Tag Archives: doorstep

Cost of living crisis: 10 years of Tory benefit cuts are driving people deeper into debt

Sanction centre: people paying back debts to the benefit system are being penalised for being poor by the current Tory cost of living crisis because their situation forces them into the hands of high-interest doorstep lenders who will make their situation worse. Isn’t the benefit system supposed to keep people out of debt?

It is amazing that this has to be spelt out for people but, with us all having to deal with the Tory squeeze on our incomes, this may have evaded a few people.

The cost of living crisis has hit the poorest people and families worst, with people on benefits suffering the worst after 10 long years of punitive Tory cut after punitive Tory cut.

The Resolution Foundation has already pointed out that the poorest households are facing a higher rate of inflation than richer people.

This is because the rising cost of home services (like energy bills), transportation and food is having a greater effect on people with less income and fewer savings to pay for them; it’s not rocket science.

So the headline inflation rate for the lowest tenth of families is around 10.3 per cent, while it is 8.7 per cent for the richest tenth. This is the greatest disparity since cost of living data began to be collected at the start of this century.

Now the Joseph Rowntree Foundation has produced a study showing that a decade of social security cuts, underfunding, and punitive government debt collection terms are pushing low-income families – particularly benefit claimants – into financial crisis.

In many situations, people were forced to choose between feeding their loved ones and making their rent payments on time, as described in the study. 2.3 million homes had already gone without both.

Low-income individuals have resorted to borrowing, adding £12.5 billion in new debt in 2022 out of a total of £22 billion. They owe high-cost lenders, such as doorstep lenders and illegal loan sharks, a total of £3.5 billion, which jeopardises their future financial stability.

Families are already having a difficult time making their payments. Since October of last year, total personal debt arrears have more than quadrupled from £1.8 billion to £3.8 billion, and JRF anticipates that these arrears will continue to grow as interest rates rise.

Unsettlingly, the research discovered that the government is making life extremely difficult for people by exploiting the benefits system to collect some debts, sometimes at exorbitant rates. Families receiving assistance without these “debt deductions” suffer less than those who are obliged to have them.

JRF has suggested a simple way to ease the burden on these claimants: allow them to repay their debt more slowly while the cost of living crisis is ongoing, rather than cutting their income by a quarter every month.

And Universal Credit entitlements should increase to ensure that – at a bare minimum – people are able to afford the essentials when they fall on hard times.

This is, of course, entirely logical. The benefit system is intended to ensure that people don’t fall into debt at all – not simply to make them prey to loan sharks at a slower speed.

But we’re seeing no announcements about this from Rishi Sunak or Therese Coffey.

All we’ve had are big headlines about payouts to everybody, including £400 for every house – meaning people who own multiple dwellings receive that amount many times, in comparison with the poor who only have one.

This Site has stated it before: it’s a big subsidy for the rich. And the fact that the poor are being driven to loan sharks makes it all the more obscene.

Source: Tory cost of living crisis made worse by a decade of welfare cuts

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Bad apples?

Meet the new boss: Richard Caseby - no connection with any 'bad apples' at News UK or the DWP. Let's hope it stays that way.

Meet the new boss: Richard Caseby – no connection with any ‘bad apples’ at News UK or the government. Let’s hope it stays that way.

The highly confrontational former managing editor of both The Sunday Times and The Sun has been named as the new director of communications at the Department for Work and Pensions.

Richard Caseby takes over after former comms boss John Shield was hired by the BBC last September.

Gosh, what an incestuous world we live in! The BBC, now confirmed as little more than a mouthpiece for the Conservative Party in its political news content, hires the former press officer for the Tory-run DWP. The DWP then hires an executive from Rupert Murdoch’s News UK, previous home of – oh, yes – former Number 10 press supremo Andy Coulson, currently on trial for criminal offences allegedly committed while he was employed by the same firm!

Murdoch, the government, the BBC – these people like to stick together, and they like to put their people in positions of influence.

There is no evidence – to my knowledge – that could link Mr Caseby to any criminal behaviour at News UK. It is to be hoped that any ‘bad apples’ who worked there did not manage to spoil the whole bunch. It would be wrong to consider him guilty of any wrongdoing merely by association with his previous employer.

