the start of the academic year, either for the first time or as returning undergraduates. However, further restrictions on the number of people allowed to mix indoors, along with the national lockdowns in November 2020 and January 2021 meant that much of the 2020-21 academic year was again heavily disrupted for students. Although urged to stay in Bristol until the end of Autumn Term, many students went home before the lockdown restrictions came into force in November. Others locked down at University and waited until the Christmas break to travel home. After Christmas all students were advised not to return for their second term, and the Government announced that in-person teaching would not resume again until the 17th May 2021 at the earliest[4].

Many were frustrated that they were required to pay for University accommodation that they weren’t  living in and even prior to the November national lockdown some students were frustrated by having to self-isolate within halls[5]. Controversy had arisen over the quality of foodboxes provided to students required to self-isolate[6], although some were pleased with what they had received[7]. Many students were also angry at how little face-to-face teaching they were receiving and by the 24th October 2020, over 1,000 Bristol students had signed up to the University of Bristol Rent Strike campaign[8]. The students were calling for rent reductions, no-penalty contract releases and better conditions for those living in halls during lockdown (Figure 1). While some concessions and rebates were won, by May 2021 students and the University of Bristol were still in dispute[9][10][11].

Figure 1: Rent strike Bristol demands

This turbulent year for students has had a real impact on student mental health, which we will explore in a separate blog. Here, we focus specifically on the student experience in relation to their accommodation; patterns of movement and how students felt about living arrangements during 2020-21.

Movement of students

When we ran our survey in May 2021 over three quarters (77%) of first year students were living in halls, 10% were renting privately and 12% were living at home with parents. Second and third year students on the other hand were much more likely to be renting privately (86%), with only 5% in halls and 7% living with parents. The percentage of students in all years living with parents was higher in May 2021 than it had been pre-Covid (Table 1) from our previous annual survey two years before, although still only a minority of students were living at home.

Table 1: Student accommodation type by year group – 2019 vs 2021 (annual survey comparison)

Around half of students reported living in different accommodation at some point during term-time

We asked students whether they had lived anywhere else that academic year during term-time (other than where they were living in May 2021 – when the survey was taken). For instance, this could refer to students who lived in halls before Christmas but were at their parent’s home by May 2021, or those who were living in halls in May but who had moved home to live with parents earlier in the year, e.g. during lockdowns, and then back again to Bristol.

Given the lack of in-person teaching and restrictions, it is perhaps surprising that fewer than half of students overall (48%) reported living in different accommodation at some point that academic year. First year students were significantly less likely (44%) than second and third years (51%) to report moving accommodation during term-time. This is again unexpected, given that first year students were more likely than their second and third year peers to live in University-owned halls, and therefore to be offered some form of rebate (as seen below in Table 2). In contrast, those living in private accommodation were required to negotiate with a range of private landlords for any such rebate. It may be that remaining on campus was more important to first year students, trying to settle in, than those with a year or more to embed themselves in the University student community.

The impact on study provision

Around half of students who moved (47%) reported having inadequate provision for study at their alternative accommodation, with a lack of adequate space (36%) and of adequate broadband connection (26%) being notable issues. Qualitatively, some students reported difficult living conditions at home as a reason for returning to campus despite the lockdown, amid concerns over the potential impact on their academic performance.

  • “I live in a basement flat and my room is very small with no natural light. It is depressing and I have nowhere else to work, so my motivation to complete my degree has plummeted. As a third year, I really feel that this has therefore had a substantial impact on my grades. Without a comfortable or acceptable working space it has been a nightmare to concentrate” – Year three female

Many students paid for unused accommodation  

Despite the University offering rebates[13], these were only for those living in halls, so primarily first year students. Unite owned halls also offered rebates to students[14]. However, according to our survey, very few (4%) second and third-year students were offered a refund for their accommodation (Table 2), as they were much more likely to be renting privately (Table 1). Many second- and third-year students reported spending little time, if any, within their Bristol accommodation but still having to pay their rent there in full.

  • “I have had to pay for a flat that has gone entirely unused while also paying money to live at home with my parents” – Year three, male

Our research indicated that only around a quarter of students (26%) received some form of refund, while a similar proportion paid for University accommodation in full despite not living there at certain periods (25%)[15].  As mentioned, this varied greatly by year group with nearly half of first year students (49%) receiving some form of refund, compared to only 4% of second and third year students (Table 2). Separate research conducted nationwide by Save the Student, estimated that students spent £1bn in a year on empty accommodation and that the average student spent £1,621 in rent for unrefunded rooms[16].

