Published: 3 Aug 2017 by Vicky Pearlman

The safety net that local welfare schemes provide is stretched to breaking point. For families who have been homeless, or are facing homelessness now, this support is vital to their chances of making a fresh start. But ideas of what makes a ‘home’ can be severely tested if families are forced to go without basic household goods, such as a cooker, fridge, carpets of curtains.

The terrible events at Grenfell have brought into sharp focus what it means to ‘start again’, although for these families it will mean a lot more than a new fridge or beds for the children. Homelessness often follows a period of personal trauma – the loss of a loved one, serious illness, the breakdown of a relationship, an escape from domestic abuse or violence, the loss of a job and an income.

At Shelter, we see far too many families move into new tenancies with few, or no, possessions with which to make a home, and too little money to buy them. Many families see little alternative but to take on risky and unmanageable debt, often in the form of rent-to-own loans, which the FCA has expressed particular concern about just this week. This pressure on their finances exposes them to the risk of rent arrears, threatening their ability to make a success of their new tenancy, right from the start. Rent arrears can quickly lead to eviction and families facing homelessness again, with devastating impacts on their health, wellbeing and their children’s education.

Local welfare schemes (formerly the centrally administered Social Fund) are intended to provide a crucial safety net to households like these. But passing the responsibility for supporting vulnerable people to local councils, and providing no additional funding, has resulted in tightening eligibility criteria and fewer people getting help.

Published today, with support from the Longleigh Foundation, Support of last resort, reveals that approximately 21 schemes have closed since 2015, and a further 30 schemes are under review, being scaled back, possibly facing closure or considering changes in management or external provision. Seventy schemes were planning to go into 2017/18 unchanged.

Our new briefing identifies two key groups at particular risk of arrears and homelessness if they are unable to access essential goods without taking on unmanageable debt:

1. Our ‘bump in the road’ group are families facing a temporary, albeit significant, crisis who face a sudden emergency which they cannot afford to remedy, such as a broken washing machine or fridge.  They may include families struggling to pull together a deposit or rent in advance to access the private rented sector, or who are moving into an unfurnished property from temporary accommodation, and families who are just about making a go of a longer-term tenancy
2. Our group of ‘constant strugglers’ are families who are barely scraping by, have no savings and nothing to spare at the end of the month. These families might be living with a disability that stops them working or accrues additional costs; they might be struggling to make up the difference between their housing benefit and local housing allowance and their rent, slipping further into arrears every month

These families are the most likely to suffer from the ‘poverty premium’, finding everyday costs more expensive than families with higher incomes. For these households, taking on another debt to manage a move into a new property, or replace a broken cooker or washing machine – even at low or no cost – would risk arrears and homelessness.

Meanwhile, the need for help to deal with a crisis or unexpected and unaffordable cost is growing. Welfare reforms, including lowering the cap on benefits, freezing the local housing allowance and the delays (both by design and in operation) in Universal Credit, and the increasing cost of renting, all play a part in this.

We have identified a wide range of crisis-support schemes across the country, some part of a local council welfare scheme, others running independently. They vary in size, scope, geographical coverage, eligibility criteria and types, and models, of provision. All of this makes it difficult for families in a crisis to know what support they might be able to get, how, and from whom.

No one size fits all, but consistency of provision is key. It is essential that that people can get the help they need, when they need it, to deal with a crisis, without putting themselves at risk of homelessness through having no alternative but to turn to high-cost, short-term credit to secure goods.

As pressures increase on local council budgets, it is difficult to see how a system of grants can continue to be sustainable – particularly for families who are experiencing a temporary, albeit significant, ‘bump in the road’.

Affordable credit presents a possible way forward for these groups.

But this cannot be an appropriate solution for our groups of ‘constant strugglers’, who cannot access affordable credit because they cannot afford to make any repayments. These families are among the most likely to fall into the clutches of high-cost, short-term lenders, risking falling into rent arrears in order to repay their loans or else risk losing the goods.

Taking on another debt to manage a move into a new property, or replace a broken cooker or washing machine – even at low or no cost – would risk arrears and homelessness.

This briefing is intended to act as a catalyst for further thinking and discussion about how best to support families in a crisis, so that a bad situation does not become a disaster. It sets out a series of next steps – for both national and local government and voluntary and community sector organisations in order to take this conversation forward.

It is difficult to escape the conclusion that we will continue to need a nationally funded grant scheme, which can help families with the unexpected costs and prevent, or relieve, homelessness. More generous welfare benefits would better support these families to that they don’t fall further into debt and poverty every month but are, instead, able to build their own, small, safety net.

This – in addition to a mixed model of support which provides individualised tenancy support, a combination of low-cost loans with saving components, and grants through Welfare Funds, furniture re-use schemes and opportunities for training and employment – has perhaps the best potential for the sustainable delivery of crisis-support to prevent, or relieve, homelessness.

This could give us a system of support that is both sustainable and flexible enough to meet the needs of both our ‘bump in the road’ and ‘constant struggler’ groups, and prevent a financial crisis leading to homelessness.