And we should not automatically consider him to have been elevated to this position – in which, as a government employee, he should be impartial and not partisan – because he may be ideologically aligned with the Conservatives.

That being said, I shall certainly be watching this character like a hawk.

It seems he has gained a reputation for being “outspoken” and “forthright” – Roy Greenslade in The Guardian recounts an occasion when a columnist for that paper had mistakenly reported that The Sun had doorstepped a Leveson Inquiry lawyer, writing that such activities were equal to “casually defecating on his lordship’s desk while doing a thumbs-up sign”.

In response, Mr Caseby sent a toilet roll to Guardian editor Alan Rusbridger along with a note saying: “I hear Marina Hyde’s turd landed on your desk.”

Of his new roll – sorry, role – at the DWP, Mr Caseby said: “Welfare reform and the introduction of Universal Credit represent the biggest transformation programme in the UK. It is fundamentally about changing culture and behaviour to make sure there is always an incentive to work.

“This is a huge and inspiring communications challenge and I’m delighted to be joining the DWP team to help in the task.”

Clearly he is already getting the hang of the lingo: “tranformation”, “changing culture and behaviour”, and “always an incentive to work” are all DWP catchphrases – probably because they don’t mean anything.

A “transformation” programme can turn a good system into the substance he mentioned in his Guardian note.

“Changing culture and behaviour” does not mean improving standards of living – in fact the evidence shows the exact opposite.

And the idea that DWP cuts mean there is “always an incentive to work” has been disproved to the point of ridicule. Iain Duncan Smith’s changes have hit low-paid workers more than anybody else and wages have been dropping continuously since the Secretary-in-a-State slithered into the job back in 2010.

Universal Credit has been the subject of so many expensive write-offs and relaunches that a campaign was launched earlier this week, called ‘Rip It Up And Start Again’, seeking an end to the fiasco.

This is the arena into which Mr Caseby has stepped.

He’d better tread carefully.

If he puts just one foot wrong, he might just get his head bitten off.

The Tory share of the vote is dwindling – why is Labour chasing it?

"Who's been sitting in MY chair?" Nick Clegg would be right to feel supplanted as Labour moves further rightwards, groping for Tory votes - that aren't even there.

“Who’s been sitting in MY chair?” Nick Clegg would be right to feel supplanted as Labour moves further rightwards, groping for Tory votes – that aren’t even there. [Picture: Reuters]

One of the things that really rankled about Rachel Reeves’ attempt at Tory talk in yesterday’s Observer was the (observable) fact that she didn’t need to.

Why try to out-Tory the Conservatives when their share of the vote has been going down at every election – among a proportion of active voters that is – itself – reducing?

So in 1955, they managed to snag 49.6 per cent of the votes. In 2010 this had dropped to 36.1 per cent. Turnout was 76.8 per cent in the first instance and 65.1 in the second. They got 38 per cent of all available votes in 1955 and 23.5 per cent in 2010.

Some could point out that Labour’s share in 2010 was only 29 per cent – around 18.8 per cent of all available votes – but this just proves the point. Neoliberal New Labour were very close to the Conservatives in outlook and policy and most people in the UK don’t want that.

But Rachel Reeves indicated that these policies would continue on her watch, and that’s why people reacted so strongly against the Observer interview.

Perhaps Labour should have done some research on this. Yes, the party has its ‘Your Britain’ website, for members to bring forward ideas – but I’ve been there and didn’t like it. It seemed needlessly complicated, with efforts made to get people discussing particular policy areas at particular times when it would have been better to let people just say what they want – when they want – and sort it out at the receiving end.

Besides – that’s just for members. How much research has Labour done on the doorstep? What do people who aren’t aligned to either main political party want? That is where Labour will get its votes.

Even pointing to research by the polling organisations doesn’t help here. Ipsos-MORI famously polled more than 2,500 people about the benefit cap earlier this year, and Iain Duncan Smith was delighted to announce that a significant majority of respondents were in favour.

It was left to this very blog to break the news that only 21 per cent of those respondents knew enough about the cap to give an educated opinion. It would be informative to know how many – of all the respondents, not just the 21 per cent – were actually affected by it.

