Poverty

fuel poverty

 How can we get the measure of rural fuel poverty? 

Some households need to spend a high proportion of their income to keep their home at a reasonable temperature. While there are national and local policies and initiatives which seek to support these households to alleviate their fuel poverty, some commentators have suggested that the COVID-19 pandemic and the tragedy unfolding in Ukraine is worsening fuel poverty and more now needs to be done. While here in the UK there are immediate concerns about customer’s ability to pay their energy bills, fuel poverty is a significant and long-standing issue for all too many people, and its impact is felt across many areas of life. How much of an [increasing] issue is fuel poverty in rural areas, and what more can be done about it? Jessica Sellick investigates. 

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What is fuel poverty? In general, it relates to households that have to spend a high proportion of their household income to keep their home at a reasonable temperature. 

The Warm Homes and Energy Conservation Act 2000 committed Government to publishing a strategy ‘to ensure that so far as reasonably practicable persons do not live in fuel poverty’. This adopted a measure that a household was fuel poor if, by modelling the energy efficiency of the home, more than 10% of net income would have to be spent on fuel to reach particular temperature standards and meet other needs. The 2010 Autumn Statement announced an independent review of the fuel poverty definition and measure. 

This  Review, commissioned in 2011, highlighted three key ways in which fuel poverty is a serious national problem: 

  • From a poverty perspective: households with high energy costs living in poverty or on its margins face extra costs to keep warm above those for typical households with much higher incomes. 
  • From a health perspective: living at low temperatures as a result of fuel poverty is a significant contributor to both excess winter deaths and a number of incidents of ill-health, placing additional demands on the health and social care systems. 
  • From a carbon reduction perspective: the energy inefficiency of homes affects the ability to reduce carbon emissions, with fuel poverty providing a further barrier in terms of the implementation of policies to mitigate climate change since those on low incomes are often least able to afford any increases in prices that may result from them. 

The report emphasised the overlap between low income and the energy inefficiency of the homes people live in. The authors recommended using a definition and measurement focused on ‘individuals in households living on a lower income in a home that cannot be kept warm at reasonable cost’. The review further suggested fuel poverty should be measured by looking at low income households facing high energy costs. 

In 2013 the Government published a consultation and its response, accepting many of the review’s recommendations including measurement of income after housing costs adjusted for family size; and adopting a Low Income High Costs (LIHC) framework as a new indicator of fuel poverty and a means of assessing it. Under the LIHC measure, a household was considered to be fuel poor if they had required fuel costs that were above average [the national median level]; and if they were required to spend that amount they would be left with a residual income below the official poverty line.  

In 2021 the Government introduced a new definition of fuel poverty. Called the ‘Low Income Low Energy Efficiency’ (LILEE) indicator, a household is considered to be fuel poor if: (a) they are living in a property with an energy efficiency rating in bands D, E, F or G; and (b) their disposable income – income after housing costs and energy needs – would be below the poverty line. 

Non-governmental organisations use other definitions and measures for fuel poor households. The National Energy Action (NEA), for example, define a household as being in fuel poverty if ‘it needs to spend more than 10% of its income on energy in order to maintain a satisfactory heating regime’. Fuel poverty is a devolved policy area and defined differently in the other UK nations. The Welsh Government definition aligns with the NEA in defining a household as being in fuel poverty if ‘they would have to spend more than 10% of their income on maintaining a satisfactory heating regime’. The Northern Ireland Assembly’s definition is more specific, defining a household as fuel poor if ‘in order to maintain a satisfactory level of heating (21 °C in the main living room and 18 °C in other occupied rooms), it is required to spend more than 10% of its household income on all fuel use’. The Scottish Government introduced a two-part definition in 2019 and has a broader interpretation, defining fuel poor households where (1) after housing costs have been deducted, more than 10% [20% for extreme fuel poverty] of their net income is required to pay for their reasonable fuel needs; and (2) after further adjustments are made to deduct childcare costs and any other benefits received for a disability or care need, their remaining income is insufficient to maintain an acceptable standard of living [defined as being at least 90% of the UK Minimum Income Standard].   

Regardless of which definition is applied, the causes of fuel poverty are underpinned by three key factors: (i) a household’s income, (ii) fuel prices, and (iii) energy consumption – which can be affected by the energy-efficiency of the household’s dwelling. In a rural context, fuel poverty is often driven by rising fuel prices, an ageing housing stock that is not thermally efficient, a lack of access to natural gas supplies, and/or the costs of delivering fuel to more sparsely populated areas. 

How many people are living in fuel poverty? 2020 is the latest year for which statistics are available in England – with the Department for Business, Energy & Industrial Strategy (BEIS) publishing its fuel poverty statistics report in February 2022. In 2020 it was estimated that 3.16 million households (or 13.2% of all households) in England were fuel poor under the LILEE definition. The data shows the proportion of households in fuel poverty declined by 34% between 2010 and 2019 (equating to some 1.6 million households). The depth of fuel poverty, known as the fuel poverty gap, has also declined in England. This measures the amount by which the energy costs of a fuel poor household exceed the high costs threshold (i.e., the cut in energy costs that would lift a household out of fuel poverty). The data reveals how the mean average fuel poverty gap reduced from £339 in 2010 to £223 in 2020.  

The Statistical Digest of Rural England identified 12% of households in rural areas to be in fuel poverty. While historically fuel poverty was seen to be more prevalent in rural areas, since 2017 urban areas have had the greater proportion of fuel poor households (with 13.8% of urban households and 11.6% of rural households fuel poor in 2019). However, the fuel poverty gap is larger in rural areas compared to urban areas – with the average fuel poverty gap for fuel poor households in rural villages, hamlets and isolated dwellings £585 in 2019 compared to an average fuel poverty gap of £216 for all fuel poor households. Similarly, using the LIHC measure, the average fuel poverty gap for urban households decreased between 2011 and 2019 whereas in rural areas this gap widened over the same period.  

The Government has projected fuel poverty levels in England in 2021 and 2022 under the LILEE definition. The forecasts reveal how the proportion of households defined as fuel poor are expected to fall from 13.2% in 2020 to 12.8% in 2021 and 12.5% in 2022. This fall is attributed to improvements in the energy efficiency of homes between 2020 and 2022, expected growth in low income deciles, and a support package for energy bills announced in February 2022. However, the depth of fuel poverty is projected to increase over this period, from £223 in 2020 to £233 in 2021 and £258 in 2022. This is being attributed to the default tariff price cap announced for summer 2022 resulting in higher energy prices in real terms. The energy price cap increased by 12% in October 2021 and by 54% in April 2022, an increase of some £700 for ‘typical levels of dual fuel consumption paid by direct debit’. Many observers are predicting a further increase in October 2022, possibly by a further 50%. Will the depth of fuel poverty in rural households also increase over this period? 

There is a 2-year lag in many of the statistics presented here, with some of these figures based on actual data from 2018. This makes understanding the levels and depth of fuel poor households in real time difficult. Furthermore, what would applying a rural lens through the data we already collect reveal (e.g., analysing the figures using the Rural Urban Classification and/or providing rural projections?) 

What is Government doing? In England, the Government has set a statutory fuel poverty target. This is based on Energy Performance Certificates (EPCs) for fuel poor homes and was produced as part of a fuel poverty strategy back in 2015: ‘the fuel poverty target is to ensure that as many fuel poor homes as is reasonably practicable achieve a minimum energy efficiency rating of band C by 2030’. The Government also set interim targets of EPC band E by 2020 and band D by 2025. 

The latest published fuel poverty statistics (for 2020) show an estimated 97.2% of low income households were in properties with an energy efficiency rating of band E or higher; 90.1% were in band D or higher; and 52.1% were in band C or higher. 

In July 2021, the Committee on Fuel Poverty (CFP), a Non-Departmental Public Body sponsored by BEIS, assessed progress towards delivering the 2025 and 2030 targets. Using the LILEE measure, they found the number of fuel poor households living in bands E, F or G had not materially changed, and that the number of households living in bands B and D homes considered fuel poor had increased to 1.14 million. The CFP described how the 2020 band E milestone had been missed – with only half of the 293,000 bands F and G fuel poor homes at the start of 2015 upgraded to band E or above by 2020. Although there were more than sufficient funds available to deliver the 2020 milestone, the CFP cited how only 10-30% of programme budgets were received by fuel poor households; and only a very small percentage of the funds were aimed at those in the deepest levels of fuel poverty. The CFP further highlighted how the Government is just over 50% towards achieving the 2025 band D milestone and that future progress with current programmes is forecast to be slow. 

The Government published an updated fuel poverty strategy in 2021. This set out several policies to improve fuel poverty, including: 

  • £60 million of additional investment to retrofit social housing and £150 million for the Home Upgrade Grant. 
  • An expansion of the Energy Company Obligation (ECO) requiring larger domestic energy suppliers to install heating, insulation, or energy efficiency measures into the homes of people on low incomes, vulnerable or fuel poor. 
  • An extension of the Warm Home Discount, a requirement for energy companies to provide a £140 rebate on the energy bill of low income older people and other low income households with high energy bills. 
  • Drive over £10 billion of investment in energy efficiency through regulatory obligations in the Private Rented Sector. 

These policies are intended to sit alongside other, existing measures to alleviate fuel poverty, including but not limited to: 

  • Winter Fuel Payment: a tax-free annual payment made to assist older people  in meeting the costs of their winter fuel bills. 
  • Cold Weather Payment: payments made during very cold periods of weather to some recipients of welfare benefits (e.g. income support, universal credit, pension credit). 
  • The Green Deal Finance Company (GDFC) which provides loans for home efficiency improvements. 
  • Social Housing Decarbonisation Fund (SHDF): there are currently 19 demonstrator projects in 17 Local Authorities in receipt of £62 million to learn lessons and gather innovation in retrofitting. 
  • Default Tariff Cap: a limit set on the amount that suppliers can charge certain consumers for a unit of energy. The cap is reviewed twice yearly, most recently in February 2022 where Ofgem increased the level of the cap to respond to rising wholesale prices and additional costs for suppliers during COVID-19. The current level runs from 1 April 2022 to 30 September 2022 and is due to be reviewed again by Ofgem in August.     

In February 2022, the Government announced further support to help households with higher bills. This includes a £150 Council Tax rebate in April 2022, and a £200 upfront discount off bills in October 2022 which will have to be repaid through energy bills over the following 5-years. 

As indicated in the 2011 Review, Government policy on fuel poverty impacts upon a number of policy areas. I offer three examples. 

The first example is energy efficiency which is seen as one of the key ways of alleviating fuel poverty. The Fuel Poverty Energy Efficiency Rating (FPEER) is a measure of the energy efficiency of a property. According to the Statistical Digest for Rural England; rural village, hamlet and isolated dwelling households with the poorest FPEER rating of F or G had an average fuel poverty gap of £1,213 compared with an average fuel poverty gap of £856 for urban households with the same energy rating. The Climate Change Committee (CCC) has emphasised how energy efficiency is key to decarbonisation as it reduces energy consumption and furthermore how it is important to address fuel poverty to ensure a ‘just transition’. 

The second example is health and wellbeing – with cold homes having negative impacts on a person’s physical and mental health. The Cold Weather Plan for England published by the UK Health Security Agency and NHS in October 2021, for example, describes how the health impacts of cold homes include increased risk of heart attack or stroke, respiratory illnesses, poor diet [heat or eat choices], and worsening or slow recovery from existing conditions. The Plan calls for a strategic approach to reduce excess winter deaths across local health and social care economies.  

The third example is the economy where energy efficiency can lead to job creation and provide greater energy security. Back in 2019, the House of Commons BEIS Committee estimated that energy efficiency measures could sustain between 66,000 and 86,000 jobs across the UK; prevent expensive investments in infrastructure; and increase the UK’s prominence as an exporter of insulation and retrofit goods and services.   

For the most part, these interventions and schemes take broad approaches: incorporating improved insulation, replacing old or inefficient heating systems, and/or reducing home energy bills for householders. How do these measures to alleviate fuel poverty affect rural residents? For example, how do these measures work for 4 million UK households who are ‘off grid’, meaning they do not receive mains gas and rely upon heating oil or liquid petroleum gas (LPG)? It is estimated that a typical household heated by oil will use 1,500-2,500 litres a year. According to BoilerJuice, the price per litre increased from £46.50 in September 2021 to £156.51 in March 2022. While gas and electricity prices are capped, heating oil prices are not. Moreover, data from Savills suggests that rural dwellings are often less energy efficient – with EPC ratings of E and D in hamlets compared to ratings of C and D in towns and cities. 

Taken as a collective, and in light of the CFP’s assessment, how do we know how successful these initiatives are [in rural communities and places] and what their return on investment is? How do, or can, these interventions consider the vulnerability of certain people living in cold conditions – especially when the evidence suggests rural households are more likely to suffer negative impacts as a result of their fuel poverty? And how can the approach taken join up policies and initiatives from across Government departments (e.g. with health, environment, and economy)?    

What impact has COVID-19 had? Analysis from Uswitch back in March 2020 suggested that some consumers would need to spend an extra £52 million a week on household energy bills as 16.8 million people stayed at home due to the pandemic – equating to an extra £16 for some households a month and £195 a year for those on Standard Variable Tariffs. The calculations were based on estimates that people working from home would use an additional 25% more electricity and 17% more gas each every day.  

The NEA’ fuel poverty monitor report 2019-2020 analysed how COVID-19 had impacted on vulnerable energy consumers and the organisations that support them. Five main impacts on fuel poor households were identified: (i) an increase in energy use due to more people spending time at home; (ii) a reduction in income as jobs were lost or placed on furlough; (iii) increased affordability issues and debt leading to energy rationing; (iv) reduction in smart metre/ECO installations; and (v) difficulties accessing support, especially for digitally excluded households or those with English as an additional language. 

During the pandemic the Government launched a range of measures to support vulnerable customers. These included new measures to ensure prepayment and pay-as-you-go customers remained supplied with energy; and new protections for customers struggling with their energy bills over winter.  

Citizens Advice highlighted three major risks facing consumers over the winter months in the period 2020-2021: (1) many people are struggling financially – with an estimated 2.8 million people behind on their energy bills due to COVID-19; (2) as people were forced to spend more time at home their energy usage would be higher than normal – and those unable to top up their energy or reduce their usage for fear of higher bills could face negative impacts to their physical and mental health; and (3) energy companies are also facing financial pressures and having to adapt their services. Citizens Advice called on the Government to do more to top up existing support schemes. 

What more can be done, and needs to be done, to tackle fuel poverty?In January 2022, Rural England and the Countryside and Community Research Institute (CCRI) published the results of their study on the lived experiences of customers in vulnerable situations in rural England. The researchers identified rural specific vulnerability factors associated with the age, isolation and basic service infrastructure (e.g., transport, communications).Many utility companies identify vulnerable users – and some have a ‘hierarchy of vulnerability’ with older people with disabilities or suffering chronic illness a priority. It was suggested that more needs to be done to promote the Priority Services Register (PSR) so as to both increase the number of people registering and also raise awareness of the support available to householders already on the register.  

From an international perspective, an evidence review of rural fuel poverty compiled in 2018 suggests locally delivered projects targeted at localised needs can reach significant numbers of households in fuel poverty, and that partnership working can leverage in additional funding and benefits. While some of the schemes collated by the researchers reduced household energy consumption through quick and cheap measures, the evidence also suggests that alleviating fuel poverty requires long-term measures that focus on improvements in housing stock. 

There are a plethora of examples from across rural England that seek to tackle fuel poverty. At a national level there are initiatives such as Fuel Bank, a collaboration between npower and the Trussell Trust which works from selected foodbanks and advice agencies to help customers who have problems with prepayment meters. Local Authorities have leveraged in additional funding for small schemes tailored to local needs (e.g. Warm Homes Eden). Back in 2013, Plymouth City Council recognised the role of community energy in addressing fuel poverty and carbon emissions and set up Plymouth Energy Community – making the link between communities, housing and renewables. For those off-grid, charities and voluntary and community sector organisations often run bulk oil buying schemes, although some of these schemes have been temporarily suspended because of unpredictable prices. 

A volatile energy market and poorly insulated housing stock means it is unlikely that fuel poverty will be eliminated in the near-future in rural areas. Therefore, do we need to prioritise support, perhaps focusing on those residents that are most vulnerable and/or facing the highest costs and/or geographic areas with household above average needs and costs? Or should we avoid a ‘worst first’ approach to ensure all fuel poor households are able to receive some form of support?  

What does the future hold? Will more rural residents face choosing between heating or eating or indeed be left struggling to be able to do either? What more can be done be done to tackle fuel poverty and prevent rural residents from being left out of the cold? In the short term, how can we ensure ‘rural’ features more prominently in Government support and in its annual debate on fuel poverty? And, in the longer-term, how can we invest in the housing stock in rural areas, and look at rural resident’s incomes?   

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). She is currently working with young farmers to gather their views on future land use; helping public sector bodies to measure their social value; and evaluating employability schemes and a veteran programmes. Jessica also sits on the board of a Housing Association that supports older people and a charity supporting Cambridgeshire’s rural communities. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

What’s the real cost of borrowing on credit in rural areas?

What’s the real cost of borrowing on credit in rural areas?

From buying a home, to replacing an appliance, or meeting an unexpected emergency, many households rely on some form of credit. But over the past four decades the UK has seen a rapid increase in consumer debt. This is now coupled with the impact of COVID-19 – with some people losing their job and others being furloughed; and sectors such as tourism and hospitality struggling as some food retailers increased recruitment. Relying on credit for everyday expenses is a problem across the whole population and while many factors have been driving its use, more households may soon find themselves unable to access credit. What credit options are available to people who need to borrow money to cope with a crisis or life event and for whom accessing mainstream lenders is not an option? What credit options available in rural areas? Jessica Sellick investigates. 

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Borrowing money is something many of us take for granted and yet access to credit is not a level playing field. Over time many of the poorest households have been unable to borrow money through mainstream channels (e.g. a high street bank, a credit card company, mortgage broker or car loan provider). Having a low income, a lack of credit history or not taking up financial products such as having a bank account can all present barriers to mainstream borrowing. This often leads people to seek out alternatives, including payday loans or doorstep lenders. Increasing access to mainstream credit, and thus reducing the cost of credit, has the potential to save people hundreds of thousands of pounds each every year. While recognising that access to credit is a personal, emotive and difficult issue for many; what is debt, credit and access to affordable lending like in rural areas and what more needs to be done? I offer four points. 

Firstly, how much money do we owe?  In 2006 the Office for National Statistics (ONS) began a biennial longitudinal Wealth and Assets Survey. This measures the assets, savings, debt and retirement planning of households and individuals. The latest release, known as round 6, covers the period 2016 to 2018 and was published in December 2019. 

  • Total household debt in Great Britain covering the period April 2016 to March 2018 was £1.28 trillion; of which £119 billion (or 9%) was financial debt and £1.16 trillion (91%) was property debt such as mortgages and equity release. 
  • Total household financial debt in round 6 increased by £12 billion (or 11%), up from £107 billion in April 2014 to March 2016. Most of the change was accounted for by an increase in hire purchase debt (up by £6 billion) and student loans (up by £7 billion). 
  • The least wealthy 50% of households held 36% of total household debt. Between April 2016 and March 2018, total debt was three-times larger than total wealth for the lowest wealth decile. 
  • 4% of households between April 2016 and March 2018 were identified as having problem debt – with people in this cohort more likely to rent their home (66% renting compared with 34% for other households), and have an unemployed household head (6% compared to 1% overall). 

