At last night’s Inner South Area Committee local Councillors discussed the impact of the government’s welfare reforms, the rise in high interest lending and the Council’s response to these issues.
Earlier this week Leeds, along with other West Yorkshire Councils blocked access to Wonga and other payday loan companies from any Council computer including libraries and other public access terminals. This is in response to the rise in people getting into spiraling debt problems with this sort of high interest borrowing.
Councillors were given an example of someone borrowing £200 from Wonga for one month. If they pay this back within the month it will cost them £237. If they can’t pay it back and the loan rolls over two further months, the cost will rise to £437. The debt escalates and becomes harder and harder to repay.
Council research shows starkly how the recession has hit families in the less affluent parts of the city. In 2004 37% of families interviewed had no savings. When the interviews were repeated in 2010 that figure had risen to 70%. The number of families who were borrowing to pay for day to day living expenses had risen from 23% to 42%.
Councillors were also reminded of the benefit changes that have come in in recent months – the so-called bedroom tax, cuts to Council Tax Benefit and the benefit cap affecting larger families. The imminent introduction of Universal Credit will see families paid their benefit monthly in arrears to mimic a salary, but this will make people receiving the benefit a target for the payday lenders.
The Police report that there has been a rise in “acquisitive crime” (stealing things) in particular shoplifting food. There has also been a rise in domestic violence.
There are alternatives to high interest lenders, for example a loan from Leeds City Credit Union is much more affordable, but they don’t have the same advertising budget or the staff to go door to door offering credit (and collecting debts). The council offers goods (eg white goods, food boxes) through its Local Welfare Support scheme and two food banks have recently been set up in South Leeds.
Councillor Kim Groves pointed out that these problems are not just faced by unemployed people and that most people on benefits are working in low paid jobs. She also said that the high interest lenders are out on the estates now and a more urgent response was needed.
Councillor Judith Blake raised the issue of children who are often the hardest hit. She said we had to get over the stigma of free school meals and increase the take up of nutritious meals that are worth £1,000 per year to a family with three children. She welcomed that the Council is channelling help, support and advice on benefits and debts through Children’s Centres.
Councillors welcomed the actions that the Council was taking with partner organisations, but called for a quicker decisions on Discretionary Housing Payments and easier access to Local Welfare Support scheme.
2 Replies to “South Leeds Councillors discuss the impact of welfare reform”
I don’t think there is enough help for people who work but are on low incomes. In my experience they are the people who have been hardest hit since the recession.
If you are on benefits then you have a regular income and can get a loan from credit union because you have no rent/mortgage to pay. If however, you are a worker on low income, then your housing cost is taken into account and you have very little chance of getting the loan. Not to mention that it’s difficult to find a branch that’s open when most of us are working.
Also, bailiffs are allowed to enter your home and take goods if you are working, despite the fact that your income may leave you in debt every month. If you claim benefits then this is not the case, as the bailiff asks to see proof of benefit and then accepts whatever payment you offer!
Not enough help and services are offered to aid the low paid worker.
I agree there are problems for the low paid worker. I think that approximately 60% of the benefits budget goes to people in work. It’s important to ensure people in low paid work are getting all the benefits they are entitled to but isn’t part of the solution to get the minimum wage increased preferably to the level of the Living Wage?
This government has tried to promote the fiction that there are two classes of people: shirkers and strivers whereas in reality there are people in work who try to do the minimum possible in their job and people without work who are desperate to get it and people in jobs who work very hard for little reward and unemployed people who are trying to avoid work.
What is clear is that the rich few are getting richer and the gap between them and the vast majority of people is getting bigger and there are increasing numbers of people in poverty including children, the old and the chronically sick who can do next to nothing about it.
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