To improve financial health, we must tackle immediate needs, but we also need to change the system so that everyone has choice and opportunity. This was the overarching message of our Building Financially Healthy Communities event in Durham.
We hosted the fourth of our Building Financially Healthy Communities event in Durham on 15th November, in partnership with the Monkey project and Advice in County Durham. Our aim was to facilitate a conversation about how we can build the financial health of our communities, really challenge our thinking about what works, and tease out examples of effective practice from the people in the room.
Sian Williams, Head of National Services at Toynbee Hall gave the keynote speech. She spoke of how the narrative we often hear when it comes to people’s financial health is one of “us and them” – if only “they” would behave differently then they would be better off. Her rebuttal to this narrative was simple – there’s no them, there’s just we.
Sian reminded us that the “system” (benefits, financial services, housing services, etc.) is becoming more and more complex all the time. Most of us just want to get on with things and money helps us do that, but the system is designed in such a way that our money is constantly “leaking” out, especially if you’re on a low income. For example, if someone is using a prepayment meter for gas and electricity, they pay more for it than a mainstream consumer would. In this situation many would suggest that the right thing to do would be to help the person switch to a Direct Debit to get a better price; however, Direct Debits are an inefficient way of managing money for many low income consumers. It’s not enough to change the individual’s behaviour, we have to change the system that leaves some people with less value for each pound they pay.
Some progress has been made. Sian gave a few examples of how some aspects of the system are changing: fee-free basic bank accounts, a cap on high cost short term credit, and a new single public money advice body which will combine debt advice, pensions advice, and money advice into one service. Change is happening, but we can all be doing more to ensure everyone has the opportunity to optimise their financial health.
We were fortunate to also hear from Steven Johnson from Collaborative Change, who has led a number of Randomised Control Trials to test “nudge” approaches to reducing rent arrears. We also heard from Helen Campbell from End Furniture Poverty, a campaign raising awareness of the often hidden problems of furniture poverty.
Steven and Helen’s presentations stimulated thought-provoking discussions about what really works to generate financial health, given the challenging economic environment. There were a few things in particular I took away from the day:
“Silver bullets need careful aim”
Using “nudge” approaches to improve financial health presents us with both an opportunity and a challenge. Since nudging has become increasingly popular as an approach to social change, it is essential that we understand that a nudge isn’t a silver bullet: it won’t transform financial health. Rather, it is a way of targeting and tailoring support at the right people; and works best when it’s targeted at those he refers to as having “high motivation” and “high ability”.
In the case of rent arrears for example, nudges will not work if people just can’t afford to pay. As a case in point, Steven pointed to evidence which showed that only 25% of rent arrears were the result of tenant behaviour. In the majority of cases, problems with payments were caused by external factors like benefit payments and systems errors. And yet, most of our interventions are designed for these 25%, leading many interventions to fail. As a final word of advice, Steven explained that even though a nudge can change behaviour, the change is small and incremental. We don’t know how long changes from nudging last though, so it’s important to see sustainable behavioural change as a journey and not an event.
See Steven’s presentation here.
Furniture poverty is about not being able to participate in social life
Being able to access and afford essential white goods and furniture is vital for a decent quality of life and for participation in the norms of society. This is the key message behind the End Furniture Poverty Campaign, introduced to us by Helen Campbell, Campaign Officer. Poverty, deprivation and social exclusion are all linked and characterise the experience of furniture poverty. This was embodied in the testimonial Helen shared of a young woman who said that if she hadn’t received help from her dad to buy a new washing machine, she would have had to buy one at a rent-to-buy store. This illustrates that furniture poverty occurs when someone doesn’t have the social capital to inherit furniture and other goods from family and friends. Without this social capital households are left having to rely on high cost forms of credit, or else go without, further entrenching their experience of poverty. Current data on the extent of furniture poverty doesn’t exist but relevant research suggests that 28% of households cannot afford at least one essential item such as carpets, fridge freezer or washing machine. Twenty six percent could not afford to replace or repair broken goods. It was not surprising then that further research had identified that furniture is one of the most important “extras” social landlords can provide to reduce risk of debt with illegal lenders, rent arrears and abandonment. The campaign is therefore calling on social housing providers to provide more furnished tenancies and offer other means of support to reduce furniture poverty. They are also working to build a coalition of voices to champion this issue through End Furniture Poverty Supporters. You can become a supporter by visiting their website at www.endfurniturepoverty.org.
See Helen’s presentation here.
In summary, the discussions and activities of the day stressed the need for us all to be advocates for financial health, either as individuals, as organisations, or collectively. A number of strong partnership networks already exist within County Durham, supported by Monkey and Advice in County Durham. These networks provide a good foundation for building a collective voice and advocating for changes to the system that create financial health for all.
Additional resources and presentations from the event can be found on our website, as well as resources from previous Building Financially Healthy Communities events.
Our next event in this series will take place in Plymouth on 19 January. Find out more here.