Defra publishes a Statistical Digest of Rural England. The latest version includes data from the ONS living costs and food survey. In the year ending March 2018, households in rural hamlets and isolated dwellings had some of the highest average disposable incomes and expenditure compared to urban areas: income levels were £903 in rural areas compared to £189 in urban areas; and expenditure levels were £626 in rural, £121 higher than in urban areas. Households in rural town and fringe areas had the lowest levels of both expenditure and disposable income. These figures do not include mortgage payments and nor does the Digest collate specific data on debt in rural areas. 

According to the Institute for Fiscal Studies (IFS), UK households currently hold  around £230 billion of unsecured or consumer debt (e.g. loans, credit card debt, hire purchase agreements, overdrafts); equating to some £8,000 per household. By unsecured debt we mean debt that has no collateral involved i.e., it is not anchored to a specific asset such as a home.  

High Cost Short Term Credit (HCSTC) is defined by the Financial Conduct Authority (FCA) as unsecured loans of up to 12 months with an APR of 100% or more, excluding overdrafts and home credit or bill of sale agreements. It can include payday loans, home collected credit [doorstep lending], catalogue credit, some rent to own, pawn-broking, guarantor and logbook loans. 

Back in February 2015 the Competition and Markets Authority (CMA) carried out an investigation into the payday lending market – identifying a clear demand for short-term, small-sum credit. 

  • Whilst the single most common amount borrowed was £100, the average loan size was found to be £260. 75% of customers had taken out more than one loan in a year, with an average customer taking out 6 loans over a 12-month period.  
  • People who were aged between 25-30 years old, who were unmarried, living in rented accommodation and on an income of less than £1,500 per month were most likely to take out a payday loan. 
  • 83% of payday loan customers took out their loan online, with 29% taking out a loan on the high street, and 12% using both channels. 
  • 53% had taken out a payday loan to cover living expenses such as grocery and utility bills; 10% for car or vehicle expenses; 7% for general shopping; and 2% to pay off another loan. 
  • 52% took out a payday loan because they had suffered an unexpected increase in expenses or outgoings; with 19% indicating they needed a loan in response to a decrease in income. 
  • 59% said the loan was for something that they could not have gone without.  

In July 2015 the Consumer Finance Association (CFA) published a commentary on borrowing and spending in the 21st century. While the report acknowledges how the HCSTC industry has been subject to increased regulatory scrutiny, the industry has evolved to respond – with many lenders now offering loans over a period of months rather than days (a timescale not covered by all mainstream providers). 

In 2014 the FCA took over regulation of consumer credit, introducing a range of measures to tighten the short-term loan industry. This led to the introduction of a price cap being applied to the industry from January 2015. The cap applies to the initial cost of the loan, the total amount of interest payable and the default fees that can be charged. Four years after the interest rate cap was introduced, a review of the high cost short term credit (HCSTC) market in 2019 found: 

  • For the year ending June 2018, 5.4 million loans had been taken out (almost 50% fewer than the peak in the market in 2013). 
  • The number of providers had fallen from more than 100 in 2016 to 88 in 2018. 
  • Between 2016 and 2018 customers had been borrowing more than £1.3 billion each year, and paying in excess of £2 billion. 
  • People taking out payday loans tended to be younger (with 37% aged 25-34 years) and were twice as likely as the average population to report feeling less confident about managing their money (61% of payday borrowers said they were less confident in managing their money compared to a national average of 24%). 

According to the Money Advice Service (MAS), doorstep loans are often for small sums – between £50 and £500 – over short periods, with repayments collected weekly or fortnightly at your home. In 2017, Citizens Advice published a report looking at how the doorstep loan market operates. 

  • Citizens Advice estimated that there were more than 420 home credit businesses in operation with 1.3 million customers. 
  • While doorstep lending was found to be shrinking, it remains the largest high cost credit loan market. In 2016 Citizens Advice helped 23,600 people with doorstep loan issues (more than any other high cost credit loan type). 
  • The average doorstep loan debt in the first two-quarters of 2016-2017 per client was £690. One-third of clients seeking help from Citizens Advice had been able to take out multiple doorstep loans: with 20% of clients having two doorstep loans, 6% having 3 doorstep loans, 3% having 4 doorstep loans and 3% holding 5 or more doorstep loans. Two clients had been able to take out 14 doorstep loans each. 

Definitive data on the overall size of the HCSTC market is not routinely collected. Nor is information straightforwardly available on the relationship between debt (secured/unsecured), mainstream financial providers and short term credit. We know that some people are more likely than others to experience debt and access HCSTC (e.g. younger, unmarried, income of less than £1,500 per month). How can we build upon existing data and information to better understand the distribution of debt and HCSTC (e.g. by household type, geography, confidence in money management skills) – and the relationship between mainstream providers and alternatives in the HCSTC market? If HCSTC providers are reducing, and people will need to continue to access credit, where are they getting it from, and what are the costs of them doing so?   

Secondly, who takes on multiple credit? In March 2020 the FCA commissioned PWC to understand more about repeat borrowing in the HCSTC market. Six key products were covered in their narrative report: payday loans, home collected credit, rent to own, guarantor loans, logbook loans, and high cost personal loans. PWC found that re-borrowing had become a habit formed by customers over several years and was now part of their financial lives. Re-borrowing was felt to be the customer’s only option – they needed the money and didn’t feel they could raise it any other way. Re-borrowing also led to an increase in everyday stress and worry, with over 60% of customers that participated in the qualitative research saying they regretted their decision to take on additional borrowing and 75% of customers finding themselves cutting back elsewhere to keep up with repayments.

The report also found customers had moved very quickly from their first payday loan to taking out multiple payday loans. Indeed, some were held concurrently and others people had very limited, if any, break in between payday loans. Payday loan customers were found to have the biggest borrowing portfolios – for both mainstream and high cost credit. While two thirds (65%) of payday loan customers surveyed said they had considered other options before taking out the borrowing they did, the qualitative research suggested that in practice most alternative options were quickly discounted as too embarrassing, unfeasible, and/or too slow.

Researchers found doorstep lending customers [known as home collected credit] were more likely to be female, over 55 years and have an annual income of less than £12,000. Less than one-third of customers were in employment and half were reliant on benefits. 60% of customers had been with the provider of their most recent loan for 3 years or more. Over half said they had taken their first home collected credit to buy a specific item or fund specific event; while nearly 1 in 10 said they took it because it was offered. Very few, if any, alternatives to doorstep lending were considered and fewer customers had mainstream credit relationships to call upon. 

The amount of payday and doorstep lending in rural areas – and levels of repeat borrowing- is not available. There may also be more informal sources of credit (e.g. borrowing from friends or family, having a tab to be settled at a future date), which may operate and indeed be more prevalent in rural areas but about which little is currently known. What is the relationship between mainstream financial products, the HCSTC marketplace and more informal lending?    

Thirdly, what do we know about current access to credit in rural areas? In June 2018 the FCA published a report setting out the findings of the Financial Lives Survey. While the survey overall found rural residents were more satisfied with their financial circumstances compared to their urban counterparts; the analysis did reveal differences between urban and rural areas when demographic, employment, household income and health variables were taken into account.  

  • Rural areas have a higher proportion of adults aged 55 years and over (13%), or who are younger, with a physical or mental health condition lasting or expected to last 12 months or more, which experience difficulties getting to a bank. 
  • The take-up of mobile banking in rural areas is nearly half that of urban areas (23% in rural areas compared to 45% in urban areas). 
  • People living in rural areas are more likely to own their own home and less likely to have a credit or loan product compared to their urban counterparts.
  • In terms of unsecured debt, adults in rural areas were found to owe £2,510 – a figure lower than the UK average of £3,320.
  • However, people in rural areas were found to have higher vulnerability levels than those living in urban areas – with 54% of adults in rural areas showing characteristics of vulnerability. The survey defines vulnerability as having limited financial resilience, low financial capability, suffering a recent life event (such as redundancy, bereavement or divorce) or a health related problem that affects a person’s day-to-day activities a lot. 

In a speech to the Retail Banking Conference in March 2019, the Chair of the FCA, Charles Randell, highlighted how branch closures can hit rural areas particularly hard – with only 50% of consumers living within 5 miles of their nearest branch, compared to 90% of consumers in urban areas. Cash is also disproportionately used by older people and when branches close this is not always accompanied by an increase in mobile banking.  Similarly, online banking means access to a computer or phone and connectivity and for some consumers the costs of these are prohibitive. 

The Good Credit Guide, published by DEMOS in July 2019, also found rural areas tend to do much better than urban areas in terms of credit scores, partly due to the above average number of older people living in rural areas and because credit scores tend to improve as we get older. The map of credit need (see page 22) reveals how rural areas fall somewhere in the middle between affluent areas with high levels of financial service provision (e.g. London boroughs, the South East of England) and the clustering of post-industrial coastal settlements where more households seem to struggle. However, low levels of credit need do not necessarily translate into low levels of credit use i.e., wealthier households can have higher levels of unsecured consumer borrowing because they can access credit more easily, abundantly and cheaply. The Index identifies 29 ‘credit deserts’ – places with high credit needs but low credit scores. The deserts are: Torfaen, Lincoln, Barnsley, Dundee City, Rochdale, Swansea, Blackburn with Darwen, Nottingham, Hyndburn, South Tyneside, Burnley, Corby, Doncaster, Sandwell, Stoke-on-Trent, Halton, Sunderland, Caerphilly, Liverpool, Wolverhampton, Hartlepool, Neath Port Talbot, Rhondda Cynon Taf, North East Lincolnshire, Knowsley, Blackpool, Merthyr Tydfil, Blaenau Gwent, and Kingston upon Hull. Interestingly, these areas also have five times as many payday lenders, pawnbrokers and rent-to-own shops as the areas with the lowest need.

In a speech to a roundtable of bank chairs in June 2020, the Chair of the FCA described how COVID-19 has accelerated the move away from cash to other forms of payment, and reduced access to bank branches in highlighting the financial exclusion of rural communities, older people and other communities of need. He further suggested that in response to COVID-19 we need to reassess our approach to consumer debt, retail investments and financial exclusion.

While this information suggests, overall, that rural households are more satisfied with their financial circumstances than their urban counterparts, rural dwellers may be more financially vulnerable. What happens if/when mainstream providers and lenders leave rural areas (e.g. the last bank branch or post office closing in a village or town) – do people find it more difficult to access lending facilities? While some alternative ways to bank are in the mainstream (e.g. using an alternative/more distant branch, an ATM, credit union, community finance provider etc.) do other alternative and non-mainstream responses also step in?  

Finally, how is credit and debt changing amid COVID-19? Falls in household incomes due to COVID-19 will be a particular challenge for households where debt repayments already absorb a significant share of household income. According to the IFS, the impact of COVID-19 on the finances of different households varies widely. Using Money Dashboard, a budgeting app, the IFS has modelled the impact of the pandemic so far on earnings, incomes and financial distress.  Compared to predictions before the crisis, and looking at data in May 2020, the IFS found the number of jobs was 4% lower and median after-tax household earnings were 9% lower (equivalent to £160 per month). Households in the poorest fifth have been hardest hit – with a fall in their median household earnings of 15% (or £160 per month). By May 2020 the number of households making mortgage, rental and council tax payments was 14%, 11% and 9% lower respectively than what would have been predicted pre-COVID. While non-payment of mortgages is spread evenly across income distribution; poorer households are falling behind by more on council tax and utility bills. Looking at those who paid a given bill in January 2020 but did not pay that bill in May 2020, the average January bill amount was £1,660 for mortgages, £650 for rent, £170 for council tax and £139 for utilities. 

A briefing note prepared by the Centre for Rural Economy (CRE) and Rural Enterprise UK in April 2020 called for Government COVID-19 support to be sensitive to rural circumstances. For example, COVID-19 may impinge on those with part-time, seasonal, low income and more irregular work in rural areas, many of whom may more easily fall through the cracks of current benefit support provision. Drawing on the findings from the Rural Lives research project, which has highlighted a number of difficulties facing benefit claimants in rural areas (e.g. the complexity of the system, distance from sources of advice and support, the need for regular digital interaction to register for and make a claim etc.); amid COVID-19 the report suggests that the benefits support system may struggle to help people in rural labour markets. For example, any delay when first claiming Universal Credit may leave some rural dwellers needing to fill a gap in their income through a payday loan, a social fund loan and/or with support from foodbanks. 

Analysis by the IFS indicates that 1 in 5 individuals are already living in a household where more than 10% of income is spent on unsecured debt repayments; 1 in 10 of these individuals are living in households that spend 20% of income on debt repayments; and 1 in 20 of these individuals lives in households that spend over 30% of their income on debt repayments. 1 in 4 middle-income households (in the 7th income decile) spend more than 10% of their income on debt repayments; with 12% of those in the 4th income decile spending 20% of their income on debt repayments. The analysis further reveals how some individuals may well continue to face debt repayment problems, due to additional debt being taken out to cover for falling incomes, because household incomes fail to recover, or because of accruing interest. 

This analysis suggests that ‘problem debt’ may start to affect more households, and that we need a quick economic recovery to prevent increases in accumulated debts that are unsustainable for households. This information also reveals that people in rural areas may struggle more, or fall through the cracks, of mainstream employability and benefits support provision – and more work is needed to fully understand rural vulnerability.  

Many of us will rely on credit at pivotal moments in our lives to help us through income shocks or to pay for something (e.g. house, car, studies). However credit (and access to it) can be part of an ongoing cycle of poverty and disadvantage for some. While policy makers have long been interested in developing affordable, at scale credit services to those on low incomes or facing an acute income shock, this takes on new meaning amid the impact of COVID-19 on credit scores, credit need and debt. How can we better understand the financial pressures facing people in rural areas? How can we better measure access to, and the affordability of, financial products (secured/unsecured, short term/long term, mainstream/HCSTC) in rural areas? And rather than wait until debt begins spiralling out of control, what mitigations can be put in place now to help people in rural areas cope?   

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). Her current work includes supporting health commissioners and providers to measure their response to COVID-19 and with future planning; working with 8 farm support groups across England on a Defra funded resilience programme; and helping Local Authorities to measure social value. Jessica also sits on the board of a Housing Association that supports older and vulnerable people. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/ https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Council Flats

Where do rural areas fit in the ‘levelling up’ agenda?

The UK is sometimes viewed as having one of the most geographically unequal economies in the world – where London and the South East are seen as some of the most productive and prosperous places in Europe with other regions and places lag far behind. ‘Levelling up’ is a term being used by Government to describe its ambitions for addressing these longstanding local and regional inequalities. What does the term come from, how is it being implemented and can we ensure rural places are not ‘left behind’? Jessica Sellick investigates.

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What is ‘levelling-up?’In recent times the term first came into prominent use when Boris Johnson used it in a speech to launch his leadership campaign back in June 2019. Then he pledged to “level up” disadvantaged regions and focus on social justice ensuring that there would be no community left behind: “we must fight now for those who feel left behind. We need now to level up, not to neglect our capital — of course not — but to put in the infrastructure that will lift every region.” When he became Prime Minister Mr Johnson went on to deliver a  speech to delegates at the 2019 Conservative Party conference describing how “indeed the best way to level up and to expand opportunity is to give every kid in the country a superb education so that is why we are levelling up education funding across the country…so that every child has the chance to express their talents.”

In October 2019 the Centre for Policy Studies (CPS) published a report detailing how wealth, talent, trade and investment are concentrated in London and the South East. Launched by Communities Secretary, the Rt Hon Robert Jenrick MP, the report also contained a blueprint setting out what Government could do to address this imbalance. The blueprint was centred around (i) a ‘devolution evolution’ in suggesting a base level of devolution across the country with fiscal devolution for Local Authorities , local transport and trade investment and policy-making, moving Government departments out of London, and a re-examination of the role of Local Enterprise Partnerships (LEPs).  (ii) The establishment of a new National Infrastructure Fund, taking advantage of record low interest rates to invest in transport, digital, energy, space, electric vehicles and beyond. (iii) The creation of Opportunity Zones to give the country’s most deprived areas the opportunity and incentives to succeed (potentially alongside a programme of ‘Opportunity Towns’). (iv) Flexibility on the Apprenticeship Levy and wider changes to skills and education policy to ensure that the UK has the pipeline of talent available for the industries of the future and has a workforce more widely spread throughout the country. In launching the report the Communities Secretary stated that “this Government has been clear that its mission is to level up our regions, boost economic growth and ensure we all benefit from the opportunities Brexit brings. And under this Government, public investment is set to reach levels not sustained for 40 years.”

The Prime Minister’s commitment to levelling up led the Department for Education (DfE) to highlight Government efforts to ‘level up education standards across England’ by providing every secondary school with at least £5,000 per pupil and primary schools with £3,750 per pupil from 2021-2022 thus guaranteeing a minimum level of funding for every child. This was accompanied by Government announcements of a £24 million Opportunity North East Programme and £780 million to support children with Special Educational Needs and Disabilities (SEND) in 2021-2022. 

Around infrastructure, the Prime Minister’s focus has been on boosting connectivity in the North and Midlands. Here HS2 is viewed as ‘the spine of the country’s transport network’:  “delivering better, faster and more reliable transport connections is the way to close the opportunity gap across this country. But it is not and never will be an ‘either/or’ between big projects and local services. Dramatic improvements to local transport and the decision to proceed with HS2 will shift this country’s centre of gravity away from the capital and transform connectivity between our towns and cities. I am drawing a clear line under the mismanagement of the past – HS2 must be delivered more efficiently and cost-effectively so that communities feel its benefits more quickly, particularly those in the North.” 

The Government’s Industrial Strategy, published back in November 2017, set out five foundations of economic policy. It is under the fifth foundation ‘places’ that the document explicitly references the need to tackle entrenched regional disparities – including in education and skill levels. Three key policies were outlined in the Strategy: (a) agree Local Industrial Strategies that build on local strengths and deliver on economic opportunities; (b) create a Transforming Cities Fund to provide intra-city transport; and (c) pilot a Teacher Development Premium. 

In February 2020 the Industrial Strategy Council (ISC) published its review into productivity differences across UK regions. They measured regional productivity by looking at the total income in an area (i.e., wages, rental income, and profits) divided by the total number of hours worked there. The evidence review covered 41 UK regions, including small groups of counties, unitary authorities and council areas. The ISC analysis reveals that in 2017 the most productive region was West Inner London, with productivity 2.1 times higher compared to Cornwall (the least productive region). Looking at the productivity of 9 UK regions relative to the UK average since 1900, the ISC found in 1901 London was 30% more productive than the UK average, and Wales 16% less productive. The review shows how these numbers remain very similar today – finding that while the productivities of UK regions had converged significantly by the middle of the 20th century, they have diverged again in the decades since 1980. Over the past decade,  for example, cities such as London, Edinburgh, Bath and Bristol have been characterised by above-average productivity growth. And yet not all cities have performed well – with Leicester, Nottingham and Sheffield described as falling behind in terms of their productivity. 

According to the ISC review, high-productivity regions tend to have a better-skilled workforce, better local governance and management culture, attract more investment, and are more likely to specialise in high-value economic activities. And it is the combination of these factors rather than any one variable that has contributed to their success. In focussing on the fifth place based component of the Industrial Strategy, the ISC suggests policies should have three features: (i) UK regional policy has been in a constant state of flux and a new degree of continuity is needed. (ii) Given the difficulty of diagnosing the root causes of a region’s productivity performance, proposed policy interventions should be robust to take account of different interpretations of the evidence, and they also need to be realistic in realising change will require action across a range of policy areas. (iii) We need to keep the spotlight on regions underperforming on their potential so as to balance productivity growth across the UK, and ensure that interventions are directed towards places where they have the best chance of making a difference. 