All of this is a great shame that may worsen into a missed opportunity. There are some terrific ideas around at the moment and all Rachel Reeves – and Labour as a whole – has to do is look around for them.

The Fabian Society website carried an article entitled Welcome to DWP the other day, in which most current proposals for reform of the system were rejected – which is a telling indictment of the state of the nation in itself. The stated reasons were that they would reduce the incomes of poor families (no thank you, Labour! You’re not going to out-Tory the Tories!) or fatally undermine universalism.

But among the ideas that were there, it was suggested Labour needs to reform individual benefits before setting its planned upper ceiling on the benefits budget. To that, I would add that the ceiling needs to be described as a proportion of a Labour government’s overall budget – not limited to a particular sum of money. This is the only way to keep it fair as inflation increases costs and devalues the pounds in our pockets, year on year.

Reducing unemployment, involuntary part time work and low pay by getting people into full-time jobs on a living wage could cut billions off the benefit bill (and boost the tax take at the same time).

For right now, the article stated, La Reeves needs to work on Labour’s perception problem – the false image created for it by an unsympathetic mass media, that it is ‘soft’ on benefits. This is based on misconceptions; only a quarter of social security goes on working-age people without jobs, and benefit fraud is – as has been explained ad absurdum on this site – miniscule.

Before the recession, Labour had cut the number of people out of work and really made work pay (with tax credits – not necessarily a great way forward, but a start – and these could be eased out of service as pressure was exerted on employers to adopt living wages). The social security budget was falling, not increasing. That’s what Rachel Reeves needs to be saying. Labour’s policies were working. The public has been misinformed. A new Labour government could create a winning formula again.

It could happen – if Labour stops being the Party of Plastic Tories and starts being the Party of the Worker once again.

‘Barefoot banking’ to support people on the edge

usury

This is a piece I wrote for the local credit union in my part of Powys, following on from the Archbishop of Canterbury’s vow that the Church of England would fight payday lenders. Quite right – usury is an evil that religious organisations traditionally oppose. I’m publishing it here because the main information is relevant nationwide (and also because today appears to be quite slow for political news).

Credit unions must rise to the challenge created by the Archbishop of Canterbury’s stand against payday lenders, according to a leading figure in a Mid Wales organisation.

Richard Bramhall of Red Kite Credit Union said the main issue facing credit unions was how to bring affordable credit to “people on the edge”.

Last month, the Most Reverend Justin Welby announced that he planned to help community-based credit unions by allowing them to use Church of England premises as bases, to put firms like Wonga.com, which charge huge amounts of interest for their loans, out of business.

“His idea is very constructive,” said Mr Bramhall.

“Instant credit is a difficult sector to service because of high rates of defaulting. Payday lenders, door-step lenders and loan sharks – and to a lesser extent banks and credit card companies – answer the threat of bad debt by charging monstrous interest rates.

The Credit Union approach is responsible lending, careful interviews, getting guarantors where possible and working with the member to develop financial competence.

“The ethos always was to save; build a relationship with the credit union through saving – becoming a shareholder – and borrowing using the shareholding as security. They pay low interest and benefit by keeping and growing their shares.

“We do not want to lend at high rates,” he said. “Our standard rate is 12.68 per cent, or one per cent per month. If you borrowed £100 over a year and paid it back without interruptions, it would cost you £6.60 in interest, with no extra charges and no penalty for early repayment.”

But he warned: “The population density here is so low and the conceivable number of members so small that, even if everyone joined, our income from loan interest would not be enough to pay for bank-type premises or employees.”

The Credit Union’s solution is what Mr Bramhall calls ‘barefoot banking’. He said “The Herb Garden Café, in Llandrindod Wells, is an example. You can access credit union services six days a week, 12 hours a day – not just when we’re open but any time we’re in the building. People can pick up leaflets, ask about the credit union, leave messages, make payments and collect cheques. It costs the café nothing.

“If people want to help, they could develop the sort of access point we have here. Our greatest need is for self-motivating volunteers and casual drop-in service points in shops, churches, cafes and even private homes all over Radnorshire and north Brecknock.”

He added that credit unions also needed to establish themselves in schools, teaching responsible money management to youngsters.