Table 2: The impact of Covid-19 on accommodation costs (2020-21 academic year)

Uncertainty over level of in-person teaching

Importantly, students may have made different accommodation choices if they had been prewarned clearly how little face-to-face tuition they would receive, difficult though that would have been for the University. Instead, under uncertainty they could respond very differently, as these two responses show.

  • “The university told me that it was highly advisable to live in Bristol if possible. So, I’ve ended up paying 12 months rent for flat that I’ve lived in for 3 months” – Year two male
  • “Because my course was online for term 2, I was able to go home, save the rent money that can be used for my summer rent at the 2nd year house” – Year one, female student

Lockdown living

Some of those who remained in student accommodation during term-time found it very isolating, and this could have impacted on their mental health. This was particularly true for first year students, who had not yet had the opportunity to build support and friendship networks.

  • “I lived on my own for 4 months with no flatmates, in a national lock down. It was not the best experience” – year one female
  • “Not been able to meet people outside of my flat really. Very isolating and limited” – year one, female
  • “Living in a house of 9 people was very uncomfortable when COVID-19 was extremely prevalent. Due to COVID-19 infections our house had to quarantine for about 3-4 weeks. After being locked in a house with no garden and really poor facilities I travelled home because it was mentally no longer feasible to remain in Bristol” – year two male

Others noted that some of the key social facilities normally offered as part of their accommodation had been closed e.g., common rooms or study rooms, and so felt they had paid for something they didn’t have access to. Some also found that the maintenance of the accommodation was poor, as a result of the Covid rules.

  • “It resulted in us paying for facilities (gym; music rooms; common rooms; hall bar; study rooms) that we were promised but have never had access to” – year one, female

Greater financial and emotional support needed for students

Overall, many students understandably expressed their disappointment with their accommodation experience over the past year. It has clearly been difficult for students academically, socially and in terms of mental wellbeing, and it is important that the University listens to and learns from their experiences. Whilst it would have been impossible for any university to know ahead of time precisely how its 2020-21 academic year would play out, there needs to be greater recognition that much of the adversity was borne by students, particularly first years with no prior familiarity with the University or their fellow students, who might reasonably have been expecting a greater duty of care to be shown to them. The pandemic was obviously very unsettling for academic, administrative and support staff as well, but not only did almost all have previous experience of working under lockdown conditions from 2019-20 but also had local homes to work from and supportive local communities, so were not faced with a parallel set of decisions and realities over the upheaval to their Bristol-based accommodation.

With hindsight, greater financial hardship support could have been offered to students who were struggling to pay for their rent; those who couldn’t work as they expected (either in term-time or the holidays) or whose family income had dropped because of the pandemic, for example. And while lockdowns were not within the control of the University, how it  communicated with students about these changes was. Some students were left feeling that the University was more concerned with its own finances than with the health and well-being of its students, especially when, in May, 2021, it turned to third party debt collectors in response to the rent strike.

It was a very difficult year for both staff and students at the University, and greater mutual empathy and understanding could have gone a long way in supporting each other in a crisis.

[1] Fieldwork was conducted between 27th April and 1st June 2021.

[2] https://www.instituteforgovernment.org.uk/sites/default/files/timeline-lockdown-web.pdf

[3] https://www.bristol.ac.uk/news/2020/may/covid-update-academic-year.html

[4] https://www.bbc.co.uk/news/education-56731330

[5] On the 9th October the University shut “The Courtrooms” residence (which had over 300 students) because 40 students had Covid.

[6] https://epigram.org.uk/2020/10/20/bristol-uni-rent-strike-on-course-to-be-the-biggest-in-uk-history-after-1000-signups/

[7] https://thetab.com/uk/bristol/2020/10/09/uob-freshers-are-being-given-incredibly-posh-food-boxes-full-of-soy-sauce-and-propercorn-42271

[8] https://twitter.com/rentstrikebris

[9] https://www.bristol.ac.uk/accommodation/coronavirus/20-21/rent-rebate/

[10] https://tribunemag.co.uk/2021/01/britains-historic-wave-of-student-rent-strikes

[11] https://epigram.org.uk/2021/05/08/rent-strikers-face-third-party-debt-collection-from-bristol-university/

[12] Questions on student accommodation are asked annually as part of the student survey. March 2019 is the latest survey available prior to the Covid-19 pandemic. The 2020 survey was asked slightly later in the year (May as opposed to March) and so embraced the first lockdown of universities under Covid-19, in late March 2020

[13] https://www.bristol.ac.uk/accommodation/coronavirus/20-21/rent-rebate/

[14] https://epigram.org.uk/2021/03/06/unite-students-announces-a-further-rent-reduction-for-march-2021/

[15] Not all students living in halls would have automatically received a refund. The first two rebates given by the University were automatically provided but students were required to apply for the third rebate by a specified deadline.

