Tackling Poverty in Leicester

We know that income alone is not a measure of poverty or people’s quality of life. However, money – and the impact of not having enough – has a huge influence on people’s lives. The money households receive, whether through work, welfare benefits or both, determines whether they can be independent or whether they need to rely on external services.

This section also covers advice services because so many of our services support people around their money and debt, or other basic needs that are not met due to lack of money. During the development of this work, advice and access to other services was identified as a key enabler. High-quality advice that is easy to access and understand is vital in helping people support themselves and their families.

A large proportion of workers in Leicester receive a low wage. We want to address this through a range of measures and to support local employers to improve wages where possible. This will bring wider benefits to businesses and not just increase the amount of money their staff take home. The jobs, skills and transport section looks at this in further detail.

People often need to access legal advice, which has a direct influence on their ability to either work or claim welfare benefits. We have individuals and families in Leicester who have “no recourse to public funds” and are not allowed to work because of their immigration status. A number of community organisations offer advice to these people, alongside other free services such as those available through the University of Leicester.

Through extensive consultation and discussions, a picture has emerged of the local landscape around money and debt.

Universal credit

This is now the primary benefit claimed in Leicester. There has been a big push to move people on to universal credit, when many would be better off staying on legacy benefits. Frontline staff expressed concerns that people presenting in crisis had multiple needs, experiencing “three to four issues per any one person”.

Local v non-local services. Being in library makes a massive difference. Get people into the building, different services in there, easier to support them.

Messaging

One suggestion was the use of targeted social media adverts. For instance, Clockwise Credit Union suggested they could target adverts at those who were considering pay day loans, and B-inspired could target those considering buying new white goods on credit at extortionate rates. There was a feeling that moving from conventional forms of targeted messages, such as posters, to online adverts would work better with harder to reach groups who may be reticent to engage with services or simply not realise these services exist. This also would help us understand areas of need by logging patterns of engagement.

Financial education in schools, debt, contracts.

Money and debt

Deficit budgets are par for the course – both parents are working but still need to use foodbanks. There is not enough money to make ends meet – arriving at a balanced budget is not possible. We need to help people to prevent and understand the cost of debt. We need to be clear that not being able to make ends meet is not the same as not being financially literate. The biggest driver for people seeking debt advice is arrears with the council. Council tax debt is remote, whereas utilities keep you warm.

Identify where the community come together and gather – target faith groups, community groups.

Advice

People don’t come to advice services at an early enough stage. We need a range of interventions which meet breadth of circumstances and individual situations. Early help prevents issues escalating. We need to raise co-locate services in local neighbourhoods, and work in partnership. Devolve power and resources into communities, local advice hubs. We need more resources for form filling and social media to educate and offer access to advice.

Everyone should have access to high quality free advice services to help them maximise their income and manage any debts.

The council helps secure this by:

• directly providing services that support residents such as tier 2 social welfare advice, STAR, early help and family support
• commissioning social welfare advice services through the voluntary sector
• making additional funding available for people on low incomes in the form of discretionary funding (Discretionary Housing Payments, Council Tax Discretionary Relief, Care Leavers Discretionary Discount, Council Tax Discounts, Community Support Grants)
• adhering to the Breathing Space legislation when working with council tax defaulters via the Debt Respite scheme
• ensuring people with mental health difficulties do not face barriers to accessing discretionary funding support
• championing the Armed Forces Covenant to promote support for ex-armed forces personnel and their families
• enabling young people leaving care to access affordable goods through their leaving care grant and support from their Personal Advisor
• providing the MyChoice online directory for all city residents to find easily accessible information about support services in their local area
• providing guidance to people unable to access benefits or receive publicly-funded services (No Recourse to Public Funds)
• delivering sessions on financial literacy for families through our Children, Young People and Family Centres
• making training available through the LSCP training programme for frontline staff to be upskilled to talk about money issues with the families they work with
• making public computers available in our libraries, neighbourhood centres and Children, Young People and Family Centres to allow online access to residents to support benefit applications and job search activity
• actively engaging with the Social Welfare Cell and its related groups/plans to support people experiencing financial difficulties
• supporting the Fuel Bank Foundation and the Foodbank Plus project to establish an emergency fuel voucher scheme for the city
• investing in an online platform (BetterOff) to provide guidance to increase benefit take up and help residents maximise their eligible benefit income

In addition, the council intends to:

• continually review the commissioning arrangements for welfare support to ensure current need is understood and met
• pilot form filling capacity using volunteers to support existing welfare rights advice services
• implement a payday advance system for council staff experiencing financial difficulties
• develop information to be provided through our registry services to residents that may experience financial difficulties following the birth of a baby or a death in the family
• sign up to the national ‘Stop the Knock’ campaign regarding the use of bailiffs in the collection of council debt
• review the processes and practice for managing finances on behalf of vulnerable adults in order to maximise opportunities to access deals available to everyone e.g. lower cost energy contracts
• provide lunchtime learning sessions for LCC staff (e.g. social work teams) that are supporting adults with welfare benefit needs to increase their knowledge of welfare rights and the benefits system

