City South awarded £1 million for debt prevention scheme

Published by Becki Ord for City South Manchester in Housing and also in Communities

CITY South Manchester Housing Trust has received £1 million from the Big Lottery Fund to prevent many of the most vulnerable people living in social housing from falling into the debt trap.

When it comes to money matters, social housing tenants are often the most vulnerable and in need. Many find themselves without access to products and services like bank accounts or contents insurance.

The Mind Your Money programme will give them the skills and confidence they need to access affordable financial services, without being forced to resort to loan sharks or payday loans. It will support jobseekers and people returning to work in Manchester to help them become more financially aware and more confident in money management. 

City South is delivering the project across Manchester and has worked in partnership with more than 20 organisations, including Manchester City Council, Northwards Housing and Gingerbread – a charity supporting single parents.

The partnership aims to establish a joint protocol among at least 22 out of the 27 housing providers in the city to agree trigger points to alert agencies when a tenant has moved in or out of work, so organisations are aware if the tenant is facing financial difficulties.

A pre-paid card scheme will be piloted so that tenants can keep aside money for essential bills in virtual jam-jar accounts and use the pre-paid card for their disposable income.

Dave Power, Chief Executive of City South Manchester Housing Trust, said: “It’s crucial that people getting back into work find themselves better off and still able to pay the rent and other household bills, without being forced to resort to loan sharks or payday loans.

“Mind Your Money will offer a range of practical tools, training and techniques to support jobseekers and people returning to employment to help them keep in control of their finances. Initiatives we’ll be developing include a pre-paid card that can be used instead of cash to pay for goods, helping people to keep on top of their money.”

Anna (not her real name) from Manchester has received help from organisations in the partnership after falling into spiralling debt when she and her husband hit hard times.

She said: “I left home at 17 and with no-one to rely on for financial support I set up life on my own. I met my husband and we had two children but because he was on a low wage we found ourselves borrowing money to make ends meet. We took out loans with legal doorstep lenders but then a neighbour recommended someone who did small loans that were flexible when it came to repayments. We borrowed money from him several times and paid him back no problems – until my husband lost his job and we couldn’t afford the repayment.

“We fell into a vicious circle where the loan shark increased our debt each time we couldn’t pay and threatened our lives. We then had to borrow more money from legal lenders to cover basic living costs as we were handing over most of our cash such as my husband’s wage and child benefits to the loan shark. I got a job but had to give it up due to illness caused by stress and anxiety. We ended up with £17,500 of debt. 

“Helpful organisations stepped in, gave us a lot of advice and I decided to declare myself bankrupt to make a fresh start.  I’ve returned to work part-time and am budgeting better. I hope I never have to take out credit again.”

Big Lottery Fund (BIG) announced the multi-million pound funding today (Wednesday 22 August) for a number of projects in the North West, which will be run in Manchester, Liverpool, Hyndburn, Tameside and Knowsley.

Cllr Jeff Smith, Manchester City Council's Executive Member for Finance, said: “In the difficult times that we are in, residents and tenants will be feeling the pinch. The council has supported this fantastic bid and we are really pleased with its success. The city’s housing associations are working really hard to help residents manage the financial difficulties they are facing and we welcome any support provided through initiatives like this."

The Big Lottery Fund’s Improving Financial Confidence programme has received the backing of money saving expert Martin Lewis.

Martin Lewis, creator of MoneySavingExpert.com, said: “Disgracefully it costs more to be poor. The poverty premium means, from household goods to energy bills, things are more expensive for those with little cash as they need to borrow to buy or don’t get the direct debit discounts others take for granted.” 

Martin continued: “Sadly we still don’t have compulsory financial education on the curriculum, and even then, more will be needed to help the financially excluded.  This is even more important as the universal credit means many on benefits will have to take greater control of their own money management.

“The Big Lottery Fund’s Improving Financial Confidence programme is a good step towards that and should provide help and information to 150,000 people who find themselves without access to products and services like bank accounts or contents insurance.  Hopefully it will reduce the risk of desperation driving people into relying on costly payday loans or even loan sharks.”

Helen Bullough, Big Lottery Fund head of the North West region, said: “We wanted to find a way to prevent debt from starting or getting worse for people on very low income or benefits. BIG’s funding will ensure that social housing providers, advice providers and local authorities can work together to improve the financial confidence of communities most in need.

“Recent changes in legislation, such as the benefits cap and the introduction of Universal Credit - whereby benefits payments go to the head of the household rather than directly to the landlord, mean there is even more pressure on tenants to take responsibility for managing their finances. This means today’s investment could not come at a more imperative time.”

Figures released this month by the Insolvency Service* show there has been close to a 10 per cent surge in debt relief orders since the same quarter last year. The latest Department of Work and Pensions Family Resources Survey** published in June shows that 16 per cent of people on the lowest income (less than £100 a week) still do not have access to a bank account – compared to just three per cent of the general population. Some 14 per cent of young people do not have an account.