The Office for Budget Responsibility (OBR) initial assessment of the potential impact of the COVID-19 on the economy and public finances was published on 14 April 2020. When asked whether austerity might be required to control the budget deficit, the Chancellor Rishi Sunak said the Government was still committed to its levelling-up agenda: “when we come out of this in terms of righting the ship, we’ll have to look at it then. Obviously this has cost a lot. But as I’ve said before, the best way out of this for all of us is to just grow the economy, which is why trying to keep as much of it as intact as possible at this moment allows that bounce-back when we come out of it and allows us to hopefully snap back to normal as quickly as possible.” We now see the term being deployed in the work of the Department of Health and Social Care (DHSC), NHS England and health providers around their ‘recovery, reform & renewal and recalibration planning’ which is focussing on addressing health inequalities; and by the Business Secretary Business Secretary Alok Sharma with the creation of 5 new business-focused groups to help the economy bounce back from the COVID-19 pandemic. Other recent Government interest has sought to level-up through cities and towns.  

The current Government’s policy aim of addressing ‘disadvantaged regions’, of ‘spreading prosperity’, and/or of creating ‘opportunities for all’ and ‘economic bounce back’ across the country is not new. Under New Labour, for example, the emphasis was on English regions and Regional Development Agencies and regional Government Offices were established. In 2002 the Government announced a new Public Service Agreement target to: “make sustainable improvements in the economic performance of all English regions and over the long term reduce the persistent gap in growth rates between the regions, defining measures to improve performance and reporting progress against these measures by 2006.” This led the then Housing, Planning, Local Government and the Regions Select Committee to conduct an inquiry into reducing regional disparities in prosperity; resulting in several recommendations around prioritising less prosperous regions rather than developing policies and investments for the benefit of all regions.  

The coalition government from 2010 moved away from traditional ‘regions’ to focus on smaller ‘city-regions’ instead. The Government at that time created a framework for sustainable and balanced growth which sought to shift away from a model reliant on a narrow range of sectors and increasing government spending towards a vision of a dynamic economy where it would be easy to start up and grow a business and where every company can reach its potential. The emphasis here was that the private sector should come first – with entrepreneurs, businesses, and social enterprises seen as the creators of prosperity.  

In a much broader context, Article 174 of the Treaty on the Functioning of the European Union (TFEU) states that the EU’s goals include ‘strengthening of its economic, social and territorial cohesion’ and “reducing disparities between the levels of development of the various regions and the backwardness of the least favoured regions”. The social scoreboard, which monitors the implementation of the European Pillar of Social Rights, includes income inequality alongside several other indicators closely related to providing more equal chances. According to a 2015 European Commission study inequality has been on the rise in many Member States in the past three decades, and was further exacerbated by the 2008 economic crisis. In some countries, income inequality is not particularly high, but wealth inequality has been on the rise. More recently the issue of inequality has gained renewed attention in European policy circles, with debates opening up around structural reform and to what extent decision making should take place at a Member State level and/or whether decision making to address disparities and cohesion should also take place at a supra-state level. 

The World Health Organization (WHO) began using the term in 2006 as part of discussions around tackling social inequalities in health. Their efforts sought “a gradual reduction of all systematic differences in health between different socioeconomic groups; with the ultimate vision being to eliminate such inequities, by levelling up to the health of the most advantaged’. 

The term ‘levelling up’ has been used widely by Governments and public bodies at country, regional, city and town levels over time as part of attempts to reduce inequalities between deprived or less favoured areas so that no area is left behind.  Which areas are being ‘left behind’?  To what extent are policy makers addressing the root causes of inequality? And should we focus our investment and support on those areas experiencing disadvantage or in all areas?    

Which places matter (and which places are being left behind)?In 2015 the European Commission launched a Catching Up initiative [also known as the ‘Lagging Regions initiative’]. This was a pilot initiative examining the factors holding back growth and investment in less favoured regions. The Commission defined catching up regions as regions whose level of development was significantly lower than the EU average. The Commission distinguishes between two types of catching up regions: (i) Low-growth regions – those experiencing a persistent lack of growth (i.e., regions with a GDP per head up to 90% of the EU average and that did not converge to the EU average between 2000 and 2013); and (ii) Low-income regions – those that remain far below the EU average GDP per capita (i.e., they have a GDP per head below 50% of the EU average in 2013). Low-income regions include countries such as Hungary and Poland; with low-income regions comprising countries such as Greece, Italy and Portugal. The Commission concluded that “moving to the next level of economic development cannot be accomplished by a one-size-fits-all policy, but will require regionally differentiated investments and policy responses. It is clear that comprehensive and well-timed development strategies are therefore needed not only to address some of the basic problems of lagging regions, but also to enhancing their capacity.”   

In September 2019 the Office for National Statistics (ONS) began publishing a quarterly measure of regional GDP for the nine regions of England and for Wales. The latest data, published in May 2020, looked at regional growth in the third quarter of 2019 (July-September). London showed the highest growth in this quarter at 1.4%, with other regions showing positive growth including the North East at 1.3% (reversing a fall of 0.9% in the previous quarter), Yorkshire and The Humber (1%), the East of England (0.9%), the West Midlands (0.6%) and the South West (0.3%).  Three regions experienced negative growth during this period: the East Midlands (-0.3%), North West (-0.2%) and South East (-0.2%).  Regional quarterly GDP is still designated as ‘experimental statistics’ which means it is newly developed and innovative statistic and needs to be interpreted with some caution. 

Regional GDP on an annual basis however has been produced for several years and is a ‘national statistic’. The latest release (published in December 2019) presents data from 2018. This showed the highest rise in GDP was in London and the West Midlands (both at 2%). London also had the highest GDP per head (£54,686) while the North East had the lowest per head (£23,569).    

This data has opened up debates around how and whether to define a region; with Robert Chote, the outgoing Chair of the Office for Budget and Responsibility, suggesting that the regions of England are the consequences of now defunct regional offices and not based on any concept of regional economies as such. Indeed the ‘place’ component of the Government’s Industrial Strategy focuses upon geography, local culture, governance and infrastructure as being important factors in determining the economic activities of a region.  

In March 2020 the County Councils Network (CCN) published a report to provide evidence and insight into place-based growth through the lens of county authority areas. The report reveals how growth, measured by Gross Added Value (GVA), in county areas has lagged behind the rest of the country by 2.6% over the last five years. GVA in the 36 county areas grew by 14.1% between 2014 and 2018, compared to 16.7% for the rest of England. In total, 25 of these counties have grown at a rate slower than the rest of the country. The research finds no north-south divide, as the county areas experiencing some of the smallest economic growth include Herefordshire (5.3%), Oxfordshire (5.6%), Cumbria (8.2%), Gloucestershire (9.2%) and Wiltshire (9.7%). 30 of the 36 county authority areas have workplace productivity levels below the England average. At the same time, counties have witnessed sluggish business growth, with county authorities averaging 7.9% growth over the last five years – almost half of that of the rest of the country’s figure of 15.1% over the period 2014 to 2019. Figures contained in the report reveal that councils in London are able to spend over 50% more per person compared to counties (£506 compared to £333) on growth related services such as roads, junctions, enterprise parks, and business support. 

Public spending analyses clearly show not only how such spatial inequalities exist but also how they have done so for decades. In July 2019 HM Treasury published its Public Expenditure Statistical Analyses for 2019. Table 9.4 (page 126) shows the expenditure per head in real terms for the period 2017-2018 revealing England to have the lowest outturn at £9,080 compared to £10,397 in Wales, £10,881 in Scotland and £11,190 in Northern Ireland. By English region, for the same period, expenditure on services per head varied from £10,378 in London to £8,299 in the South East. The North West (£9,807) and North East (£9,805) received slightly more funding than Yorkshire and the Humber (£8,966), the East Midlands (£8,388), the West Midlands (£8,967), the East of England (£8,359) and the South West (£8,628). This opens up debates around whether to ‘level up’ i.e., so every region receives a similar level of expenditure per head; and whether this will require some regions to ‘level down’ and receive less funding?  

Between 2010 and 2018, total employment in the UK rose by 3.6 million. Analysis by Oxford Economics reveals that of the 396 Local Authority areas in the UK, 20 accounted for one-third of this growth. 10 of these Local Authority areas were London boroughs, with the remainder large cities including Birmingham, Bristol, Edinburgh, Leeds and Manchester. 

The Bennett Institute for Public Policy (University of Cambridge) has been undertaking a Townscapes project to provide a deeper analysis of how towns are faring across the regions of Britain and elsewhere – showing a finely grained picture of how different towns relate to their wider regions and nations, as well as to their nearest cities. This work reveals the merits of a more granular and regionally rooted perspective for our understanding of geographical inequalities and the kinds of policy needed to address them. On the basis of findings from their work in Scotland, Wales and the North East of England, the Institute argues that policy makers need to consider multiple town categorisations, to get beneath the broad groupings that have become so dominant in this debate such as ‘university’, ‘coastal’, or ‘post-industrial’ towns. Instead they suggest adopting a data-driven typology developed by the ONS in 2019 to contrast the fortunes of ‘working’, ‘partially residential’ and ‘residential’ towns in different parts of the country. 

In academic circles emphasis has been placed on the importance of cities (and dynamic agglomerations). Edward Glaeser in his book ‘Triumph of the City’ (2011), for example, describes cities as “our greatest invention” that makes us “richer, smarter, greener, healthier and happier”. Pierre‐Philippe Combes and his colleagues posited that firms are more productive, on average, in larger cities because they toughen competition (allowing only the most productive to survive). The view that often emerges here is that cities, being larger and denser than towns and rural areas, have a comparative advantage relative to any other places which means businesses benefit more from being located there.  Other academics have sought to highlight the uneven playing field between regions in bidding for inward investment and its implications for devolution where different structures between regions and countries can enhance the prospect of some regions more than others.

The UK2070 Commission is an independent inquiry into city and regional inequalities in the UK. Chaired by Lord Kerslake, it has been set up to conduct a review of the policy and spatial issues related to the UK’s long-term city and regional development. Its latest report, published in February 2020, described a need ‘to think about North and South, Towns and Cities, and Urban and Rural. The issues of economic underperformance and wellbeing affect all parts of the UK including coastal towns in the south east of England. Past attempts to remedy the fundamental spatial imbalances in the UK have failed. They have been too little, too late, too fragmented and too short-lived. Radical change is required. We need to comprehensively increase and sustain the scale and breadth of action over the next twenty years through a coordinated plan”. The report calls for a devolution of powers and resources from central government to local communities as part of a wider drive for long-term National Spatial Plans to provide confidence for investment and to help the UK deliver on its international commitment to the UN’s Sustainable Development Goals.

Historically, policy attention on regional inequalities has tended to emphasise a ‘north-south divide’, however more recent work is starting to focus upon collating data and information to offer a more granular and forensic understanding of how inequalities can affect all kinds of places. 

What does levelling up mean for rural places?Many RSN members are all too familiar with these figures and debates. In terms of investment for example, analysis for the RSN’s Fairer Funding Campaign shows how urban Local Authorities in 2020-2021 will receive 62% (equating to £109 per head) more in the Settlement Funding Assessment compared to rural Local Authorities. Similarly, rural residents pay, on average, 22.7% (equating to £105 per head) more in Council Tax than their urban counterparts. 

In terms of data, the Statistical Digest of Rural England, collated by Defra, allows for comparisons between different types of rural and urban areas on a range of social and economic subject areas. For example, predominantly rural areas contributed 15.9% of England’s GVA compared to 45.6% from urban areas (excluding London), 27.4% from London and 11.2% from urban areas with significant rural areas. The contribution from predominantly rural areas to England’s GVA declined slightly between 2001 and 2018 – from 17.3% to 15.9% – due to an increase in London’s contribution to GVA over the same period. When London is excluded from the analysis, predominantly rural areas contribution to GVA declined from 22.7% to 21.8% between 2001 and 2018. In April 2017 the ONS published an article exploring the productivity of rural and urban areas in Great Britain. This revealed that the overall average labour productivity (Gross Value Added per worker) of the business economy in 2014 for urban areas [excluding London] was 86 (on a Great Britain equals 100) basis, which was 5 percentage points higher than for rural areas (81 on a Great Britain equals 100 basis). This gap was larger in the south of England than in the north and Midlands and in some regions, such as the North West of England, average GVA per worker in rural areas was actually found to be higher in rural areas compared to urban areas.

A Government Office for Science / Foresight report on the future of mobility describes how limited community and public transport in rural areas has been hindering participation in social and economic activities, thereby putting people at risk of exclusion from the labour market. Similarly, the removal of the Education Maintenance Allowance has further disadvantaging young people in rural areas that tend to be more reliant on higher-cost public transport trips. In September 2019 a report from the Environment, Food and Rural Affairs Committee highlighted the continuing digital divide between urban and rural areas. Despite significant improvement in both rural broadband and mobile coverage in recent years, it has only barely kept up with increasing demand. Accordingly, poor connectivity continues to hinder rural businesses and is preventing people from engaging with online public services the rest of the country take for granted. Ofcom research revealed almost 600,000 “forgotten homes” in rural areas across the UK who are still unable to get sufficiently fast broadband to meet a typical family’s needs. In England and Wales 6.6% of premises do not receive the 10Mbps internet service the government has mandated as the bare minimum to cover a family’s modern digital needs, compared with just 0.7% in cities and towns.

In terms of shifting authority away from London and devolving power, according to the RSA, towns and rural areas in England must benefit from the next wave of devolution. Without an elected Mayor, they argue rural areas, towns and smaller cities in England risk being left-behind on growth, public sector investment and the freedom to develop local solutions to problems.  A poll carried out by Populus for the RSA looked at what the public wanted to see next. On most social policy issues, people want to see issues decided more locally: just 18% agree the balance between local and national government is ‘about right’. Broken down by issue, people want to see housing decided at a local level (61% say it should be more locally decided, versus 18% who say more national), followed by schools (52%-23%), transport (50%-24%), policing (49%-26%), social care (48%-28%), planning/economic development (46%-23%), training/skills (37%-27%) and culture (36%-22%).  Only on healthcare (36%-40%) and climate change (12%-61%) were people supportive of a national approach.  Mayors were generally supported with 54% of respondents willing to support or would support a Mayor for their area, with 26% opposed. Of the different models on offer, 25% preferred the ‘Greater Manchester’ model, where the Mayor makes decisions jointly with local council leaders; 18% back the ‘London model’ of a strong Mayor with a directly elected scrutiny body; while 11% support a citizen-led approach.  However, the poll also found that there was little ambition for Mayors to be imposed – with 50% of survey respondents say that Local Authorities and Government must agree a devolution deal for it to go ahead.  In March 2020 the Housing, Communities and Local Government Committee relaunched its inquiry into progress on devolution in England. The Committee will scrutinise the impact of recently agreed devolution agreements and ask if the transfer of further powers to England’s regions can boost local economies and provision of public services.

As the economy emerges from COVID-19 and Government begins to taper its support packages and businesses seek to open and rebuild, the Business, Energy and Industrial Strategy (BEIS) Committee has launched a new super inquiry on Post-Pandemic Economic Growth. A briefing from the University of Newcastle published in May 2020 provides a rapid assessment of current and likely future impacts of the COVID-19 outbreak on rural economies: ‘the impact of COVID-19 on public finances, personal freedoms, international trade and public debates will be substantial, with changes at national, European and global levels affecting rural economies. One long-term ramification of COVID-19 may be the acceleration of firms substituting capital for labour in order to reduce vulnerability to future pandemics (particularly in an environment where the costs of capital investment through low interest rates and government loans will be low). This may affect things like social care, where there may be a further push to develop technological aids to help older people stay in their homes and remain independent rather than enter residential care or require daily care visits. It is possible that COVID-19 will make rural areas more attractive for the future, given the space they afford. This raises questions over trends to centralise health care and other services. An open question concerns the extent to which changes in household, business or supply chain behaviours brought about by the pandemic will return to their original state once it has run its course.’ 

The BEIS Select Inquiry will consider how to level up regional economies so that communities and individuals no longer feel left behind to solving old problems such as poor productivity, sluggish exports and disorganised devolution and embracing new opportunities to modernise the UK economy.  How should Government adopt/prioritise its recovery package for rural areas? What support will rural communities and businesses require to stimulate growth (e.g. digital connectivity, remote working)? What role might Local Authorities and other agencies (e.g. Local Enterprise Partnerships, voluntary and community sector etc.) play in delivering growth (e.g. community support)? And what might be the unintended rural consequences (positive and negative) from this renewed emphasis on economic growth be? Will these initiatives ‘level up’ rural areas or will they be left behind? The Inquiry Committee’s call for evidence closes on 17 July 2020.   

To date, it has been assumed that central Government [the national level] is the administrative unit necessary to address this issue.  In terms of investment, the Green Book is used by Government departments to determine which policies, programmes of activity and projects public funds should be invested in. This often discriminates against those parts of the country that need the most targeted support and investment.  Government has committed to a review of the Green Book and as we continue to emerge from COVID-19 ensuring the framework is in place as soon as possible to support the recovery is important.  Similarly, there has been a lack of continuity and consistency of regional and place-based policies– rural areas need local strategies with interventions that embrace their spatial, socio-economic and environmental contexts and we also need to avoid a one-size-fits-all approach as what works in one rural place may not be appropriate in another rural place. We need to bring together place shaping leaders in rural areas (e.g. Local Authorities, voluntary and community sector, faith groups etc.) and provide them with the governance, funding and capacity to undertake this levelling up process.  And finally, if levelling up is to be more than a policy motto, we should be concerned first and foremost about the effect of policies on people in these (rural) places.  For the extent to which coming out COVID-19 and exiting the European Union will make local and regional (rural) imbalances better or worse remains unclear. 

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Jessica is a researcher/project manager at Rose Regeneration and a senior research fellow at The National Centre for Rural Health and Care (NCRHC). Her current work includes supporting health commissioners and providers to measure their response to COVID-19 and with future planning; working with 8 farm support groups across England on a Defra funded resilience programme; and helping Local Authorities to measure social value. Jessica also sits on the board of a Housing Association that supports older and vulnerable people. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk. 

Website: http://roseregeneration.co.uk/ https://www.ncrhc.org/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Universal Basic Income

What would a ‘basic income’ for rural residents look like?

‘Basic income’ is a tax-free, unconditional and non-contributory basic income automatically paid to people (weekly or monthly) irrespective of how much they earn or their work status. Interest in basic income is growing– with pilots in Spain, Italy, Finland, Kenya  and the Scottish Government supporting Local Authorities to explore a scheme. What does a basic income scheme in England look like and how would it work in rural areas? Jessica Sellick investigates.  ………………………………………………………………………………………………..

What is basic income? Back in 1516 Thomas More published ‘utopia’, a book depicting a fictional island society. More described how every citizen on Utopia should be provided with some means of livelihood, so that nobody would become a thief first and then a corpse. Although a work of fiction dating back more than 500 years, More’s idea of providing everyone on the island with a universal basic income is now being discussed and tested across the world.  

Universal Basic Income (UBI), Citizen’s Income (CI) or Basic Income (BI) are terms often used interchangeably to refer to an unconditional and regular payment made to every citizen in a given territory or place regardless of means. Basic income has five characteristics: (1) periodic – it is paid at regular intervals; (2) cash payment – allowing those in receipt it to decide what they spend it on; (3) individual – paid to a person rather than a household; (4) universal – paid to all without being means tested; and (5) unconditional – provided without the requirement to work or demonstrate willingness to work. 

Variations to basic income include: (i) making ‘full’ or ‘partial’ payments according to whether a person’s needs are at, above, or below, a poverty line; and (ii) a preference for ‘universal basic services’ where instead of receiving a cash payment services such as education, health, care and transport are provided free for all. 

