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Turning the tide of personal debt

23 August 2012

In this guest blog, the National Housing Federation’s Jane Greenoak highlights the importance of BIG’s Improving Financial Confidence programme, which targets social housing tenants at risk of falling into personal debt.

There are moments when, distracted by the grind of daily life, we stumble and don’t pay proper attention to our finances. Thankfully, a gentle fallback on an overdraft, the bank of mum and dad or a loan from a generous friend fills the void for many of us until the next payday.

Housing associations run crucial schemes helping people with their money

Housing associations run crucial schemes helping people with their money

But for millions of vulnerable people in the UK living in social housing – some of the poorest people in the country – the situation is starkly different.

We take for granted the ease with which we can set up a bank account. But without proper identification or proof of address, many people can’t – leaving them unable to take advantage of generous direct debit discounts for household utility bills or even get employment.  

And for those without easily accessible financial products such as insurance, a flooded bathroom or break-in can suddenly turn a month where you thought you were just getting back on your feet and to grips with your finances into a crisis. As Martin Lewis, founder of our partners, MoneySavingExpert.com, says, “Disgracefully, it costs more to be poor.”

At the National Housing Federation we represent England’s housing associations, many of whom run crucial schemes helping people cut down on debt, maximise their income and develop money management skills.

And we also know a thing or two ourselves about financial inclusion: together with government, we created My Home Finance, a social enterprise that offers affordable credit, money advice, bank accounts and linked savings accounts.

So when we were approached by the Big Lottery Fund to help develop a programme called Improving Financial Confidence – a £31.7m fund for 37 projects that will help an estimated 150,000 tenants across England become more financially aware, confident in money management and better able to access financial products like bank accounts – we jumped at the opportunity. 

We knew housing associations had a great deal to offer and that their values and commitment coincided with what the Big Lottery Fund was trying to achieve. 

And the Big Lottery Fund’s initiative couldn’t have come at a better time. Personal debt is rising, more families are finding it difficult to manage their finances and the Government’s welfare reforms will cut benefit payments to thousands of people across the country.

This is precisely the kind of environment in which costly “payday” loan sharks thrive, lending money to desperate people already struggling to make ends meet with outrageous interest rates. Three quarters of the two million people who use high-cost credit lenders, with average APRs reaching over 200%, live in social housing.

Improving Financial Confidence will be a springboard for many people, providing innovative projects that can be adopted by other social landlords, and will equip residents in social housing with the support and knowledge to side-step these payday lenders and take charge of their own finances.

The initiative will also help older people plan better for high winter fuel bills, ensuring they can heat their homes over the coldest months; show people mired in a maze of debt a way out; and help hard-up parents budget so they can buy a Christmas or birthday gift for their child without having to cut back on food or risk getting into rent arrears.

Housing associations and the Big Lottery Fund are united in their commitment to make a real, practical difference to people’s lives. Together, we can start to turn the tide of exclusion that money worries bring. 

Jane Greenoak is Senior Funding and Partnerships Adviser at the National Housing Federation.

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