[16] https://www.savethestudent.org/accommodation/national-student-accommodation-survey-2021.html

MaPS recommissioning of debt advice services: will it meet the needs of clients in vulnerable situations?

Posted on by jamie.evans

By Jamie Evans

In recent weeks, debate has been raging about the provision of face-to-face debt advice services in England. Over 1,700 people – many of whom are frontline debt advisers – have signed a petition calling for ‘an immediate pause to the Money and Pensions Service (MaPS) recommissioning of debt advice’, which the authors of the petition, the Unite Debt Advice Network, argue ‘is likely to result in cuts to funding for debt advice of up to 50%, with face-to-face debt advice particularly affected’.

MaPS, on the other hand, believes that its recommissioning exercise ‘will increase the amount of debt advice available to people in England’ and will ‘ensure services are built around customers’ needs’. It says that it has not commissioned based on channel, instead asking debt advice providers to suggest how best to meet the needs of clients using a range of different channels (including but not limited to telephony, face-to-face, virtual appointments, and webchat). In a recent meeting with We Are Debt Advisers (a network of 500 frontline debt advisers), Caroline Siarkiewicz (MaPS Chief Executive) intimated that face-to-face advice would receive 20% of the total funding allocation. We Are Debt Advisers estimates that this would be equivalent to a 16% cut in funding for face-to-face advice services.

The issue has attracted national attention, leading to a Westminster Hall debate on 1st December. A number of MPs advocated passionately for protecting face-to-face services, with Emma Hardy (MP for Kingston Upon Hull West and Hessle) arguing that ‘face-to-face advice is the only way of supporting a significant proportion of people in debt, and… a reduction in capacity and coverage will fail some of the most vulnerable in our society.’

Advisers know channel matters a lot for vulnerable clients

It certainly shouldn’t be controversial to say that different people have different needs when seeking support – whether with debt problems or any other issue they face. This means that some people will prefer digital methods of communication, others will prefer (or only be able to access) more traditional methods, and some might be perfectly happy with a combination of both.

This is something that debt advisers are well aware of.

In 2018, the Personal Finance Research Centre received grant funding from the then Money Advice Service to conduct research on debt advisers’ experiences of working with and supporting clients in vulnerable situations – including mental health problems, addictions and a range of other situations. We surveyed more than 1,500 advisers and, as part of the research, we asked if there were particular groups of clients who might be affected (negatively or positively) by a shift to digital debt advice services. What advisers told us is summarised below:

Potential impacts of digital debt advice on vulnerable client groups, according to debt advisers we surveyed (read the research here)

The results demonstrate widespread concern among frontline debt advisers about the potential impact on vulnerable clients of a shift to digital methods of debt advice. They highlighted a range of practical issues that their clients might face in accessing digital debt advice:

“Many of the people I see can’t maintain the same phone number because they can’t afford ongoing phone contracts.”

“Vulnerable clients benefit from building up a relationship with the advisor to be able to trust them enough act on the advice – which they could never get via digital delivery.”

“Clients who can’t afford to eat can’t afford internet… or [can’t afford the] fares to get to free internet.”

“[Face-to-face] we are better able to gauge their needs and abilities, e.g. via email a client can agree to carry out an action but face-to-face we can see that this causes them distress so we can support them to do it.”

Advisers reported that clients with mental health problems, cognitive impairments or learning disabilities may need information explained several times or in different ways. Advisers also highlighted the considerable challenges that clients can face in gathering or understanding paperwork, which are often dealt with quickest in-person.

The scale of vulnerability in debt advice

There are almost always pros and cons to the introduction of new technologies, as we see in long-running debates on issues like access to cash and bank branch closures. Debt advice faces many of the same fundamental questions – but a big difference is the scale of vulnerability encountered by debt advisers.

Based on our survey, we estimate that just under a third of the clients supported by advisers remotely (i.e. telephony or webchat) had disclosed a mental health problem. This rises to half of clients supported by face-to-face advice. In the Westminster Hall debate it was reported that this may rise to as much as 82% for some advisers.

Of course, not all mental health problems are necessarily incompatible with digital advice delivery. Indeed, many people with conditions like social anxiety might be unable to access advice in-person or over the phone, so methods such as webchat offer a hugely important lifeline (see, for example, research from the Money and Mental Health Policy Institute).