Why is interest in basic income growing? In recent years there has been increasing academic, policy, practitioner and media interest in basic income. This interest stems from: 

  • Increased support from a broad range of constituencies: from different political parties and Governments, through to NGOs, civil society, academics and think tanks – who are all concerned with looking at how we might distribute and share resources more fairly [for the common good].  
  • Concerns about inequality: the World Bank’s ‘changing wealth of nations’ tracked the wealth of 141 countries between 1995 and 2014. Their analysis shows that while global wealth had grown significantly over this period, per capita wealth declined or stagnated in more than two dozen countries in various income brackets. In the UK, in 2017-2018, 42% of all disposable household income went to the 20% of people with the highest household incomes, while 7% went to the lowest-income 20% (based on disposable income before housing costs had been deducted).
  • New patterns of work: anxiety about the effects that automation could have in workplaces – will robots take people’s jobs? Will this lead people to more flexible but less secure working patterns?   
  • Social protection: a view that some systems of social security have trapped people between benefits and poor quality low-paid work leading to economic insecurity. There is also a view that some welfare systems are leading to a culture of dependency on the one hand [reducing incentives to work and save] and failing to meet peoples’ needs on the other hand [e.g. poverty, skills, labour market changes]. There is a further view that more established welfare states spend too much on administering payments and that basic income would lead to efficiencies. 

These uncertainties around work, livelihoods and living standards amid ongoing social, economic and environmental changes have led momentum around the desirability and feasibility of basic income to build. 

Which countries have undertaken basic income pilots – and how have they been run?  While the idea of a minimum income guaranteed by the Government to its citizens can be traced back to the renaissance; more recent interest stems from the United States in the 1960s and 1970s. At this time policy makers believed negative income tax represented a simple and desirable alternative to existing programmes. The complex set of cash and in-kind benefits paid to certain categories of the population would be replaced with a single guaranteed income payment for all families that would gradually diminish as earnings increased. The scheme was piloted in New Jersey and Pennsylvania from 1968 to 1972 and involved 1,357 low income urban households. A rural experiment, in Iowa and North Carolina, was carried out between 1969 and 1973 with 809 low-income families. A third experiment, in Gary, Indiana, worked with 1,780 black and ethnic minority households. The largest experiment, involving 4,800 families, took place in Seattle and Denver from 1971 until 1982. The Seattle and Denver participants received more generous payments than the three other pilot cohorts, and the duration was extended from three to five years. All four pilots ended in 1982. 

The Alaska Permanent Fund (APFC) was established in 1982 to collect revenue from the state’s oil and mineral leases to fund an annual stipend to Alaskans. Residents register each year from January to March, with the stipend announced in September and payments typically made in October. The amount usually ranges from $1,000 to $2,000 per person ($4,000 to $8,000 for a family of four) and the majority of Alaska’s 740,000 residents receive it.

In February 2019 the state of California launched a basic income experiment. Over an 18-month period 130 adults living in Stockton’s lower-income neighbourhoods will receive a monthly payment of $500 on a pre-paid debit card. 

The Canadian Guaranteed Annual Income (GAI), known as Mincome, took place in Dauphin, Manitoba between 1974 and 1979. The experiment covered the city of Winnipeg and rural Manitoba with lower-income households in one of the sites selected assigned to one of seven treatment groups or the control group. The families in the treatment groups received an income guarantee – or minimum cash benefit – according to family size that was reduced by a specific amount (35, 50 or 75 cents) for every dollar they earned by working. 

Towards the end of the 1970s European countries began to discuss basic income. The most widely known experiment took place in Finland from January 2017 until December 2018 and provided 2,000 randomly selected unemployed people with a monthly payment of £490.  

Back in 2016, the Italian coastal city of Livorno introduced a basic income pilot that saw the city’s 100 poorest families receive €500 a month. In January 2017, they expanded the pilot to include a further 100 families.

Also in 2016, the Dutch city of Utrecht proposed a basic income trial entitled “Weten Wat Werkt” (Know What Works). Over a two-year period the proposed trial will divide 250 citizens into test groups. Each test group will receive different amounts under different conditions. One group, for example, will receive a total of €960 monthly with no additional conditions while another group will receive €150 on top of the original amount if they engage in community service or undertake voluntary work. 

Taking its name from a 1970s basic income pilot in Canada, B-MINCOME is a project running in Barcelona from 2017 until 2020. A guaranteed minimum income is being provided to supplement the income of residents in the most deprived parts of the city – with 1,000 households receiving payments on a trial basis. 

In September 2017 the Scottish Government announced it would support Local Authority areas to explore a basic income scheme – with £250,000 offered between 2018-2019 and 2019-2020. Following a feasibility study four Local Authority areas were selected for the pilot: Glasgow, Edinburgh, Fife and North Ayrshire. The four local authority areas are undertaking research into the feasibility of a basic income pilot, supported by the Scottish Government and others, including NHS Health Scotland.  The Royal Society of Arts (RSA), for example, has been working in Fife to understand how a place-focused trial could operate and to model the potential economic impact. In a previous report on basic income the RSA proposed every adult in Scotland be given a basic annual income of £2,400, rising to £4,800. 

In September 2019 Professor Guy Standing published a report for the shadow chancellor of the exchequer setting out proposals for the next Government to implement a series of pilots across the UK. The recommendations include initially providing every adult in the UK with a weekly basic income of £48.00 (and a lower sum to children) with the payment changing over time as funding for the scheme builds up. Other organisations have suggested different models – from a partial/starter scheme through to a citizens’ wealth fund. The RSA has produced a toolkit amalgamating experiences from across the world to inform experiments in the UK.

The Centre for Social Justice (CSJ) has detailed how much a universal basic income programme would cost the UK Government under three scenarios: (1) available to all working age adults 16-64 years; (2) all adults over the age of 16 years; and (3) all households across the UK. Assuming the programme paid out to working age individuals between the ages of 16 and 64 years old [scenario 1] and the payment was equal to the income poverty line (60% of the median wage) the payment would be £16,320 per person. The total cost of the programme would be approximately £669.1 billion (roughly 83 per cent of UK public spending, or a little over one-third of UK GDP). This compares to the £283 billion spend on UK current social protection and personal social services for the period 2018-2019 (e.g. state spending on pensions, incapacity benefits, unemployment benefits, housing benefits, child benefits and social services). 

Between 2019 and 2022 basic income will be rolled out in Sikkim, India. This builds upon work carried out in in 2011 when the Indian Government and UNICEF launched two pilots to test the impact of basic income in eight villages in Madhya Pradesh. 

While other countries have not provided basic income per se, they have made cash payments to their citizens – Iran, for example, provides each citizen with $33 a month; and between 2007 and 2009 residents in two rural settlements in Namibia received $12 a month to help tackle malnutrition.  

Each of these countries has adopted a different model – from the level of payments made (how much and to whom) to where the funding comes from (and for how long). In some cases pilot schemes have been funded from direct taxation and the development of capital funds with dividends (North America) while in others from sources other than the earned income of citizens (e.g. oil in Alaska, aid in Namibia). Some schemes have ‘strings’ attached to them (e.g. a requirement for children to attend school) while in other instances basic income replaces existing state benefits and/or is targeted at lower income residents or to subsidise low-wage work. In other schemes a regular sum of money is paid to all citizens regardless of their circumstances. 

What are the results – does basic income work? For many these experiments and schemes herald a new way of thinking about the links between public/social services and income security. Proponents believe basic income offers an unconditional safety net that can help people out of poverty by giving them time to apply for jobs, learn new skills or obtain better paid work (tackling in-work poverty); support greater personal freedom, dignity and decision-making; and reform existing welfare and social security systems. Opponents argue that basic income is too expensive to implement (in some cases requiring much higher taxes), leads to an increase in unemployment in vulnerable groups and fails to substantively improve life circumstances (i.e., of individuals in insecure work and poor quality housing). 

What can we learn from experiments that have already taken place or are in train? 

Unfortunately the lessons from the experiments in the United States (negative income tax) and Canada (Mincome) in the 1970s were not gathered or disseminated. 

Preliminary results from Finland found little or no impact on the likelihood of recipients’ undertaking paid employment (i.e., no effects on employment or unemployment or income levels compared to a control group). The Finnish Government had hoped the experiment would lead to an increase in participation in paid work. However, the evaluation did find that people felt healthier and more optimistic about the future. In 2018 the Government decided not to renew the scheme and it ended. The final report on the experiment will be published in 2020.

In Ontario, a pilot running in 2016 was intended to help people living on low incomes better meet their basic needs, including improving their outcomes in food security, stress, mental health, healthcare usage, housing stability, education and employment. Some findings of the work have been shared – with recipients reporting that they could treat food as medicine, undertake voluntary work and were experiencing reduced stress in everyday life. However the Government announced in August 2018 that the research project would be ending. According to Lisa MacLeod, Minister of Children, Community and Social Services: “we have a broken social service system. A research project that helps less than four thousand people is not the answer and provides no hope to the nearly two million Ontarians who are trapped in the cycle of poverty,” 

The National Bureau of Economic Research’s (NBER) working paper on the labour market impacts of the Alaska Permanent Fund found that universal and permanent cash transfer does not decrease employment. Using data from the Current Population Survey and a synthetic control method, the NBER’s analysis showed that where the dividend had no effect on employment per se, it did increase levels of part-time working. 

Aggregating evidence from various schemes, What Works Scotland (WWS) produced a scoping review of ten basic income interventions (from some 28 published studies) in September 2018. WWS found evidence of labour market participation, health, education and a range of social and economic outcomes. For interventions carried out in the 1970s there were small reductions in labour market participation for male household heads and larger reductions for second earners and single parents. More recent studies have found little impact on labour force participation. A number of studies have reported on positive health outcomes (e.g. improved mental health and diet, reduced service use) and social outcomes (e.g. improved parenting, reduced offending). 

Similarly, the World Health Organization (WHO) commissioned a policy paper on basic income policies with a view to researching innovative approaches to reduce health inequalities. Citing evidence across countries that insecurity surrounding income support status has adverse effects on people’s physical and mental health; the paper explores how providing basic income stability is both crisis-preventative and health-constitutive and fits with the WHO’s approach of providing universal policies across the whole gradient but implemented at a level and intensity that is proportionate to need.  

What about basic income in rural areas? 

While some basic income experiments have included rural areas, it was back in 2012 that an overarching proposal was published calling for a ‘rural basic income’ (RBI) to be introduced within the European Agricultural Fund for Rural Development (EAFRD). Proponents of RBI argued it would reduce pressure on rural residents having to move and increase spending capacity in local areas. In recognising that experiments and pilots are important, the proposal argued that a small region does not resemble a complete national economy, therefore RBI should be implemented across the European Union at the same time by reforming the Common Agricultural Policy (CAP); giving direct payments to all residents living in rural areas, including farmers. Using Eurostat figures of EU inhabitants living in rural areas and the Gross Domestic Product (GDP) of each Member State, and then taking 40% as the basis for a RBI, the proposal estimated the cost of an EU-wide scheme at more than 1000 billion (or five times the total EU budget at the time). As it would not be possible to finance RBI from the agricultural budget alone, a variety of finance models were presented – from co-financing by Member States and levying a basic income tax through to setting certain conditions to be in receipt of RBI (e.g. targeting people in disadvantaged areas). 

Back further still, in 2010 the Joseph Rowntree Foundation (JRF) extended its work on Minimum Income Standard (MIS) to explore how needs and costs varied for rural households.  Researchers found people living in rural areas typically spent 10-20% more on meeting their everyday requirements compared to their urban counterparts. In 2010 it was suggested that single working adults needed to earn at least £15,600 a year in rural towns, £17,900 in villages and £18,600 in hamlets or remote settlements. For a couple with two children the annual earning requirement increased to £33,000-£42,000. The 2019 MIS reveals in order to reach a minimum acceptable living standard in 2019; a single person needs to earn £18,800 a year and a couple with two children £20,600 per parent. While the MIS figures have not been updated for rural households since 2010 combined with the EU proposal on RBI they provide starting points for considering how much a basic income scheme would cost in rural areas and whether it is affordable / how it might be financed. 

Does basic income work? 

Answering this question depends on what you mean by work – what are the aims, objectives and outcomes expected? In the case of Finland, for example, where the policy objective was to get people into employment, recipients were no more likely to find jobs compared to the control group that did not receive the payments. However, this example and those evidenced by the WHO have highlighted some of the social benefits (e.g. health and wellbeing improvements, changes to the way people access and use public services). 

Undertaking a basic income experiment therefore requires careful consideration: 

  • Is there broad political support for basic income – and how might Government move from idea to policy and implementation? 
  • Is there public support – how is basic income understood and is it seen as feasible? 
  • How would it operate? For example, will it be paid to all individuals or to certain cohorts or in specific circumstances? Will it be conditional or unconditional, withdrawable or non-withdrawal, means-tested, targeted or tiered? Will existing state benefits and services remain in place, be reformed or replaced?  
  • How much would it cost – and where will the money come from? Will there be any financial losses (to people) and/or savings (to society and the state)?  
  • What impact would the scheme have on the individuals who would receive it – and how will we measure and evaluate these outcomes? 

Where next? While basic income is growing in popularity as a concept, there is no universal or agreed upon formulae for deciding how much should be paid, to whom, when and for how long. Basic income continues to be a sticky issue with debates continuing around whether it is desirable, necessary, affordable, should be means-tested, available to all or targeted. For all the efforts involved in setting up pilots across the globe – are they worth it and what do they achieve? While answering these questions is not always clear, basic income in all its forms has not been tried and tested on a large scale. With work underway in Scotland and interest in England, will there be an appetite for designing a feasible, fundable and meaningful basic income scheme for rural England? Watch this space. 

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Jessica is a researcher/project manager at Rose Regeneration. Her current work includes evaluating two veteran support projects (in Cornwall and North Yorkshire); supporting public sector bodies to measure social value; and evaluating a series of community safety and crime reduction projects. She is also a senior research fellow at The National Centre for Rural Health and Care (NCRHC). In her spare time Jessica sits on the board of a housing association. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://roseregeneration.co.uk/https://www.ncrhc.org/ Blog: http://ruralwords.co.uk/ Twitter: @RoseRegen 

Income inequality

How can we develop a picture of income [in]equality in the countryside?

Some people have higher incomes and wealth than others. According to the Office for National Statistics (ONS), average household income in 2018 contracted by 1.6% for the poorest fifth of the nation and rose by 4.7% for the richest fifth. ONS’s statistical bulletin also reveals how median household disposable income growth plateaued at £28,400 in 2018, ending four years of previous growth. The gap between the poorest and richest households appears to be growing; thus reversing a downward trend over the previous 10 years. What is income inequality and how prevalent is it in rural areas? Jessica Sellick investigates.  

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What do we mean by ‘income’? 

This is money received on a regular basis. It can come from earnings (employment), benefits (pension, tax credits), investments and other income sources (e.g. private pension). From a policy perspective, there are four main categories of income: (1) original income: this is the amount of money you receive before taxes and benefits; (2) gross income: this is your total income after benefits but before tax; (3) disposable income: this is the amount of money left over after direct taxes are deducted from your gross income; and (4) post tax income: the amount of money remaining after direct and indirect taxes and benefits are deducted. There are two measures of income: (i) household living standards [money shared amongst household members]; and (ii) individual incomes [money kept at an individual level]. 

What is a ‘high’ or ‘low’ income level? 

The term ‘income inequality’is used to describe the extent to which income is distributed in an uneven manner within a given population. A range of income and income distribution metrics are used by academics and policy makers to measure inequality.  

In the UK, statistics on household incomes are ‘equivalised’: adjusted for household size and composition to enable better comparisons and to identify trends in living standards over time.This is because a larger household is likely to need a higher income to enjoy the same standard of living as a smaller household. The Department for Work and Pensions (DWP) publishes incomes data from the Family Resources Survey.  

The Households Below Average Income (HBAI) dataset reveals how an individual was in the top 10% of the distribution in 2016-2017 if his or her disposable weekly household income before housing costs was: 

  • £962 for a couple with no children.
  • £645 for a single person with no children.
  • £1,029 for a single person with two children under 14 years. 
  • £1,247 for a couple with two children under 14 years. 

An individual is in the bottom 10% if she or he had household income of less than: 

  • £248 for a couple with no children, £166 for a single person with no children. 
  • £265 for a single person with two children under 14 years. 
  • £347 for a couple with two children under 14 years. 

For gross income before housing costs, an individual is in the top 10% if he or she had a household income greater than:

  • £1,321 for a couple with no children.
  • £885 for a single person with no children.
  • £1,413 for a single person with two children under 14 years.
  • £1,849 for a couple with two children under 14 years. 

An individual is in the bottom 10% if he or she had a household income of less than: 

  • £287 for a couple with no children.
  • £192 for a single person with no children.
  • £307 for a single person with two children under 14 years.
  • £402 for a couple with two children under 14 years. 

The OECD uses the Gini coefficient [based on the comparison of cumulative proportions of the population against cumulative proportions of income they receive – ranging between 0 in the case of perfect equality and 1 in the case of perfect inequality]; and the Palma ratio [the share of all income received by the 10% people with highest disposable income divided by the share of all income received by the 40% people with the lowest disposable income]. According to the Gini coefficient, the UK has some of the highest levels of income inequality in the European Union. The UK is 11th on a list of 28 countries – with Bulgaria, Lithuania and Romania having the highest levels of income inequality; and Slovenia, Slovakia and Iceland the lowest levels.  The OECD ‘Better Life Index’ reveals the average household net-adjusted disposable income per capita in the UK is $28,408 per year (compared to an OCED average of $30,562); and describes how the top 20% of the UK population earn nearly six times more than the bottom 20%. 

The London School of Economics (LSE) Centre for Analysis of Social Exclusion (CASE) has explored income inequality and wealth, from 1961 to 2016. Their report, ‘Double Trouble’, which was commissioned by Oxfam, shows a positive correlation between income inequality and income poverty in the UK. The analysis shows that, on average, during the last 50 years a one point increase in income inequality – as measured using the Gini coefficient – was associated with an increase in relative poverty of 0.6 percentage points.

In March 2017, the Institute for Fiscal Studies (IFS) published its findings on changes in inequalities between and within regions, by examining data that follows the same people over time. The IFS found that while income inequality remains highest in London, the rate here is falling. Average income in the highest-income region of Great Britain (South East) is around 25% more than that in the poorest region (West Midlands). Incomes in the West Midlands (and in fact the East Midlands, Wales and the North of England) are no higher than incomes were in the South East in the late 1990s. According to the IFS, 13% of the population saw their real household income fall by less than 5% or rise by less than 5% between 2010–2011 and 2014–2015. Over this time period, 87% of people saw their household income change by at least 5%; with 37% experiencing a fall in income of 5% or more and 50% seeing a rise of 5% or more.

In Scotland, Oxfam has produced an income inequality calculator This shows the distribution of the Scottish population by equivalised household net income for 2015-2016 – dividing the population into equally sized groups known as percentiles to identify the poorest and richest households. Users enter basic information about their household and council tax to then view which percentile they fit into.  

At a global level, there are various measures for comparing standards of living across countries. The World Bank’s World Development Indicators (WDI) builds measures of Gross Domestic Product (GDP) to identify high, middle and low income countries. ‘Basic needs’ data [e.g. income, consumption, wellbeing, education, health care, security] is collated from which the World Bank defines the ‘extreme poor’ as those low-income countries where people are living on less than $1.90 a day and those middle-income countries where people are living on $3.20 – $5.50 a day. The Penn World Table (PWT) is a set of national accounts data that includes information on capital, productivity, employment and population – the table allows comparisons of relative GDP per capita as a measure of standard of living. The Maddison Historical Statistics Project gathers historical economic statistics including GDP and GDP per capita. 

