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Preventing the ‘poverty premium’

22 August 2012

By Dharmendra Kanani, Big Lottery Fund England Director


As the economic outlook remains bleak, households across the country are facing ever increasing demands on incomes that don’t go as far as they used to.

While we know that everyone is feeling the strain, those people on lower incomes are facing particular hardship. The ‘poverty premium’ means that the most financially excluded are struggling with the higher cost of basic services (PDF).

Seeking out short term, high interest credit or even loan shark lending might feel like the only option, but can lead to those people falling into a spiral of unaffordable debt, compounding the stress of already pinched economic circumstances.

Money worries like these can have further implications, from the impact on mental health and wellbeing (PDF), to the knock on effects of anti-social behaviour and homelessness that affect the wider community.

With new legislation on the horizon that will change the way thousands of people access their housing benefit and manage their basic living expenses, the launch of Big Lottery Fund’s (BIG) Improving Financial Confidence (IFC) awards is well timed. We are investing £31.7 million to find innovative solutions to financial exclusion.

BIG's England Director, Dharmendra Kanani

BIG’s England Director, Dharmendra Kanani

BIG’s funding will reach an estimated 150,000 social housing tenants through 37 projects across England, bringing social housing landlords, voluntary sector organisations, local authorities and private sector stakeholders together to work directly with tenants to make real changes to their lives. This is one of a number of strands of investment from BIG to support individuals in need to lead fulfilling lives.

BIG worked with a range of stakeholders to decide how best to focus this investment, and evidence suggested that social housing tenants were most likely to lack access to the basic financial products and services most of us take for granted. Things like a bank account to facilitate cheaper direct debit payment for utilities, home contents insurance and affordable credit options.

Each project awarded funding today is focusing on supporting those groups identified as being most at risk:

  • First time social housing tenants in their first 12 months of tenancy
  • Tenants moving in and out of work
  • Young people in social housing

The projects we’re funding will work with tenants to develop practical, beneficiary-led solutions to financial exclusion. This includes one to one support on household budgeting, choosing the right energy supplier, tenants groups organising their own training sessions on cooking on a budget, or broader initiatives that will ensure housing support workers are better equipped to support tenants to make informed money choices. These initiatives will be led by the people who use them, and support real people powered change in their communities.

To really make the biggest impact we can with this investment, we have  appointed evaluators to work with these targeted projects to find out more about what works, and how investing in preventative measures can bring real social as well as financial benefits to individuals as well as social landlords. The research this evaluation produces will mean that we will be able to offer learning and advice to key stakeholders and to affect wider change across the sector.

Our long term goal is to influence future policy and practice in this field, and I am particularly enthusiastic about this new focus on learning and making an impact that lasts beyond the initial investment.

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