Households struggling to meet repayments as average debt rises 55% in 18 months, KNH-backed welfare reform study finds

Release Date: 09-Mar-2015
Half of in-debt households surveyed about the impact of benefits changes are unable to regularly meet their weekly repayments – while the average amount owed has risen by more than 50% in 18 months.
The findings are revealed in the sixth report from Real Life Reform – a major study by social landlords into the lives of up to 100 Northern households affected by welfare reforms.

Nine families in Kirklees are among those who shared their experiences in the latest round of research, and KNH is among the landlords carrying out the study

Interviews carried out in November 2014 with 70 tenants – the majority of whom have been tracked since the study began in July 2013 – have revealed:

• One in two in-debt households are unable to regularly meet their weekly repayments

• Average debt per household has increased by 55% from £2,288 in the study’s first report in September 2013 to £3,554 now

• 64% of households are now in debt, compared with 74% in the last report in October 2014. However, some participants have used Debt Relief Orders to wipe out debt

• The overall average spend on food is £3.63 per person per day, but for 3 in every 10 households the spend is £2.86 per person per day

Matthew Gaunt is a Real Life Reform steering group member and manager in KNH’s Rent Assist team, which collects rent on behalf of Kirklees Council and also provides a specialist money and debt advice service. He said: “For the last 18 months we have been following the experiences of households and it is clear that the challenge of keeping their heads above water remains extremely difficult for many.

“While fewer households are in debt now compared to our last report in October, that reduction is due in part to the use of Debt Relief Orders. But while this might appear to address an immediate issue but it affects people’s credit ratings and can impact on their ability to open a bank account.

“For those remaining in debt, average debts are significantly higher than at the start of the study and it is clear that people are finding it hard to make regular payments. Households in the study report constantly the struggle to juggle their money and tell us that they have no safety net to fall back on.”

Today’s report also shows the lowest levels of employment since the study started, with 23.5% of households having one or more people in work.

And, contrary to national trends, more than four in every five who do work are in part-time or insecure employment, including zero-hours contracts. For these households, a worsening financial position has emerged, leaving them with an average of £16 per week to live on after food and bills have been paid for.

Lisa Pickard, a member of the Real Life Reform steering group and chief executive of Leeds and Yorkshire Housing Association, added: “As well as understanding the impact of welfare reforms, the Real Life Reform campaign is also tracking whether its intention to get people back into work and for work to pay is happening.

“Working and living off such low levels of disposable income, we can understand why 69% of those working part-time are seeking more hours. Accessing work continues to be a challenge for those who can work, but we also see for those who can't, including carers and people with health issues and disabilities, that the margins continue to tighten.”

Ten housing providers are working on Real Life Reform to investigate how the lives of tenants affected by welfare reform are changing. The study is looking at their housing, health, wellbeing, financial, education and employment prospects.

Case studies are being interviewed by trained front line staff, once every three months for at least 18 months so that their experiences can be tracked.

Real Life Reform uses a detailed questionnaire developed with support from The University of York’s Centre for Housing Policy.

The study is also supported by the Northern Housing Consortium (NHC), which is sharing the research findings with politicians and other partners.