To overcome the differences in economic variables in various countries (i.e., how exchange rates may distort comparisons); the European Commission uses GDP per capita adjusted for purchasing power parity (PPP) in allocating structural funds. Interestingly, the Economist has used PPP to construct ‘The Big Mac index’: a burger exchange rate [i.e., the dollars needed to buy a Big Mac in different countries]. 

Looking at data about income inequality opens up discussions about the relationship between gross income and disposable income; the relationship between individual income and household income – and what this comprises (where housing costs fit); how the flow of money into an individual or household is built up or retained over time; and the tax and benefits systems in different countries (and whether/how these redistribute income). This opens up further discussions around how data about income inequality is collected and analysed – and where/how distribution is segmented (i.e., where the line gets drawn between low, middle and high percentiles). 

Can we measure income inequality in rural England? 

Defra’s Statistical Digest of Rural England (March 2019) includes information on household expenditure and its relationship to disposable income. Households in rural hamlets & isolated dwellings have both the highest disposable incomes and the highest levels of expenditure – compared to households in urban areas which have the lowest levels of expenditure and disposable income. On average, households in rural hamlets and isolated dwellings have a weekly expenditure of £643 (£170 higher than urban households) and a weekly disposable income of £870 (£177 more than the urban average). When looking at the proportion of average weekly disposable income left over after weekly expenditure (excluding mortgage payments), this is higher in urban areas at 32% compared to 26% in rural areas. Rural households spend a higher proportion of their disposable income on ‘transport’ and ‘recreation’ than they do on housing and utilities. In the year ending March 2017, average weekly transport costs for those living in rural hamlets and isolated dwellings was £132 – or 15.1% of their total weekly disposable income and £58 higher than urban areas. 

In rural areas the proportion of disposable income left over once average weekly expenditure has been deducted (excluding mortgage payments) had also declined – from 29% in December 2013 to 26% in March 2017. 

Using the HBAI statistics, the proportion of rural households in relative low income was 16% before housing costs and 17% after housing costs – in urban areas these figures are 18% and 24% respectively. 13% of households in rural areas are in absolute low income before housing costs and 15% after housing costs – this compares to 15% and 22% in urban areas respectively. The dashboard in the Statistical Digest showing relative and absolute income (on page 142) therefore suggests that the percentage of people living in relative low income [before and after housing costs] has decreased compared to urban areas where these figures are increasing. 

In 2018, median workplace based earnings in predominantly rural areas were £21,900 compared to £23,300 in predominantly urban areas. Between 2009 and 2018 median workplace earnings increased by 15.1% for mainly rural areas and by 13.7% for largely rural areas. 

The ratio between the lowest quartile (25% of house prices and the lowest quartile earnings) reveals in 2017 in predominantly rural areas the average lower quartile house price was 8.6 times the average lower quartile earnings – compared with 7.4 times in urban areas excluding London. 

The Joseph Rowntree Foundation (JRF) has developed a Minimum Household Income (MIS). MIS is based on the items that members of the public think UK households need to be able to afford in order to meet material needs (e.g. food, shelter, clothing) as well as opportunities and choices to participate in society (e.g. transport, communication and computing, to be able to take part in activities). The amount that households need to earn in order to reach MIS in 2018 was £18,400 for a single adult and £20,000 for a dual-earner couple with two children. Back in 2010 JRF did a specific piece of work on a MIS for rural households. Researchers found people living in rural areas typically spent 10-20% more on meeting their everyday requirements compared to their urban counterparts. In 2010 it was suggested that single working adults in rural towns needed to earn at least £15,600, in villages £17,900 and £18,600 in hamlets – compared to £14,400 in urban areas. For couple with two children the annual earning requirement increased to £33,000-£42,000. 

Where next? 

Every man is rich or poor according to the degree in which he can afford to enjoy the necessaries, conveniences, and amusements of human life—Adam Smith

Geographer Danny Dorling uses the term ‘peak inequality’ to describe circumstances under which the places that we live in have become so segregated that the best-off do not mix with the less well-off. Dorling describes how equality of the bottom 90% of UK citizens peaked in 1978 when they took home 72.2% of the income that there was to take that year. Since then there has been rising inequality. The income share of the next 9% above the 90% peaked in 1993 (at 28% of all income) but fell to 25% in 2014. By 2013 the income of the top 0.1% peaked at 5.8% or 58 times average incomes. 

In the United States, the MIT Media Lab project is mapping income inequality not just according to where people live, but also where they shop, eat and spend their free time in Boston. The researchers have identified ‘place inequality’ and ‘income segregation’ to describe how the places where people live and the people around them can be radically different. i.e., at one coffee shop visitors come from a variety of household income levels but at a second coffee shop, a 2 minute walk away, people are mainly from the lowest income bracket. 

Living Standards research by The Resolution Foundation explores the prospects for household incomes and inequalities over the next five years. The researchers found that typical incomes stagnated in 2017-2018 and are projected to grow slowly over the next five years – reaching only 1.3% by 2022-2023. For the ‘just about managing’ low to middle income working age households, this means three years of falling or flat incomes (reflecting weak real term pay growth, cuts to working age benefits and housing costs). These findings suggest income inequality in the UK is likely to increase over the next 4-5 years without public policy interventions. 

What more can be done to understand income and income inequality in rural areas? 

We need to (re)think how we measure ‘money received on a regular basis’ (for rural residents and households) and determine the ‘disposable income’ left over. For some people living in rural areas their income can fluctuate on a regular basis. I am thinking here of  job jugglers – people who have more than one type of work (some of it seasonal, temporary or part time leading to low pay); people out of work and trying to get by without seeking support from the state; and people barely scraping a living or workers accepting lower wages or working fewer hours. We also need to take into account where people work and the kinds of work that they do. People do not necessarily work in the same place as where they live, workplace and residence based average earnings differ – with average residence based earnings in rural areas typically higher than workplace earnings because people living in rural settlements may commute to work in urban areas for higher paid jobs. 

We also need to understand how much it costs to live in rural England (and different types of rural areas – from the sparse/dispersed to town and fringe) i.e., expenditure on housing, utilities, transport, access to services, food and so on. And not merely the expenditure required to meet ‘basic needs’ but those that enable an individual to live a fulfilling life in rural areas. How much does it cost, on a regular basis, to live in the countryside? 

Both strands of information would then provide a means of measuring the dispersion of incomes and benchmarking them (across different types of places and areas). This may further provide a means of forecasting how changes in income will affect different individuals and households in rural England. It may also be possible then to see how public policy may further be harnessed to reduce the gap between the richest and poorest households in our rural areas.  

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Reference:   Smith, Adam. “An Inquiry into the Nature and Causes of the Wealth of Nations.” Edwin Cannan ed., 1904. Chicago: University of Chicago Press, 1976.

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Jessica is a researcher/project manager at Rose Regeneration. Her current work includes evaluating two veteran support projects (in Cornwall and North Yorkshire); supporting public sector bodies to measure social value; evaluating a series of community safety projects; and undertaking a piece of work on migration. 

She is also a senior research fellow at the National Centre for Rural Health and Care (https://www.ncrhc.org/). 

In her spare time Jessica sits on the board of a housing association. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. 

Website: http://roseregeneration.co.uk/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Food poverty

Hidden hunger – how can we tackle food poverty and insecurity in rural areas?

When we think of the word ‘hunger’ we often think about starving children in developing countries. Yet unfortunately this type of hunger is very much a reality for some people living in the UK today. Figures suggest 1 in 6 adults has skipped a meal because they couldn’t afford it and 1 in 12 has gone a whole day without eating. School holidays make up 13 weeks of the year – this means children and young people spend a quarter of their year not in school. This brings additional costs and challenges for families – with some 3 million children at risk of hunger during holiday periods. For too many children and adults the food runs out. Because it’s harder to spot in the UK it can be difficult to convey hunger exists. How many children and adults have hunger as their most constant companion? What causes household food poverty and food insecurity?  And what more can be done to respond to this urgent need? Jessica Sellick investigates. 

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How many children and adults are going hungry? 

The Food Standards Agency’s working definition of food poverty is ‘where the constraints are such that it is not possible for individuals or households to consume a nutritionally adequate diet, they could be considered to be in food poverty.’This is where an individual or households isn’t able to obtain healthy, nutritious food, or can’t access the food they would like to eat – forcing people to eat what they can afford rather than what they want. Some commentators draw on Peter Townsend’s concept of relative poverty in defining food poverty beyond these nutritional concepts to ‘the social functions that eating serves i.e., being able to modestly eat out once in a while, have friends over to eat or celebrate special occasions.’  

The Food and Agriculture Organization (FAO) defines food insecurity as ‘a situation that exists when people lack secure access to sufficient amounts of safe and nutritious food for normal growth and development and an active and healthy life. It may be caused by unavailability of food, insufficient purchasing power, inappropriate distribution or inadequate use of food at the household level…Food insecurity may be chronic, seasonal or transitory.’ 

According to UNICEF, in 2017, 10% of children in the UK were reported to be living in households affected by severe food insecurity [defined by UNICEF as ‘experiencing hunger’]. According to figures published by End Hunger UK, in January 2018 16% of adults in Great Britain either skipped or saw someone else in their household skip meals; 14% of adults worried about not having enough food to eat; and 8% of adults had gone a whole day without eating because of a lack of money during the last 12 months. Parents whose children were aged 18 and under were found to be particularly food insecure, with 23% either skipping or seeing someone in their household skipping a meal due to a lack of money; 23% worried about not having enough food to eat; and 13% had gone without eating for a whole day in the last 12 months. Parents with primary school-age children (aged 5-11 years) fared even worse: with 27% either skipping or seeing someone in their household skipping meals to make ends meet. 

“I work—two jobs—and my husband works full-time. We should be able to afford good, nutritious food. We should be able to afford food. The reality, though, is multiple days when dinner has been a tin of chopped tomatoes, some value dried mixed herbs, and 20p pasta; we have to regularly feed our family on around £1.50 for the entire meal—not per head. By the time our rent is paid, money put on the gas and electric keys, the bills paid…there’s nothing left. We drink water, we eat the cheapest food, but we struggle to afford even that.”

“It [Christmas] was a festival of all the things we couldn’t have. Adverts on telly show families spending loads of money and you’re just bombarded with it everywhere you go – this faux festivity and cheer. My worst year, I didn’t have a tree, didn’t have any decorations, I couldn’t buy any presents, I had unplugged the fridge, turned the heating off, taken out the light bulbs…I sent my son to his father’s for Christmas and I just sat on my own and got drunk on cheap lager on the couch and didn’t tell anyone.”

According to academics at Northumbria University, holiday hunger is a ‘condition that occurs when a child’s household is, or will, become food insecure during the school holidays.’ When there is no school there is no Free School Meals (FSMs). Eligibility for Free School Meals (FSMs) extends to all children in England and Scotland who are in Year 2 and below. For pupils in other years FSMs is means tested. According to the Institute for Fiscal Studies (IFS), in April 2018, there were some one million children receiving means tested FSMs, with two-thirds of these children living in the lowest income fifth of households with children. A change to the rules governing FSMs led by the Department for Education (DfE) is now taking place due to the introduction of Universal Credit (UC). The IFS estimates that this will lead some 210,000 extra children will be eligible for FSMs after the rollout of UC. However, 160,000 children who are currently entitled to FSMs will lose out under the new system – meaning an overall increase of 4% or some 50,000 pupils in receipt of FSMs. In many cases, school dinners can be the main source of nutrition for children and young people living in low income households.  

Research by Feeding Britain suggests 3 million children are at risk of hunger during school holidays; and that the loss of FSMs during the holidays costs a family, on average, £30.00-£40.00 per week. Work in Glasgow by the Child Poverty Action Group (CPAG) has highlighted some of the cost pressures facing families during holiday periods – with many parents reporting falling into debt or borrowing money to pay for heating, eating and uniform for new the new school term.  

A survey funded by Kellogg’s found more than six out of ten parents with household incomes of less than £25,000 said they were not always able to afford to buy food outside of term time [this figure increased to 73% for parents on incomes of less than £15,000]; and that one-third of parents had skipped a meal during the school holidays so that their children could eat.   

No parent cuts out meals for themselves or their children through choice; they do so because they have no choice. But it is difficult to tell how many children and adults have hunger as a constant companion because there is no standard measures or data collection for measuring this across the UK.  

The FAO, for example uses the Food Insecurity Experience Scale (FIES) to measure food insecurity through people’s experiences. The FIES asks individual respondents for themselves or their household as a whole during the last 12 months is there a time when – because of lack of money or other resources – they: (1) were worried they would not have enough food to eat; (2) were unable to eat healthy and nutritious food; (3) ate only a few kinds of foods; (4) had to skip a meal; (5) ate less than they thought they should; (6) ran out of food; (7) were hungry but did not eat; and (8) went without eating for a whole day? Responses to these eight questions are then transposed onto a scale from mild food insecurity (i.e., worrying about the ability to obtain food); through to moderate food insecurity (i.e., reducing quantities, skipping meals) and severe food insecurity (i.e., experiencing hunger). 

The United States Department of Agriculture (USDA) collates data and information on ‘hunger’, ‘food security’ and ‘food insecurity’ as part of Government attempts to identify the economic and social factors that may lead to hunger.     

When it launched new research into destitution in 2018, the Joseph Rowntree Foundation (JRF) described what it means to go hungry. By ‘destitute’ the researchers asked respondents if they, or their children, had lacked two or more of the following six essentials over the past month because they could not afford them: (i) shelter, (ii) food, (iii) heating, (iv) lighting, (v) clothing and footwear and/or (vi) basic toiletries.

How can we draw on some of these definitions and measures to develop some baseline data (and ongoing information) about children and adults experiencing hunger, on the verge of hunger, and at risk of hunger (including the nutritional and social functions of food) across the UK? 

Why are people hungry – what is causing household food budgets to become so restricted? 

The report of the All-Party Parliamentary Group on hunger in the United Kingdom ‘a strategy for zero hunger’ describes how:  

“something fundamental is happening in advanced Western economies which throws into doubt the effectiveness of a national minimum below which no one is allowed to fall. It is the erosion of an effective national minimum that has led to the existence of hunger and the rise of the food bank movement in its wake” (page 9). 

The report illuminates the multifaceted reasons for hunger. These include: a reduction in real wages; benefits levels and changes (delays/errors in processing claims, benefit sanctions); juggling the budget for food, housing and utilities (which for some people means going without food in order to avoid becoming homeless or the utilities being turned off); people being overwhelmed by a sudden budgetary crisis; and/or the absence of FSMs. The APPG also identified some underpinning reasons including the size of debt which many families are struggling with and addiction (including addiction funded by debt).  

A Rapid Evidence Assessment (REA) carried out for Defra back in 2014 asked food aid organisations who accesses their support and why. Food aid organisations identified immediate problems such as a sudden reduction in household income (job losses or benefits payments) as well as ongoing circumstances (continual low household income and indebtedness). The REA also revealed how people who struggle to manage their food needs adopt a variety of strategies to avoid having to ask for food help (e.g. cutting back, changing eating and shopping habits, juggling budgets, turning to family and friends). When they do turn to food aid – often as a very last resort – they are likely to draw upon as much assistance (food and non-food support) as they possibly can.   

More recently, in January 2018, the APPG on Hunger published its report into the ‘hidden’ problem of elderly hunger in the UK. This revealed more than 1 million older people at risk of malnutrition caused by social isolation (e.g. due to bereavement, illness, immobility or loss of driving licence) and cuts to public services. The report found malnutrition costs the NHS approximately £12-13 billion a year and this is being exacerbated by reductions in social care packages, cuts to meals on wheels services and local shop closures. 

‘Food aid’ is an umbrella term that encompasses a range of large and small scale local activities aimed at helping people to meet their food needs, often on a short term basis (during crisis or immediate difficulty). 

Food banks are one example of food aid. Foodbanks in the UK are typically run by charities, community groups, voluntary sector organisations and faith groups. People are usually referred to a food bank from an agency or body such as Citizens Advice, Jobcentre Plus, GP, social worker or school from whom they receive a voucher to take to a food bank where they receive 3 days’ worth of food. 

Since February 2017 the Independent Food Aid Network (IFAN) has been mapping the number of independent foodbanks outside of those operated by the Trussell Trust. So far, researchers at the IFAN have identified 801 independent foodbanks. This equates to 39.3% of the total number of UK food banks, with the Trussell Trust’s network currently extending to some 1,235 foodbanks. 

Between 1 April 2017 and 31 March 2018, Trussell Trust foodbanks provided 1,332,952 people with three-day emergency food supplies – a 13% increase on the previous year. Some 484,026 of these emergency food supplies went to children – whose foodbank use increased 6% on the previous year. The top four reasons for referral to one of the Trussell Trust’s foodbanks were: being on a low income (28% of referrals), a delay in benefits (24%), changes in benefits (18%) and debt (9%). 

An animation, ‘Hunger by the Sea’, made by Bournemouth University contains first-hand accounts from people accessing support from a foodbank. The foodbank used to develop the animation was situated by the sea and this was used to produce images to accompany participant’s narratives about how they are struggling to keep their heads above water. The Trussell Trust also provides narratives of people using its foodbanks. 

The UK Government does not collect data on the number of foodbanks in operation, the number of people accessing them and the circumstances that lead them to do so. This would undoubtedly build a fuller picture about the ‘national minimum’ below which people should not be allowed to fall.  

How many people are hungry in rural areas – and how many people are struggling to access healthy and affordable food? 

An Evidence Review for the All-Party Parliamentary Inquiry into Hunger looked at the extent and geographical spread of hunger and food poverty. The review included a section on ‘rural hardship’ which identified several factors which may worsen the ability of low-income households in rural and coastal areas to be able to afford food. These factors included: struggling with the higher costs of heating their homes, higher costs of transport, distance to work or Jobcentre Plus and low-paid and seasonal employment. Evidence submitted to the review found some rural residents were living some distance from lower-cost supermarkets and could not afford the bus fare to travel to town to shop. The insecure and short-term patterns of employment in some rural areas led some residents to not be able to accrue savings or resources to provide resilience during difficult times; and how property costs are higher and comprise proportionately more of the family income which means families can be more vulnerable to shocks in their household budget. 

Food deserts are defined in the US as ‘parts of the country vapid of fresh fruit, vegetables, and other healthful whole foods, usually found in impoverished areas.’ 

A report published by the Social Market Foundation in October 2018 found about three-quarters (76%) of food deserts in England and Wales were in urban areas, with the remaining 24% in rural areas. While a quarter (24%) of urban super output areas are “food oases”; this is the case for 7% of rural super output areas. Overall, 95% of food oases are in urban areas and 5% in rural areas. Rural areas were found to have more restricted choice of food stores than urban areas; and for rural residents without access to a car, or with restricted mobility, accessing a range of food stores in a rural area was a challenge. 

Much is written about what happens when a supermarket opens up in an area but less is written about the consequences when a supermarket closes – particularly in a rural area which can lead to a reduction in the local community’s access to fresh food.  

Defra’s Statistical Digest of Rural England  (December 2018) monitors ‘accessibility to key services’ by looking at the time taken to travel from a rural place to a service location. Generally, people living in rural settlements have lower overall levels of accessibility to key services compared with people living in urban places – with people living in sparse rural settings having the lowest overall accessibility. For travel by public transport, the average number of key service locations accessible to people living in rural areas is highest for primary schools and food stores, with 9 available within a 60 minute journey time. 