Getting the balance right

Getting the balance right requires a comprehensive understanding of demand for debt advice via different channels (including how well demand is actually being met at the moment). This is no easy feat, particularly when we have insufficient data on what the whole debt advice sector actually looks like. Investment to build this data would greatly improve MaPS’ ability to forecast accurately and might improve their chances of obtaining a more representative sample when consulting with advisers from different parts of the sector. It is also important to ensure research on these topics properly involves those who are digitally excluded. This is something we can all improve on.

In the meantime, it would be good to see the evidence on which decisions are currently based. MaPS is yet to publish its formal Equalities and Vulnerability Impact Assessment, so this seems a good place to start.

There are elements of MaPS’ proposals which are (hopefully) welcome from the perspective of vulnerable clients. Caroline Siarkiewicz describes how MaPS hope the new funding approach will get advisers off the ‘hamster wheel’ of dealing with one client after another, leading to more time spent with individual clients rather than simply chasing high volumes.

Whatever happens, it is clear that at present many advisers are suffering poor wellbeing due to their workload – a recent IMA survey found that 68% of those working for MaPS-funded advice organisations were dissatisfied with their workload, with two-in-five (41%) reporting that they ‘often feel stressed and anxious at work’. Many are uncertain about their future and are tired of repeating the same things over and over again, both in relation to debt advice and in terms of wider social policy. They are the experts in this arena, so decision-makers need to start listening.

Read the research here: Vulnerability: the experience of debt advisers

Open Banking for Good – making a difference during the pandemic

Posted on by david.collings

By Sharon Collard and Jamie Evans

Nationwide Building Society’s Open Banking for Good (OB4G) – an initiative to use Open Banking technology to help ‘financially squeezed‘ people – ran from 2018 to early 2020. With around 4 million UK households currently struggling to manage financially, the COVID-19 pandemic has highlighted the value of these propositions as well as presenting opportunities and challenges for the fintech Challengers in terms of their ability to grow and scale.

Open Banking for Good (OB4G) was launched by Nationwide Building Society in 2018 and ran throughout 2019 into early 2020. It brought together user experts (charity partners), solution experts (fintech Challengers) and process experts (Nationwide’s OB4G team) to solve real-life financial challenges for people who are ‘financially squeezed’.

Our newly-published evaluation of the impact of the OB4G programme shows that it largely met the expectations of the five fintech Challengers that completed it, by creating time and space for innovation though collaborative learning with user experts. As a result, all five Challengers successfully developed and tested propositions that tackle real problems which were grounded in the experience of people who are ‘financially squeezed’.

The COVID-19 pandemic took hold in March 2020, just as the OB4G programme was wrapping up. The economic and social impact of the pandemic has fallen especially heavily on OB4G’s target audience with an estimated 4 million people currently struggling to manage. While the pandemic brought home the potential value of the propositions that were developed in the OB4G programme, it also impacted the OB4G Challengers in a range of different ways:

  • Income smoothing challenge: Trezeo brought forward the development of its sickness insurance for independent workers and gave existing members complementary cover from early March to the end of June 2020. The pandemic also meant it had to delay its next funding round and put on hold its partnership with an online employment platform.
  • Income and expenditure challenge: Both Ducit.ai and OpenWrks saw increased demand for their Income & Expenditure propositions as the pandemic led to large-scale drops in earnings and people turned to creditors for forbearance and support. OpenWrks also created a payment relief solution that enabled lenders to offer an automated online channel for customers to apply for mortgage and consumer credit payment deferrals.
  • Money management & help challenge: The first national lockdown in March 2020 – when 2.5 million people were advised to stay at home or ‘shield’ – highlighted the value of Touco’s ideas for using tech to provide a safe way for individuals to give money to a helper to spend on their behalf. The pandemic also created significant challenges for Touco’s planned user testing of the new version of its app. The major changes to people’s spending patterns also had implications for how people interacted with Tully’s Money Coaching app, and in particular the spending challenges they might set.

Nationwide asked us to evaluate the programme so that they could learn and improve the current Nationwide Incubator which is focussed on addressing the challenges of living in financial difficulty. Our evaluation of the OB4G programme is also important as it helps build a new evidence base around the potential of technology and innovation to ‘move the dial’ on big social issues. This knowledge sharing has become even more important in the wake of COVID-19, which brings opportunities to use a Grounded Innovation approach to ‘build back better’ and improve the UK’s financial wellbeing.

Read our report: Open Banking for Good: Making a difference?