Working together to tackle cost of living pressures

We’re about to publish Paradigm’s ESG report for last year. It includes a mildly sceptical note about the helpfulness of the government’s current definition of fuel poverty and its link to low EPC ratings.

There are lots of good reasons for tackling low EPC ratings, with reducing fuel poverty a key incentive. The other part of the fuel poverty measure is about the amount of money left after fuel bills have been paid. For now, the fuel poverty measure might be compared to a see-saw with one end weighed down by several sacks of concrete.

There can be few, if any, landlords not taking a hard look at the support they offer to customers, and considering what extra help they can offer right now as inflation, particularly in gas and electricity bills, carves increasing holes in household budgets.

Paradigm has many people in roles that provide advice and help to customers. This includes checking people are claiming eligible benefits and helping to access funds for people in severe hardship, including our hardship fund.

One of our most important partnerships is with the Citizens Advice organisations, that we work with and fund, who support our residents who need additional help to resolve their financial crisis.

Debt can affect anybody, but some are more likely to be affected

An increasing proportion of our tenants are in deeper financial holes than a basic level of support will resolve - often linked to moments of personal or family crisis, ill health, or caring responsibilities. The scale of the current cost of living crisis brings many more people closer to the edge of being unable to weather what would otherwise be a temporary problem for them.

There is no typical customer profile for Paradigm residents that we refer, or who self refer, to the CA services that we fund. However, we have noted that they are more likely to suffer from mental ill health or disability.

Independent advice

Referral to Citizens Advice offers our customers a way to seek help which they can be reluctant to do from Paradigm directly, given that we are one of their creditors (rarely the only one). It means that they have somebody they can trust with knowledge and experience to work out how to reduce or eliminate their debts and get them back on an even keel. In many cases, it can also help them to tackle the underlying cause of their financial problem, reducing the risk of the problem recurring.

Skills and authority to offer complex debt solutions

Many of the cases require levels of advice that are regulated. The ability to do this involves compliance arrangements which means it would not make sense for us to provide this type of advice in-house. The type of arrangements involved, which have sometimes been serious enough to make bankruptcy an option, require advocacy for the individual which is unconflicted.

Patience and confidence for those who need more support

It is not uncommon for individuals to have ignored or avoided acting on their financial problems for an extended period, or to have multiple debts as they have got further into the red with each new creditor demand. In these cases, particularly where this is either the product or the cause of a mental health crisis, it can take several meetings to fully uncover the extent of their problems, both financial and non-financial. The casework involved in this requires skills that go beyond straightforward benefit checks. Online or virtual services will not meet the needs of people whose case starts with a carrier bag full of months’ worth of unsorted and unopened envelopes, bills, and demands for payment.

Changes to money advice

Right now, our CA partners are telling us that the demand for the service is going up and that the severity of the cases (and the difficulty of solving them) is increasing. That will come as a surprise to nobody.

Funding for money and debt advice – for local CA organisations and other debt advice charities – comes from a variety of sources. Many receive local authority grants. These are not guaranteed income. Although they may provide more by way of a financial benefit than their headline value, local government is facing inflationary pressures on their budgets, and discretionary grants are having to compete with the budget pressures in core statutory local government duties. This often matters a lot for the core funding of local CA and other debt advice organisations.

There is also added uncertainty due to the Money and Pension Service (MAPS) approach to allocating national grants for community level debt advice. This has left many local debt advice organisations with interim extensions to that part of their grant funding and uncertainty over whether the available funds for local face-to-face advice will be significantly cut when MAPS resume the procurement for that service.

Working together to get rid of customer debt where we can

Our partnership with local Citizens Advice organisations (other debt advice services are available!) provides us and our customers with an extra option to tackle serious financial hardship, often recovering sums of money for individual customers which are many multiples of the direct financial cost of providing the service.

As part of our regular review of our work with our local CA organisations, we are clear that we can work better in a partnership where we have more consistent approaches to how we make referrals, and how we liaise to share intelligence about our daily experience.

It means that we put the right capacity in the right place and that we can plan for how we deal with new and emerging problems rather than being on the back foot. They are helping us now with a project to illustrate current and future household budgets for typical Paradigm customer groups, and how changes in benefits, wages, and bills will affect them.

The purpose though which matters more than ever is to get our customers’ debt under control or eliminated and to put as much money back in their household budget as we can (and make the see-saw ride a bit fairer).