Approximately 28% of UK food banks are located in rural areas, but their distribution varies across different rural districts. Even where there is a foodbank in a rural area some remote residents may struggle to access it (or get a referral from an agency) because of the distance and cost of transport. Research has further highlighted how the stigma often associated with using foodbanks can take on additional prevalence in rural areas where this is often a strong ethos of ‘making do’. 

Back in 2015 Hannah Lambie-Mumford and Carolyn Snell investigated the ‘heat or eat’ dilemma in rural areas, interviewing clients from Trussell Trust foodbanks in Cornwall. The report’s findings suggest neither fuel nor food is sacrificed for the other, but instead those with the lowest income ration both. The quantity and quality of food is reduced, whilst the use of fuel for cooking and lighting is often prioritised over warmth. 

Is it possible to collect data on the number of foodbanks in operation, the number of people accessing them (or not able to access them) and the circumstances that lead them to do so? 

Importantly, is it also possible to map sources of ‘affordable’ and healthy food in rural areas – not only taking into account distance to a food store  and number of stores available in a given area; but then overlaying this information with other indicators such as average household income, deprivation and availability of public transport? 

What is being done to address hunger?  

In March 2018 the Government announced a £2 million ‘Holiday Activities and Food Programme’ for new and existing holiday clubs to explore how to help disadvantaged children benefit from healthy meals and enriching activities. In November 2018, the DfE published management information about the children and young people attending the holiday clubs.  This revealed, of the seven organisations funded by the DfE to provide healthy food and enriching activities, 18,200 children and young people had received support. 

Holiday clubs provide free meals and activities during the school holidays for children who may otherwise go without and are often operated by charities, community groups, youth groups or Local Authorities. In 2017, the estimated 593 clubs across the UK provided over 190,000 meals to more than 22,000 children and young people during the summer holidays and October half-term. But their geographical coverage is patchy which means they are not reaching all the children who need help during the holidays.

Under the strapline ‘no child too hungry to learn’, Magic Breakfast provides breakfast food and expert support to schools. The DfE provided funding to Magic Breakfast to support schools to set up and run breakfast clubs in schools with over 35% of the pupils eligible for FSMs which had no existing breakfast club. The evaluation of the scheme found the delivery model worked well – with 184 schools recruited and 96% of schools continuing to provide a breakfast club after Magic Breakfast’s contract with the DfE ended. As well as reducing hunger, breakfast clubs were perceived to improve concentration and behaviour in class and to improve punctuality for some pupils. In March 2018 the DfE announced £26 million [funded through the soft drinks industry levy] towards a National School Breakfast Programme. To be delivered by Family Action in partnership with Magic Breakfast, the Programme aims to help improve breakfast for pupils in more than 1,700 schools by 2020. In addition to providing the National School Breakfast Programme, Magic Breakfast is continuing to provide nutritious breakfasts to more than 31,500 children during school term time. In the 2017-2018 academic year, Magic Breakfast provided 2,884,512 bagels, 2,016,727 bowls of cereal, 1,765,446 glasses of juice and 242,705 bowls of porridge.  

The Healthy Start Scheme is Government funded and provides vouchers for pregnant women or parents with children under the age of four years on benefits for them to spend on healthy foodstuffs such as milk, fruit and vegetables.  

Other non-Government initiatives include Fare Share’s, the UK’s largest food charity, campaign ‘feed people first’ which is working with manufacturers, processors, packers and retailers so that surplus food can be collected by local charities. Many foodbanks have joined the ‘more than food programme’, becoming community hubs and providing people with support people tackle debt and financial issues, get through and out of fuel poverty and providing holiday clubs for children when FSMs are not available.   

What more can be done? 

The Fabian Commission on Food and Poverty looked at how a fairer food system could be built that works better for people on low incomes. The Commission’s recommendations included a new cross-department minister with responsibility for eliminating household food insecurity in the UK; action to reduce acute household food insecurity caused by sanctions, delays and errors in the benefits system; an inquiry to remove poverty premiums for key living costs such as food, utilities, housing, household appliances and transport; and called for Local Authorities to establish food access plans that address physical barriers to affordable, nutritious food in their area. 

Other organisations are also calling for a coordinated Government strategy to tackle household food poverty and food insecurity (e.g. End Hunger UK, Feeding Britain, Church Action on Poverty and partners).  

The Poverty and Inequality Commission was tasked with looking at the Child Poverty Delivery Plan 2018-2022 by the Scottish Government. The Commission’s recommendations included: that the Scottish Government introduce an additional cash benefit during school holiday periods that at least matches the equivalent costs of school meals; that the Scottish Government and Local Authorities should work together to take a strategic approach to funding a package of school holiday support that address the full range of pressures faced by low income families; and that existing holiday club provision should be used to provide food as a core element of their work. 

Much of this work draws attention to some of the themes outlined above – particularly in calling for more government leadership [e.g. strategy, data, welfare reforms]; recognising the important work undertaken by local, regional and national charitable (food) organisations; and helping people to earn a decent wage. In addition to this strategic approach; another strand of work is seeking to encourage people who are struggling with food insecurity to feel more able to seek assistance without the stigma of shame or failure. This strand recognises the assets and resources that communities already have and how these might be built upon. 

What more can be done to support people in rural communities? We need to listen to people with first-hand experience of hunger in our rural communities and use these experiences to provide immediate and longer-term support. this means we shouldn’t just focus on food (nutrition and social functions) but should be much more holistic and wide ranging (e.g. work/wages, social inclusion etc.) No one should have hunger as their constant companion. As Sir Winston Churchill (1943) reminds us ‘healthy citizens are the greatest asset any country can have.’ 

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Jessica is a researcher/project manager at Rose Regeneration. Her current work includes evaluating two veteran support projects (in Cornwall and North Yorkshire); supporting public sector bodies to measure social value; evaluating a hospital avoidance service; and undertaking a piece of work on migration. 

She is also a senior research fellow at the National Centre for Rural Health and Care (https://www.ncrhc.org/). 

In her spare time Jessica sits on the board of a housing association. 

She can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. 

Website: http://roseregeneration.co.uk/ 

Blog: http://ruralwords.co.uk/ 

Twitter: @RoseRegen 

Rural debt

How can we stop a rural debt spiral?

On 8 November 2017 the Treasury Committee announced a new inquiry into household finances. The Committee will look at the state of UK household balance sheets (including savings levels) and examine indebtedness, inter-generational issues, lifetime financial planning and the effectiveness of the market in providing finance and solutions to low income households. The inquiry comes amid research published by the Money Advice Service (MAS) in September 2017 which found one in six people struggling to cope with the money they owe – this means they find it difficult to keep up with bills and credit commitments or have missed payments for bills or credit commitments in three or more of the last six months. 15.8% of the population in England, Scotland and Northern Ireland are over-indebted and 17.7% in Wales. In England, the regions with the highest levels of indebtedness are the North East (at 17.7% or some 373,963 people) and London (17.2% or 1,190,557 people). The regions with the lowest levels of indebtedness include the East of England (14.3% or 693,851 people) and the South East (13.3%, 950,209 people). When the figures are broken down further, at Local Authority level, there are a number of locations including Nottingham, Hull, Leicester, Manchester, Sandwell, Lincoln, Sunderland, Stoke-on-Trent, Merthyr Tydfil and Blanaenau Gwent where one in five adults is struggling with problem debt.

The Money Charity’s statistical bulletin for November 2017 shows the average total debt per household (including mortgages) has reached £54,490. The APR on a £5,000 personal loan has increased by 1.31% over a year; there has been an increase per adult in consumer credit lending since 2016 equating to £290.10 per person and 35% of households have no savings whatsoever. Every day in the UK 277 people are declared insolvent or bankrupt (equivalent to one person every 5 minutes and 12 seconds); 3,274 consumer County Court Judgments (CCJs) are issued (with an average value of £1,509); Citizen Advice Bureaux (CAB) in England and Wales deal with 3,828 new debt problems; and 13 properties are repossessed (one every 1 hour and 50 minutes). People in the UK owed £1.557 trillion at the end of September 2017, a rise from £1.505 trillion at the end of September 2016 (and an extra £1,030.47 per adult). The average adult in the UK now has personal debt of £30,096 – around 113.8% of average earnings. Total credit card debt in September 2017 was £69.4 billion – this equates to £2,562 per household and would take 26 years and 1 month to repay if the householder only made the minimum repayment each month.

Similarly, Insolvency statistics for England and Wales show applications for individual voluntary arrangements (IVAs) have reached their highest level since they were introduced in 1987. There were 25,479 individual insolvencies in Q3 2017 in England and Wales – comprising 3,682 bankruptcies, 6,274 debt relief orders and 15,523 IVAs. Individual insolvencies increased by 10.6% in Q3 compared to Q2 2017. These figures are attributed to changes to the process for people declaring themselves bankrupt and changes to Debt Relief Order (DRO) eligibility criteria.

While we all face ups and downs, this mass of figures reveal how many people are already in – or at risk of falling into – problem debt. How many people living in rural areas are in a ‘debt trap’ and what can be done about it? I offer three points.

Firstly, what is debt and how much is there in rural areas?

While we might each view the word ‘debt’ differently, at its most basic, debt is something borrowed (usually money) that has to be repaid to a person or organisation. This could be using an overdraft on your bank account, owing a friend £20, having a student or car loan and/or a mortgage. Within this definition it’s almost impossible for anyone to be ‘debt free’ over the course of their life. This is why money charities describe ‘credit that works for you’ i.e., credit used wisely which can be paid back over a long period of time with relatively low monthly payments that enable you to keep the rest of your money free for other things; and ‘credit that works against you’ i.e., where you start to use credit to pay for things that you could do without and can’t really afford. It is also worth noting that debt is something that some people have few choices over: if you want to go to college or university you may need to take out a student loan; if you are facing a 6+ week wait to receive a Universal Credit payment you may have to take on debt to keep a roof over your head and food on the table. A plethora of terms cover credit that doesn’t work for you: unmanageable debt (where borrowing money has ended up taking you to an unhappy place), indebtedness, debt-to- income ratio, over-indebted (where keeping up with bills and credit commitments is a heavy burden or you are falling behind or missing payments leading to regular arrears), ‘problem debt’ (a debt or accumulation of debts that impacts on you adversely because you are unable or struggling to repay) and/or a debt trap (where debt repayments and creditors demands spiral into unmanageable situations which can devastate lives).

According to MAS and CACI, the over-indebted population is younger, more likely to rent and more likely to have children than the UK as a whole. It feels the impact of macroeconomic changes more keenly and is more exposed to changes in the welfare system.

CAB find people end up struggling with debt for a range of reasons – with two standout features. Firstly, a drop in income, with people experiencing a significant fall in income (defined as moving to a lower income quintile). People in this category were 33% more likely to fall into problem debt two years later. Secondly, some other sudden change to people’s finances. Here people take on debts for a range of reasons. People who quickly became over-indebted typically held lower amounts of debt (£663) than those who are already struggling (£2,140). The number of people struggling with debt has remained largely stable (around 9% of all individuals in any one year). And while the majority of people who get into difficulties with debt are able to get back on track a year or two later, a significant minority struggle with their debts over a long period of time.

Applying these definitions and statistics to a rural population is not commonplace.

A CAB report on clients’ experience of debt published back in May 2003 found while total household debt among clients ranged from £132 to £11,000; a significant proportion of clients faced debts in proportion to their income which were totally unmanageable (14 times their income); with those living in rural areas, owner occupiers and non-householders having particularly high levels of debt relative to their income. While rural clients typically owed less than the average CAB debt client, their lower average income meant their debt to income ratio was much higher: 14.8 compared to a ratio of 12.6 for urban clients. The report found rural clients are likely to be isolated and face additional expenditure (particularly on transport and food) which affected their ability to repay debt.

The Commission for Rural Communities ‘rural money matters’ report in 2009 found that while people in rural areas experienced the same financial challenges as people living in towns and cities, living in the countryside brought additional challenges – with around 200,000 rural dwellers at the time not having access to a bank account, poor public transport and long travel times making access to mainstream financial services difficult and costly for people. A dispersed client base and poor economies of scale made it challenging to deliver debt advice and credit union outreach services. According to a CAB outreach worker at the time: “it’s expensive being poor and it’s especially expensive being poor in a rural area.”

More recently, the Joseph Rowntree Foundation (JRF) spotlight on income describes how despite rural jobs being poorly paid people in rural areas need to spend 10-20% more on their everyday needs compared to their urban counterparts, and they need to earn well above the minimum wage to make ends meet. Back in 2010 JRF developed a Minimum Income Standard (MIS) for rural households. This found single working age adults needed to earn at least £15,600 a year in rural towns, £17,900 in villages and £18,600 in hamlets or remote countryside to reach a MIS, compared to £14,400 in urban areas.

The Bank of England’s analysis of monetary financial institutions lending to UK residents reveals the UK agricultural, hunting and forestry sector had an outstanding debt of £18.5 billion as of May 2017, with debt levels up 57% since 2010 (see tables, particularly C1.2). On the one hand, the figures suggest farmers have access to capital to invest in their business; on the other hand, some farmers may be getting into unmanageable debt.

Whilst problem debt is often viewed as an urban issue, it is clearly a rural issue too (connected to other issues such as income, access to services, housing, transport and energy which make debt issues more acute in a rural setting). We need to improve our data and information collection so we better understand how many people are in problem debt, at risk of problem debt, or in a debt trap in rural areas and the challenges they face.

Secondly, what impact does debt have on people’s lives?

StepChange estimates the social cost of problem debt in the UK to be £8.3 billion. This sum is a result of additional welfare benefits, moving and eviction costs, lost productivity and demand for care, support and other services that people rely on as a result of problems linked to their debt.

CAB’s report on the debt effect highlights how unmanageable debt is closely related to wider problems in people’s live (e.g. financial exclusion, family breakdown, unemployment, low pay, poor physical or mental health). CAB’s experience of giving debt advice to over 350,000 people a year suggests more than half of clients (54%) have a problem in at least one other area, and nearly 75% of debt clients said they felt anxious or stressed because of their debts. They found people with unmanageable debt were 24% more likely to have a mental health score at the bottom quarter of the population. They also found debt problems meant people were less likely to be willing to take major life decisions. Another survey of 1,400 people in financial arrangements to deal with their debt found 84% felt as though their debts had an impact on their mental health.

A further report by The Children’s Society and StepChange sought to lift the lid on the devastating impact debt can have on children. Their findings show that children are suffering worry, anxiety, bullying and are going without essentials as their families are trapped in problem debt. According to Matthew Read, the chief executive of The Children’s Society, “families are increasingly relying on debt to make ends meet – but we’re in danger of ignoring the impact this is having on children now and in the future. We cannot allow children to pay the price of debt. With little savings to fall back on, it can take just one unexpected set back – like illness or being made redundant – to trip a family over the edge and into a debt trap that can feel impossible to escape from. This research exposes the shocking reality of parents lying awake at night worrying and unhappy children going without.”

While there are a plethora of examples of people who have paid off debt – the headlines include ‘I’ve been completely debt free for one year and here’s how my life has changed’ or ‘how I went from being £36,000 in debt to being back in black’ – and while the MAS has real life examples of how people have got out of debt; there are fewer examples of people recording their actual lived experiences of accumulating and living with problem debt. Over the last few months I have been evaluating a project delivered by CAB which helps people to get on top of their money in the broadest sense. While the project is leading to behaviour change, with clients sorting out money problems before they become unmanageable, respond to key changes in their life, and get support to manage their money to limit wider effects (e.g. eviction, homelessness); the clients were reluctant to talk about finances with their families, friends and local community. Clients described how “I was getting into more and more trouble, more financial difficulties, and before them [CAB] I didn’t know where to turn”; “I was living day to day, I got into a lot of debt, I thought I was going to lose my home, I couldn’t afford food. They [CAB] helped me with managing my debts and budgeting, they also helped me get food parcels and put me in touch with local charities. Before them [CAB] I didn’t who to turn to”; “without them I would’ve carried on struggling, there’s no doubt about it. I don’t like to ask family and friends and I try to stand on my own two feet”; and “if I hadn’t received helped from them [CAB] I think I would have had a breakdown as I really wasn’t coping.”

Thirdly, what can be done to address problem debt?

Returning to an earlier figure of one in six people in the UK being over-indebted at any one time, according to MAS less than one in five people seek advice.

Debt advice is seen as a key way of helping people ‘on the edge’ as well as those already with problem debt. In England and Wales, debt advice is provided by a range of organisations including Citizens Advice, East Midlands Money Advice, Capitalise, Money Advice West and Greater Merseyside Money Advice. They offer a range of services over the telephone, online, by email or face-to-face. The UK Government has also put together a range of debt help schemes to help people resolve their debt problems and become debt free.

The debt advice sector is diverse, with a range of approaches and working models. MAS research found one of the sector’s key strengths to be kindliness and compassion, combined with high levels of technical knowledge and experience. However, while the sector is set up to tackle immediate financial challenges and deal with ‘crisis’, supporting clients to make longer-term improvements to their financial situation to prevent them becoming over-indebted again has been less of a focus. MAS also describes a need to address wider (non-debt specific) issues and improve the identification of individual levels of need to then tailor the best means of providing support.

MAS evaluates the impact of the debt advice services it funds. Initial findings published in January 2017 found debt advice resolves clients’ critical issues, with 93% of clients agreeing actions to take following advice and 68% saying the advice they received resolved the problems they asked about. Debt advice was found to give clients the knowledge they needed to deal with financial difficulties – with 83% of clients feeling more in control of their financial situation. Debt advice was seen to improve clients’ financial capability – with 89% checking their income and expenses more regularly. Debt advice also led to improvements in clients’ wellbeing – with 73% of clients saying they were less stressed, 62% saying they were sleeping better, 63% feeling their mental health had improved, 69% feeling their relationships with friends and family had improved and 71% saying they are now performing better at work.

There is, therefore, an increasing focus on preventative money / debt advice as well as helping those already in problem debt. According to the CAB there is a preventative advice gap. One of the reasons people don’t get money advice is that it is not designed or delivered in a way that helps them avoid getting into financial difficulties. They found: (i) advice is not offered at crucial times in people’s lives, with some 23 million people not offered advice at key moments in their lives; (ii) advice is seen as a last resort – 50% of consumers are likely to consider seeking help for a debt than for general money management; and (iii) advice is too narrow – over 1 million people who have had financial guidance did not get help with a related issue such as housing or work. The MAS has a ‘talk money worries’ campaign which includes spotting the signs that someone is in money trouble. MAS believes money guidance should be offered to people at key moments in their lives – to help them adjust to changes, review their financial situation to sort out any problems before they become unmanageable and encourage people already in problem debt to get help to manage it and limit its wider effects. StepChange describes how a lack of financial resilience is tipping people into a debt trap as part of calls for Government to create ‘safety nets’ to help people cope with ups and downs.

HM Treasury recently launched its ‘breathing spaces’ call for evidence. This is exploring whether more people might be encouraged to seek advice, or seek it earlier than they would otherwise have done, if there were greater incentives for them to do so. In Scotland, for example, people in debt entering into repaying plans have a statutory right to have their fees and interest frozen under the Debt Arrangement Scheme (DAS). The evidence call is seeking to gather information and insight about whether a six-week breathing space could be designed – who should be able to access a breathing space, how should a breathing space be activated, how can it be simple and practical to implement for debtors and creditors? The call closes on 18 January 2018.

CAB has further identified a ‘referral gap’. This is where people raise money issues first with professionals such as doctors, banks or a Local Authority. When these professionals are not able to offer help directly, they need to be able to refer people onto appropriate and timely money advice. However, CAB polling found this didn’t always happen, with around 3.4 million people who have raised money issues with a trusted professional not receiving advice or a referral.

While some of the organisations offering debt advice provide outreach services in rural areas, since the closure of the Commission for Rural Communities there has been relatively little work looking at the advice and support needs of people living in rural communities suffering from money and debt problems. What is rural coverage of debt advice services like and how can this be improved? Are Government schemes being taken up by rural dwellers?

For many people borrowing (‘credit that is bad for you’) is unsustainable. More people than ever are not able to cope with a sudden drop in income or other sudden change in their financial circumstances, not having the savings needed to mitigate this or some other rainy day.

Some people build up problem debt over time while for others it can be triggered by a single event. If it’s almost impossible for anyone to be ‘debt free’ over the course of their life, what more can be done to prevent people (in rural and urban areas) from falling into a debt spiral?

 

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Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential. Her current work includes supporting a Lottery programme to help people into paid work; research for the NHS on rural workforce recruitment and retention issues and supporting a community rail partnership. can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://roseregeneration.co.uk/ Blog: http://ruralwords.co.uk/ Twitter: @RoseRegen

 

Rural Homelessness in the UK

Being homeless in the countryside – an invisible issue?

Having nowhere stable to live (a home) can affect a person’s ability to live, work, enjoy and get on in life. Finding yourself with very little money, where every day is a struggle, can be seen as something that happens to someone else. Yet in 2015/2016 some 6,270 households were homeless in rural Local Authorities, with many other households threatened with homelessness or people having previously experienced homelessness. But with four-fifths of homelessness cases found in urban areas, rural homelessness all too often remains neglected and misunderstood. What can be done to prevent and relieve homelessness in rural areas? Jessica Sellick investigates.

Back in 2003 Crisis and the Countryside Agency jointly published a report on the incidence and experiences of people staying with family and friends in response to homelessness. Based on interviews with 164 people in three areas (London, Sheffield and Craven), the report revealed how staying with family and friends was a common situation in rural areas – often the only option when becoming homeless; with a minority of respondents staying with the same friend or relative since becoming homeless but the vast majority having to move between different friends and relatives. While this situation was viewed as a positive experience by some, for others it led to insecurity, poor living conditions, limited privacy and restrictions on their behaviour and lifestyle. Less than half of those interviewed had approached their Local Authority for help; having few expectations about the support likely to be forthcoming and in part a recognition of the limited resources available to the Council to respond (i.e., high demand and a limited housing stock in rural areas). For me, this report highlighted both the need to recognise and also the need to respond more adequately to the reality of homelessness in rural areas. Many of the people staying with friends or relatives were being neglected by traditional measures of homelessness (i.e., official homeless statistics captured through Local Authorities). And it revealed an inequity in being able to provide advice, assistance and accommodation to homeless people regardless of where they are living. How have policy and decision makers recognised and responded to the experiences of homelessness in rural areas since then and what more can be done? I offer three points.

Firstly, what is ‘homelessness’ and how many people in rural areas are affected by (or have experienced) homelessness?

The Housing (Homeless Persons) Act 1977 was the first time a definition of homelessness appeared on the statute books. Therein a person was considered homeless if ‘they and anyone who normally resides with them had no accommodation’ or ‘if they had accommodation but could not secure entry to it’. In 1986 Parliament amended this definition to include those who ‘have an entitlement to occupy accommodation but the accommodation is so bad that it would be unreasonable to remain in occupation of it’. Since 1977 there have been a number of discussions around how homelessness is defined – with some commentators calling for a broader definition (anyone who is ‘roofless’) and others suggesting this would exaggerate the ‘true number’ of people experiencing homelessness. More recently, the Housing Act 1996 defines someone as homeless ‘when they have no accommodation, or it is not reasonable for them to continue to occupy the accommodation they have.’

Homelessness policy is devolved and there are, therefore, different legal definitions and Government responses across England, Wales, Scotland and Northern Ireland.

In England, common situations which meet the legal definition of homeless include: if you don’t have a home and you’re on the streets; you have a home but can’t get into it (e.g. you’ve been illegally evicted by your landlord, an ex-partner has changed the locks); you’re evicted by bailiffs and have nowhere else to go; if you are staying rent-free with family or friends and they give you reasonable notice to leave; if you stay with different friends and family for short periods of time because you have nowhere settled to stay (e.g. sofa surfing); if you’re experiencing or threatened with domestic abuse by a partner, former partner or family member; if you’re staying in a night shelter, emergency short-stay hostel or refuge; if your home is unaffordable because you can’t pay for basics like food and heating after you’ve paid the rent or mortgage; and/or if you have somewhere to live yourself but it’s not possible for your partner, dependent children or other household members to live there too.

In each situation the Local Authority must assess if an individual or household is legally homeless now, or likely to become homeless within 28 days. For a homeless household to qualify for temporary accommodation the Local Authority must be satisfied that they meet one or more criteria that would qualify them as being ‘in priority need’ and that their homelessness is not intentional. Three-quarters of households classified as being ‘in priority need’ do so because they contain dependent children or a pregnant household member. If the Council decides an individual/household is legally homeless they may then qualify for emergency and long-term housing. If the Council decides an individual/household is not legally homeless (i.e., that they’ve made themselves intentionally homeless) it doesn’t have to offer them any housing.

The Housing Act 1996 places a duty on Local Authorities to provide free advice and information about homelessness and its prevention to any person in their district. The Act also places a number of duties on Local Authorities to provide assistance to homeless people (e.g. providing temporary and settled accommodation). The Homelessness Act 2002 introduced further powers for Local Authorities to take reasonable steps to prevent homelessness for households that do not meet any of the criteria that would classify them as ‘in priority need’ and where their homelessness would be unintentional. Since then, Local Authorities with relatively high numbers of applications for assistance have in many cases used this power to provide ‘housing options’ services.

The Department for Communities and Local Government (DCLG) collates data from Local Authorities on statutory homelessness. To provide a national overview – and identify trends over time – DCLG uses the data to measure the number of rough sleepers, the number of households placed in temporary accommodation and the number of cases of homelessness prevention dealt with. Every quarter, Local Authorities provide DCLG with data on the number of households that have applied for homelessness assistance and the number of households that they have worked with to prevent them from becoming homeless. The latest statistical release (published in September 2017) found Local Authorities had received 27,470 applications for housing assistance between April and June 2017. 14,400 of these applications (or 52%) were accepted as ‘owed a main homelessness duty’ with the reminder found not to be homeless (6,220 applications or 23%), to be homeless but not in priority need (4,550 applications or 17%) or to be intentionally homeless and in priority need (2,310 applications or 8%). Since 1998 the proportion of Local Authority decisions that have been acceptances and intentionally homeless has increased slightly, and the proportions that have been found not in priority need and not homeless has fallen slightly. The number of households deemed ‘statutorily homeless’ is down 1% on the previous quarter and down 5% on the same quarter in 2016. However, this data does not include information on people who are staying with family and friends, people who are in accommodation not provided by the Local Authority or people who would otherwise not come to the attention of a Local Authority.

In July 2017, the Institute for Public Policy Research (IPPR) published its report ‘right to home?’ Describing homelessness as an issue ‘notably absent in people’s understanding of rural life’; the authors used DCLG’s official statistics and wider literature to consider the scale and nature of rural homelessness. IPPR’s analysis revealed between 2015 and 2016 2,625 households had been accepted as being in priority need in 50 ‘mainly rural’ Local Authorities and 3,645 households in 41 ‘largely rural’ Local Authorities. An average of 1.3 households for every 1,000 in mainly or largely rural areas was accepted as homeless (a drop from 1.4 in 2010-2011). This compares to an increase of 2.79 in urban areas over the same time period. However, in sixteen predominantly rural Local Authorities, the number of households accepted as homeless were more than in urban areas in 2010-2011. Between 2010 and 2016 mainly rural Local Authorities recorded a rise from 191 to 252 rough sleepers (an increase of 32%). The report highlights how many cases of homelessness in rural areas go undetected – with individuals “likely to bed down in alternative countryside locations, such as outhouses, barns, tents and parked cars…The stigma of being visibly homeless in rural areas can be much stronger than in urban areas and difficulties accessing local authority services can mean households remain uncounted in official records” (page 3).

What the report illuminates is how homelessness is more than the absence of safe, secure and decent accommodation. Crisis, for example, distinguishes between ‘core homelessness’ and ‘wider homelessness’. Core homelessness refers to households who are considered homeless at any point in time because they are living in short-term or unsuitable accommodation. This includes rough sleeping, sleeping in tents/cars/public transport, unlicensed/insecure squatting, unsuitable non-residential accommodation such as ‘beds in sheds’, hostels, night/winter shelters, domestic violence victims in refuges, temporary accommodation such as bed and breakfast accommodation and sofa surfing. Wider homelessness refers to people at risk of homelessness or those who have already experienced it and are living in temporary accommodation. This category encompasses staying with friends/relatives, being under notice to quit, being asked to leave by parents/relatives, in other temporary accommodation (e.g. social housing, private sector leasing), and/or being discharged from prison, hospital or other state institution without permanent housing.

Centrepoint has been bringing together data from Government, Local Authorities and charities to compile a Youth Homelessness Databank. This goes beyond calculating the number of young people who are ‘statutory homeless’ to encompass the number of young people facing homelessness and/or the numbers of young people going to their Local Authority to ask for help (whether or not they qualify as statutory homeless and are eligible for support). The charity estimates that more than 150,000 young people approached Local Authorities across the UK for help (eight times as many young people than those accepted as ‘statutory homeless’). At least 30,000 young people experiencing or at risk of homelessness have been turned away from their Local Authority and are therefore not captured in any official statistics.

In August 2017 Crisis published research conducted by Heriot Watt University examining current and projected levels of homelessness across different categories. They found nearly 160,000 households (approaching 250,000 people) are experiencing the worst forms of homelessness across Britain; with rough sleeping forecast to rise by 76% in the next decade unless Governments take long-term action to tackle it. The analysis found in 2016, at any one time, 9,100 people were sleeping rough; 68,300 households were sofa surfing; 19,300 households were living in unsuitable temporary accommodation; and 37,500 households were living in hostels. The forecast reveals how – over the next 10 years – overall numbers of homelessness may rise by 26.5% and the number of households living in unsuitable accommodation double over the same period.

To begin to address the current limitations of monitoring the movement of households from homelessness to settled accommodation, DCLG is seeking to introduce a new system of collecting data. This will record more information about people who approach a Local Authority for assistance and the outcome of this approach. This is intended to provide a more thorough understanding of the causes of homelessness and the impact of Local Authority responses to it. Eventually DLCG would like to map data on individual households for homelessness onto other Government department datasets to better understand the wider costs of homelessness to the public sector. This P1E /H-CLIC data collection system – which will receive household level rather than aggregated Local Authority level data – is currently being piloted.

Taken as a collective, what these definitions and datasets reveal is how the full extent of homelessness in rural areas (and at any given time) is not fully known. For official statistics require precise categories of clearly identifiable groups of people (i.e., literally counting the number of people deemed to be ‘rough sleeping’) and Local Authority discretion can mean homelessness applications are not assessed in a consistent way across the country. This leads to a continuum of definitions – from people who are ‘roofless’ through to ‘people in housing but who would rather live elsewhere’ – and degrees of homelessness (rough sleepers, hostels/temporary accommodation and other precarious forms of housing). In practice, who counts as homeless and what support they require needs to be reconciled by public servants and charitable organisations supporting homelessness on a day-to-day basis.

Secondly, what are the causes of homelessness and (rural) people’s experiences of it?

Raynor Winn and her husband became homeless after he was diagnosed with a terminal illness. She wrote a blog for The Big Issue – recounting how the Local Authority refused their application for priority housing leaving them to camp and sofa-surf. Filling two rucksacks with the bare essentials they decided to walk the 630 miles of the South West Coast Path. Raynor describes how “it seems that in rural England the homeless are a problem to be hidden. In the land of high-value housing, holiday homes and tourists, the authorities regularly run campaigns to clear the streets of rough sleepers. Maintaining the public view that there is no homeless problem. Consequently, the few that are seen in rural areas are shunned and prejudice levels are high. But the rural homeless are still there. We met many hidden communities, in sheds, barns, woods, in caves and under bridges. Unseen, but very real, staying hidden because of the prejudice…We were lucky, we found a home at the end of our trail, and now live where the Coast Path runs past the front door. But for the unknown numbers of hidden rural homeless that never happens.”

In the United States, on any given night in 2015, 32,800 Americans in rural families experienced homelessness. Similar to the UK, the practical challenges of counting homeless people in rural areas means we may be underestimating the true size of the rural homeless population. This article, by Zachariah Oquenda, recounts his family’s experiences of living in a tent on a campsite; “after two more weeks at the campsite, someone offered us help. A friend let us stay with his family. Since resources like shelters and food banks are few and far between in rural areas, many homeless families end up in crowded housing or “doubling-up” with extended family or friends. We lived with that family for a few weeks before we found another home in Henry, Illinois. Though the house in Henry also was substandard—incomplete plumbing, lack of insulation, and faulty electricity—we made it our home. It certainly beat the rain. Structural issues—such as higher poverty rates; inadequate transportation; and limited access to shelters and services like health, mental health, and child care—make people and families who live in rural areas particularly vulnerable. This helps explain why rural homeless families are disproportionately likely to go without shelter: in 2014, rural families accounted for 15.7 percent of all homeless families, but almost 27% of all unsheltered homeless families (families without access to service shelters that usually live in cars, in tents, or on the street).”

Back in England, in 2016 the House of Commons Communities and Local Government (CLG) Committee published the findings of its inquiry into levels of homelessness and the pressures affecting homeless people. This identified ‘observable trends’ causing – and leading to an increase in – homelessness including those that are structural/societal (i.e., not being able to afford a property to live in: income/benefits versus rental on properties) and personal/individual (e.g. relationship breakdown, mental illness, addiction issues, discharge from prison, leaving the care system).

Since 2010 there has been significant reform of the welfare system reducing the level of support for low income households and those at risk of homelessness. In September 2017 the National Audit Office (NAO) published a report on homelessness. Examining whether value for money is being achieved it sets out the causes and costs of homelessness, the response of local government to homelessness, and leadership from the Department for Communities and Local Government (DCLG) in reducing homelessness. The report found there were 77,240 households in temporary accommodation in England in March 2017, an increase of 60% since March 2011. These households included 120,540 children, an increase of 73% from March 2011. Homelessness at present costs the public sector in excess of £1 billion a year. More than three quarters of this – £845 million – was spent on temporary accommodation. Three quarters of this spending – £638 million – was funded by housing benefit. The ending of private sector tenancies has overtaken all other causes to become the biggest single driver of statutory homelessness in England. The proportion of households accepted as homeless by local authorities due to the end of an assured shorthold tenancy increased from 11% during 2009-2010 to 32% during 2016-2017. According to Amyas Morse, head of the NAO, “Homelessness in all its forms has significantly increased in recent years, driven by several factors. Despite this, government has not evaluated the impact of its reforms on this issue, and there remain gaps in its approach. It is difficult to understand why the Department persisted with its light touch approach in the face of such a visibly growing problem. Its recent performance in reducing homelessness therefore cannot be considered value for money”. Overall, the NAO concluded that the Government’s approach to tackling homelessness cannot demonstrate value for money.

DCLG’s live statistics on statutory homelessness (table 774) published in September 2017 shows the reasons for homelessness recorded by Local Authorities in 2016-2017. The main reasons include: the end of an assured shorthold tenancy (31% of all households accepted as homeless), parents no longer able to accommodate (14%), other friends/relatives no longer able to accommodate (12%), relationship breakdown – violent (11%), loss of other rented or tied housing (7%) and relationship breakdown – other (5%).

In a rural context, IPPR found while many of the causes of rural homelessness to be similar to those experienced by households in urban areas (i.e., a change in personal circumstances such as relationship breakdown, being a victim of domestic abuse, unemployment/loss of income); the Welfare Reform Act 2012 had increased the number of households at risk of homelessness. They found this to be particularly challenging for rural dwellers where housing is less affordable than that in urban areas and there is a shortage of affordable homes.

Thirdly and finally, what can be done to support homeless people and prevent homelessness?

During 2015 Crisis established an independent panel of experts from across the housing and homelessness sector to assess the strengths and weaknesses of the current homelessness legislation in England. The panel’s report described the creation of a two tier system of advice and assistance – with applicants owed a main homelessness duty (i.e., families with dependent children) and those who are not owed a main homelessness duty (e.g. single people). Crisis carried out a mystery shopping exercise, finding only 37 out of the 87 single people approaching a Local Authority for help were given accommodation that evening. The lack of a compulsory and audited quality framework or inspection regime for homelessness services made it difficult to see how Local Authorities were meeting their legislative responsibilities; and they found a lack of evidence around prevention work. The panel recommended a stronger duty be placed on Local Authorities to prevent homelessness at an earlier stage.

In March 2017, the Government announced it would be protecting and maintaining funding for Councils to provide homelessness prevention services at £315 million over the 4 years to 2019-20; it would provide £20 million to support innovative approaches in local areas to tackle and prevent homelessness; it would allocate £20 million to a rough sleeping prevention fund to help individuals at risk or new to the streets get back on their feet; establish a £10 million Social Impact Bond programme to help long-term rough sleepers; and provide £61 million for Councils to implement the measures in the Homelessness Reduction Bill. The Homelessness Reduction Act 2017, expected to be in force by April 2018, will create new legal duties for English Local Authorities to ‘give people meaningful support to try to resolve their homelessness’ and ‘introduce measures to prevent people becoming homeless in the first place’. However, Councils are waiting for Government to publish its code of guidance and provide detailed funding allocations – how will the £61 million allocated by Government be distributed (and what percentage will go to rural areas)?

A report by the Local Government Association in July 2017 reveals Councils are currently housing 77,240 homelessness households in temporary accommodation, including 120,540 children. This is a 25% increase in London (some 54,280 families) and a 52% increase outside of London (now 22,950) since 2014. The increasing unavailability of affordable housing is limiting the options for Councils seeking to find settled accommodation for those that need it leading them to use expensive and less desirable forms of emergency temporary accommodation (e.g. bed and breakfast, nightly rated accommodation). As well as highlighting the increasing number of people and households requiring temporary accommodation, the report also highlights the innovative approaches taken by some Councils in England to respond to this increasing demand. The report draws together practice from Councils working with partners to provide good quality temporary options for homeless households in ways that are more financially sustainable. One of the case studies contained in the report is from Teignbridge. Here the District Council has converted a former GP surgery into a well-managed hostel (where homeless households typically stay for less than three months while their needs are assessed and help provided). The Council has also built up a portfolio of properties with Plymouth Access to Housing (PATH) which provides access to private sector property for homelessness prevention; and is working with Young Devon to set up a multi-agency enquiry service for young people with housing issues.

South Norfolk is one of 28 ‘trailblazer areas’ across the country funded as part of a £50 million programme aimed at preventing people from becoming homeless in the first place. South Norfolk Council is running a project called FIRST: Financial, Independence, Resilience, Skills and Training to give people help earlier on and give them access to suitable accommodation. The Council is also using the principles of social enterprise to deliver private rental sector homes and helping tenants by them not having to find high deposits and fees as well as matching those under 35-years with suitable sharers.

An interview with Lisa Lewis, the chief executive of Doorway – a charity that provides a drop in centre and services for rough sleepers in Chippenham, Wiltshire –illuminates how ‘in smaller communities homelessness is much more hidden, and because of that, there is often less support to help our friends that are sleeping rough or sofa surfing. In large urban areas it is common to see people sleeping on the street; whereas in smaller communities homelessness is rarely visible. People double up and triple up in homes, sleep in cars, go from couch to couch, or live in tents far away from public view. It’s still homelessness – both rural and urban homelessness have negative effects on our communities – without exception.’

While the Homelessness Reduction Act 2017 seeks to address concerns about rising homelessness by placing a greater duty on Local Authorities to intervene early and prevent homelessness among all groups; this move away from a model of determining ‘priority need’ to assessing ‘vulnerability’ is only part of the picture. More work is needed to improve data collection on rural homelessness. More work is needed to understand the relationship between housing, welfare, health and employment and how this plays out in a rural context. More work is needed to make sure approaches taken to support people who are homeless or at risk of becoming homeless meet the needs of rural dwellers. For in the words of Raynor Winn “if the beautiful British countryside is to have any integrity, we must open our eyes to the desperate need of people who are not on our doorsteps, but in our hedgerows.”

 

Money matters

Money matters: tackling (rural) financial exclusion

Many people in the UK lack access to even the most basic financial services or are forced to rely on high-cost products which can prove damaging to their long term health. The ‘poverty premium’, where the poor pay more, exacerbates financial exclusion and reinforces a vicious circle. With many local bank branches disappearing and a growing emphasis on digital services, what can be done to tackle financial exclusion in rural places? Jessica Sellick investigates.  

In March 2017, the House of Lords Select Committee on Financial Exclusion published its report on ‘tackling financial exclusion: a country that works for everyone?’ This revealed that 1.7 million people in the UK had no access to a bank account, 40% of the working age population had less than £100 in savings, 51% of people aged 18-24 years regularly worried about money, and at least 600,000 older people were financially excluded. The Select Committee has called on Government, the Financial Conduct Authority (FCA) and banks to give greater priority to tackling financial inclusion. The Committee’s recommendations include: (i) a call on Government to appoint a Minister for Financial Inclusion tasked with reporting annually to Parliament on progress made to address financial exclusion; (ii) broadening the remit of the FCA to establish new rules requiring banks to have a duty of care towards their customers; (iii) interventions aimed at improving levels of financial literacy; and (iv) a greater understanding of the relationship between disability, mental health issues and financial exclusion.

In April 2017, ATMIA (a non-profit trade association representing the global ATM industry), published ‘access to cash: the first step towards financial inclusion’. This report provides an international overview of the role of cash and ATMs in reaching financially excluded persons who have no bank account. The report includes case studies from the UK, Brazil and the Philippines. Quillaume Leperq, the report’s author, describes how “a transition away from cash would only serve to isolate the unbanked and the underserved from the rest of the population…Efforts to eliminate financial exclusion must take into consideration the ways in which those who make up the unbanked are already marginalised”. The Digital Money Index which ranks countries’ readiness to migrate from cash to digital payments: with the UK ranked in fourth place in the Index followed by the United States (third place), Singapore (second place) and Finland (first place). In these countries the use of contactless debit and credit cards, smartphone ownership and bank account penetration rates are all high. In the UK transportation has been a key driver of contactless payment adoption by consumers; with Visa Europe predicting by 2020, 25% of UK consumers will be using mobile payments on a daily basis (up from 8% in 2015).

For me, these reports illuminate two issues: firstly, the often uneven and unequitable access to financial product and services. Secondly, the scale, development and adoption of new payment technologies suggesting we are moving from a cash-carrying to a cash-less society. In the words of Ajay Banga, the CEO of MasterCard, is there a risk that we are “creating islands where the unbanked transact [only] with each other.” How we can bring people living outside of the financial system into it – especially in a rural context? I offer three points.

Firstly, what do we mean by financial exclusion and financial inclusion?

The term ‘financial exclusion’ first emerged in the 1990s in academia. Academics researched bank branch closures and people’s physical access to financial services. At this time financial exclusion was regarded as the ‘processes by which individuals and households face difficulties in accessing financial services’. Financial exclusion was therefore seen as a geographical (exclusion) issue in that closures appeared to have disproportionately been concentrated in poorer areas.

Since the 1990s understandings of financial exclusion have evolved to individual, institutional and behavioural forms of exclusion. For example: the failure to qualify for a financial service because of the minimum deposit required or poor credit history (condition exclusion); the cost of financial services such as unauthorised overdrafts (price exclusion); less profitable customers being unaware of the financial services available because they are not targeted by providers (marketing exclusion); and some people view financial services as “not for people like us” (self-exclusion).

The term ‘financial inclusion’ emerged in 1997 as a response to the problem of exclusion and was first seen as ‘securing access to appropriate, affordable products and services.’ Over time, this understanding has evolved from being an access issue to one of financial citizenship where interventions are required to support individual’s to improve their financial literacy and capability so that they can better manage their own finances.

The Financial Inclusion Commission (FIC) is an independent campaigning body made up of parliamentarians and experts, whose aim is to promote financial inclusion on the public policy agenda. Back in 2015, the FIC produced its report ‘financial inclusion: improving the financial health of the nation’. This brought together evidence on financial inclusion, identified gaps and set out some of the challenges ahead. Since then the FCA has published Occasional Papers on access to financial services in the UK. The 2016 paper, considered how access affects not just the vulnerable, but consumers across the spectrum – and how this situation is not static because new access issues are emerging all the time because of social and technological change. Since 2013, the School of Social Policy at Birmingham Business School has published an annual financial inclusion monitoring report. This recognises how achieving financial inclusion means people need: (1) a secure income which meets the Minimum Income Standard; (2) access to appropriate and well-regulated financial services; and (3) access to free and appropriate advice, particularly for those with debt problems.

What emerges from these policy and academic discussions is the need for people to be able to access basic financial services (e.g. bank account, insurance, pensions), access affordable credit and have a minimum budget available to be able to live. While much research has focused on vulnerable groups (i.e., older people, people with mental health problems, people with disabilities), there is an increasing recognition that financial exclusion affects different kinds of people at different points in their lives (i.e., people in the armed forces or people privately renting who move around may find it difficult to access a bank account or mortgage). While there will always be people that do not wish to access financial services, for those that do, they need to be able to access regulated, responsible, affordable, appropriate products and services.

Secondly, how are rural communities affected by financial exclusion?

There is very little current discussion and debate about the impact of financial exclusion on rural communities. Back in 2009, the now defunct Commission for Rural Communities (CRC) published a support guide to rural financial inclusion. The guide highlighted the ways in which living in rural area brings additional challenges – how financial exclusion is less visible in rural areas compared to urban areas making it harder for providers to identify and target support to those who need it most; how poor public transport and long travel times makes physical access to mainstream financial services difficult and costly for rural communities; and how delivering debt advice and credit union outreach services costs more because of the dispersed client base and economies of scale. Since 2009, two trends in financial services have compounded these findings and impacted on rural communities: (1) an ongoing programme of bank branch closures, and (2) an increasing reliance on digital services.

High street banks delivering services through their branch networks have been contracting for many years. According to information published by the FCA, in 1988 there were 20,583 branches but by the end of 2015 there were reported to be only 8,400 branches. This decline is much steeper than in other parts of Europe: with the UK having 180 branches per million inhabitants in 2014 compared to 447 in Italy, 521 in Germany, 589 in France and 718 in Spain. ’Abandoned Communities’ was produced by the campaign group Move Your Money in July 2016 to highlight the impact of bank closures and the people they leave behind. Since 1989 1,500 communities have been left with no bank and another 840 communities with only one bank remaining. The group suggests banks are closing branches in poorer areas while opening or retaining them in more affluent areas. Their research shows of the 600 branch closures between April 2015 and April 2016, the banks have been targeting rural areas for closures. More significantly, the group found that areas losing the last bank in their town received £1.6 million less lending over the course of a year.

In Bricks and Clicks, Deloitte identified seven different types of branch catchment. One of the categories is ‘declining rural communities’ – places where the people are amongst the poorest, unemployment is high and where branches are struggling with shrinking footfall and reduced demand for financial services. This is leading to debates around cost efficiency, co-location and to what extent banks should help rural communities get back on track. Amid reports that 500 branches are set to close in 2017, research by Saga has revealed that 5.5 million people aged over 50 years of age will be forced to switch their account of their local branch disappears – significantly, some 37% of those surveyed said without access to a high street bank they would be prevented from carrying out many financial transactions.

On a more positive note, since 2015 twenty-five banks have had arrangements with the Post Office for their customers to be able to make cash withdrawals and deposit cash and cheques through its 11,500 branches. The minimum network access criteria means 99% of the UK population, including 95% of its rural population, should be within six miles of a post office. However, even six miles may be a difficult, costly or an impossible distance to travel for many rural residents.

While branch closures raise issues about how individuals access existing bank accounts, there is concern that removal of local banking facilities altogether may lead to increased financial exclusion.

An increasing reliance on digital services poses a number of additional challenges for rural residents. Yet digital technologies are increasingly being used to tackle financial exclusion (e.g. through the use of pre-paid cards, budgeting apps, and simplified current accounts designed for lower income and less financially stable households). The Government has also looked at how digitisation of public services can reduce financial exclusion. The issues in rural areas are two-fold: many rural areas do not have a reliable or fast broadband service, and some rural residents do not have the necessary computer skills to be able to manage their money online. The digital exclusion heatmap developed for Go ON UK, for example, found where digital skills were lacking, lack of infrastructure was part of the story.

Thirdly, what, then, can be done to tackle financial exclusion in rural areas?

Previously, the Commission for Rural Communities had called for different parts of the public, private, community and voluntary sectors to come together within a locality to work on financial exclusion issues (e.g. supporting credit unions to increase access to affordable credit); and emphasised the need to rural proof financial services provision and availability.

If the solutions are likely to be local, Local Authorities have a key role to play. The LGA’s review of local welfare schemes in 2014, for example, highlighted how Councils were innovatively administering local welfare assistance (LWA) funding. While many authorities wanted to expand scheme amid rising demand, they were cautious about planning for the future because of Housing Benefit reform, Universal Credit and a backdrop of a further £12 billion reduction in spending on working age welfare benefits.

The Money Advice Service (MAS) provides a range of tools and calculators on money matters. Set up in April 2011, the MAS are funded through a series of levies on the financial services industry and operated by (but independent from) the FCA and Government. Through the What Works Funding Programme, MAS is providing £7 million in 2016/2017 to build the evidence base around what types of interventions can make a measurable impact on people’s financial capability and to share that evidence with stakeholders across Government, financial services and beyond. Some of this pilot activity is taking place in rural areas. Cornwall Rural Community Charity (CRCC), for example, is running Get £ F+IT, a project supporting 80-100 older people to help them manage their money in retirement. This project is providing older people with six half-day digital and financial inclusion sessions in four rural locations. The findings of this work will be available on the Financial Capability Evidence Hub. In October 2016 the Government announced the replacement of the MAS with a new body, publishing a consultation on the work of this new body in December 2016. This new body is intended to bring together pensions guidance, money guidance and debt advice in one place and also required to scale up financial capability projects that have been proven to work.

The Big Lottery Fund is matching funds from the European Social Fund (ESF) 2014-2020 to invest in local projects tackling the root causes of poverty, promoting social inclusion and driving local jobs and growth. Known as Building Better Opportunities (BBO), the amount of funding and type of projects vary according to Local Enterprise Partnership (LEP) area but some include projects that support financial literacy. Another Lottery programme, Improving Financial Confidence (IFC) is aimed at helping people become more confident in, and more aware of, how to take control of their finances. Mainly (although not exclusively) delivered by Citizens Advice Bureaus, IFC is helping rural and urban residents to access and use financial products and services suitable to their needs.

In response to concerns about the damaging effects of payday loans and other forms of high-cost credit, the Archbishop of Canterbury established a Task Group on Responsible Credit and Savings. The Just Finance Foundation was established in 2016 by the Church of England and Church Urban Fund, in order to implement the Archbishop’s vision of a fairer financial system. After 2 successful pilots a Mustard Seed Appeal is underway to help fund 30 dioceses to train 6,000 volunteers to support 2.5 million people across the UK struggling in financial distress.

While these initiatives highlight the role of Government, charities, the voluntary sector and faith groups in tackling financial exclusion; perhaps there now needs to be a renewed focus on identifying financial exclusion specifically in rural areas?

A broad range of support and guidance is required to help everyone get out of, and avoid falling into, financial exclusion – from providing children with lifelong skills in savings, borrowing and debt, through to meeting rising demand for debt advice services. Bank branch closures, broadband availability, digital skills and welfare reforms are all affecting the extent to which rural residents are financially included in rural England. Going forward, will a new Government commit to a Minister for Financial Inclusion (and will he/she rural proof public policy and its implementation) and will the new Money Guidance Body in 2018 commission services in rural places (i.e., of successful interventions funded by the MAS that are ready for replicating, further testing and/or scaling up in other parts of the country)? Above all, how can we ensure rural financial exclusion is not hidden and that people living in rural areas receive the financial access, support and guidance they need?

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Jessica is a researcher/project manager at Rose Regeneration; an economic development business working with communities, Government and business to help them achieve their full potential. Her current work includes supporting a Lottery programme to help people into paid work; research for the NHS on rural workforce recruitment and retention issues and evaluating a financial capability project. Jessica can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: http://www.roseregeneration.co.uk/ Twitter: @RoseRegen

 

Rural poverty – forgotten, not gone

It’s hard to imagine a time when it’s been tougher to live in the countryside. With charities and helplines busier than ever as farmers struggle to cope with the weather, disease and financial woes and the number of people using food banks tripling, there’s acute poverty in rural areas. The reality is many rural residents are struggling to make ends meet. With poverty in the countryside predicted to rise, what can be done to help those at risk and those already falling deeper upon hard times? Jessica Sellick investigates.

When we talk about poverty in the UK today we rarely mean malnutrition or squalor, rather with the introduction of the welfare state back in the 1930s poverty is marked by ‘poor’ people whose level of deprivation is heavily out of line with the general living standards enjoyed by the majority of the population. But what does poverty mean –how do people see it, how rural is it and what can be done to tackle it? I offer three points.

Firstly, the widely accepted definition of poverty is having a household income which is 60% less of the average or median (i.e., the income earned by the household in the middle of the income distribution). In the period 2010-2011 this equated to £419 per week.

In February 2013 the Department for Education carried out a consultation on a new definition of child poverty, calling for this 60% median figure to be included in a new multidimensional measure which would also calculate if a child lives in a workless household, in a family with problem debt, in poor housing, attends a failing school and/or has parents in poor health.

Responses to the consultation varied with the National Children’s Bureau calling upon policy makers to focus on how to eradicate poverty rather than being preoccupied with measuring it; and the Church Urban Fund concerned that a composite Index would lack transparency. In comparison, the Commission for Rural Communities (CRC) throughout its tenure used the term ‘disadvantage‘ to not only include poverty but also limiting factors in one’s life situation (e.g. lack of skills, unequal levels of health and wellbeing).

The debate over the definition – and the utility of the 60% figure – resonates more recently with ‘It shouldn’t happen here‘, a report published by Save the Children documenting some of the experiences of the 3.5 million children already living in poverty in the UK – a figure predicted to increase by 400,000 by 2020. The report illuminates how low-income parents are cutting back on food so their children have enough to eat; with children themselves describing missing out on things like shoes, a warm coat in winter, holidays and school trips.

Studies of poverty are extraordinarily challenging to do and because of this research has tended to provide an urban picture due to the higher concentration of need in towns and cities. Obtaining data and evidence on rural poverty is more complex. For example, the Index of Multiple Deprivation (IMD) can only go part way in providing an analysis of rural poverty, for it focuses upon an area based approach which lacks efficacy when a given population is spread over a wide geographical area. Other indicators such as lack of car ownership are also insufficient due to higher levels of car ownership in rural areas, even amongst low income households, because of lack of public transport. Alongside this, there are gaps in qualitative information on experiences of rural poverty –for example older people who can be asset rich but cash poor, people not taking up means-tested welfare benefits to which they are entitled and/or having poor access to services. Yet understanding these issues and how rural residents can be supported to move out of poverty is a key component of sustainable rural development.

Secondly, what does it mean to be living in poverty in rural England? Taking the numerical measure of 60% of the median income, Defra’s own Statistical Digest of Rural England 2013 reveals in the period 2010-2011,16% of households in rural areas were below the poverty threshold after housing costs compared to 23% in urban areas; 16% of working age people (aged 16 to 64) in rural areas were below the poverty threshold after housing costs compared to 23% in urban areas; and 20% of children and 13% of pensioners were below the poverty threshold.

A Minimum Income Standard (MIS) is an ongoing research programme between JRF and Loughborough University defining what level of income is needed to allow a minimum acceptable standard of living today. Based upon household budgets and what members of the public think, the MIS 2012 found rural budgets to be higher than urban budgets: set at £19,820 for single working-age adults living in a village compared with £16,383 in urban areas.

Whether you take the 60% median figure or the MIS it is important to note that poverty can be concentrated in pockets of rural places, it can be experienced over the course of someone’s life or occur in the short term (e.g. where someone is unemployed for a few months). It is not merely associated with rural residents who are unable to work but also those in work and juggling more than one job – some of it seasonal, temporary or part time leading to low pay. People in rural areas are often more dependent upon the public sector for reasonable employment and have been vulnerable to austerity measures and cuts. According to Professor Mark Shucksmith, Director of the Newcastle Institute for Social Renewal (NISR) this picture will only worsen. Professor Shucksmith is predicting countryside poverty will increase in the next five years among working people, children, and older people and will be compounded by unaffordable housing and increased fuel poverty: “far from the popular perception of benefit recipients as workless and work-shy, more than two thirds of working-age recipients of benefits in rural England are in work already but getting by on low incomes, and this proportion is increasing. Many of these hard-working people in rural England will suffer further as a result of the cuts in welfare benefits and loss of public services.”

Thirdly, how can we support those at risk of or already living in poverty? Policy and decision makers need to take account of the very real but dispersed nature of rural poverty and deprivation when formulating their interventions. Poverty has various components – it is not merely financial/income related but also linked to access to employment, education and health services and the level of community spirit that exists and can be harnessed to provide people with emotional and practical support. Many rural organisations already seek to ameliorate some of the negative impacts of poverty by joining up their intelligence and actions. For example, local organisations can map the dependency of rural residents on public sector employment and/or benefits to identify those most affected by public sector cuts and welfare reform to help them to establish a contingency plan. Local organisations can also develop a directory of other groups whose activities align, complement and enhance their own activities. These local organisations are embedded in rural communities and people feel a sense of ownership in them and the support they provide. These community activities and preventative work could go some way in helping policy and decision makers focus their interventions on rural people rather than the spatial approach often taken in targeting programmes.

What remains clear is that poverty is an important dimension of rural life, albeit one that is often hidden and poorly addressed. Sadly poverty remains a fact of life for many people in rural England today.
The RSN is holding an event on poverty, deprivation and inequalities on 21 May 2013 at Teesside University’s Darlington Campus. The event will include presentations from David Hunter (Durham University) on the impact of the Government’s health reforms, Joyce Liddle (Teesside University) on the Adonis Review, Liz Charles (Durham Rural Community Council) on fuel poverty and Jon Carling (formerly of the Commission for Rural Communities) on what it’s like growing up and getting old in the countryside today.For more information and to book your place at this free event please contact Wendy Cooper by email wendy.cooper@sparse.gov.uk or telephone 01822 813693.

Jessica is a rural practitioner at Rose Regeneration which has particular empathy and enthusiasm for rural and coastal issues. She recently led a project for Oxfam on farm poverty and is currently undertaking research for the Royal Agricultural Society of England (RASE), The Farmer Network, Cumbria Fells & Dales and Solway Border & Eden Local Action Groups (LAGs) and The Princes Countryside Fund to understand how farmer networks operate; and research for Defra on alternative models of service delivery. Jessica can be contacted by email jessica.sellick@roseregeneration.co.uk or telephone 01522 521211. Website: www.roseregeneration.co.uk

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