In the ‘Definitions of poverty’ section, we referenced the Minimum Income Standard (MIS). This was developed in 2008 to measure the difference between household income and the actual cost of living at a standard which meets material requirements and allows individuals to participate in society. The update in 2019 told us how close those on out-of-work benefits, or those who are paid the National Minimum Wage/National Living Wage, come to the MIS. It told us that working-age households without children had a budgetary increase of 4% which was attributed to an increase in the cost of domestic fuel by 10.4%, higher bus fares by 8.9% and council tax, which increased by 4.7%. Some basic items, such as the cost of food, did not rise as quickly as inflation at 0.5%. Families paying for childcare are facing an increase of 3-4% in cost. If a family requires full-time childcare, the impact is significant if they are receipt of tax credits and Universal Credit, which do not meet the threshold of childcare costs.  Out of work households are becoming worse off, and further from MIS. In 2008, benefits provided 42% of the required household budget for a single person of working age.  Now, they cover less than 32%. This figure for families is even more stark – a couple with two children, who are reliant on benefits, have only 56% of what they need.

The MIS report of 2019 highlighted the following groups, for whom the gap is widening:

• lone parents, whether working full time or part time – they have gained less from the NLW compared to reductions in their in-work benefits. Most cannot reach more than 75% of MIS through their earnings, regardless of how much they work, trapping them on very low incomes
• any family with at least two children under 5, for whom the punitive cost of childcare makes it impossible to improve net earnings by working more hours
• single-earner couples, who do not generally require childcare but, like lone parents, they have made more modest gains from the NLW than dual earners; the effect of in-work benefit cuts has also been to leave them at least 25% short of MIS
• households in any category with a third child born since April 2017, who no longer triggers an extra tax credit or UC entitlement; these families have disposable incomes a third to a half below the MIS budget, regardless of working patterns

Universal credit

The introduction of universal credit (UC) has had a significant impact on Leicester’s residents. The policy decision to build in a five-week delay in making the first payment of a claim has led to extreme hardship for many. Even accepting that up to five weeks is “on time” for a first payment, 85.3% of new UC claims are paid in full on time nationally, whereas in Leicester this figure is 78.7%.

Significantly, for our vulnerable groups, only 74% of new claims from families with children are paid in full “on time”, 9% below the national figure. Following this trend, 74% of our new claims with housing costs are paid in full on time, compared with 82% nationally. Worryingly, where sanctions across all benefits were at the lowest recorded level (at only 1,287 in 2018/19 compared with 7,000 in 2013/14), sanction rates for UC work seekers were at 11.8% of caseload per month.  Though this was during the first 18 months of UC being rolled out, these figures are, and remain, higher than the sanctions against the legacy benefit Jobseekers’ Allowance (JSA).

Households receiving universal credit (UC) or working tax credits (WTC), August 2021

Number of families in receipt of UC or WTC	Leicester East	Leicester South	Leicester West
With children	10,050 (64%)	8,580 (62%)	8,920 (62%)
Without children	5,300 (21%)	6,370 (17%)	6,520 (19%)
Total	15,350 (37%)	14,950 (29%)	15,440 (32%)

Running out of money

The Leicester Health and Wellbeing survey (2018) asked residents about their financial circumstances. While 69% of Leicester residents reported “hardly ever/never running out of money before the end of the week or month”, this was considerably different for vulnerable groups. Of the residents who did not work because of sickness/disability, 39% reported running out of money by the end of the month, a huge contrast from the overall figures. While we do not have national comparators, figures from Lloyds Banking Group show that 80% of people had money left after paying for essentials, suggesting that Leicester residents are less financially secure.

Debt

This picture is also supported by levels of debt, when we compare national and local levels. Over-indebtedness is defined by the Money and Pensions Service:

"Over-indebted" individuals are defined as those who find keeping up with bills and/or credit commitments a heavy burden or have fallen behind on, or missed, any payments for bills and/or credit commitments in any three or more months in the last six months.”

Figures nationally for over-indebtedness stand at 17.2%, and at 18.0% for the East Midlands. For Leicester, the figure is higher once again, at 23.4%. The figures below outline the estimated supply and unmet demand for debt advice services nationally, regionally, and locally:

Face-to-face advice	UK	East Midlands	Leicester
Supply	0.34 million	36,000	1,850
Unmet demand	0.37 million	14,000	2,800
Face-to-face supply as % of demand	48%	71%	39%

Of 40 local government districts in the East Midlands, Leicester ranks 8^th for highest proportional unmet demand for face-to face advice.

Community support grant

Services in Leicester support people around money in a range of different ways. Leicester City Council manages a Community Support Grant (CSG) for people in crisis.

The map below show people who applied for a CSG in 2020/21 by ward is shown below: