This month, as anyone working in frontline support will know, the cost of living crisis has begun to push low-income families to the very edge. Rises in the cost of food, fuel and rent are all set to hit households below the poverty line the hardest. For them, the combination of austerity and the pandemic has already been punitive, with a record one in six working families now living in poverty. With inflation set to exceed eight per cent by the autumn, we’re looking at the worst real-term incomes squeeze in 50 years.
The pressing need to tackle these challenges was at the heart of the National Housing Federation’s recent Housing and Finance Conference.
For two days in March, financial leaders from across the housing sector came together to share best practice and maximise housing delivery nationwide. Discussions ranged from environmental and social governance, the importance of data, pension schemes, tax and the timeliness of support provision – and above all the need for connection between finance and social inclusion.
The benefits of direct, online payment methods can be significant, allowing some people to access support more easily and take back control of their finances
Across the panels and speaker sessions, it was clear that financial technology is undoubtedly considered a key weapon in the battle to deliver support to the most vulnerable in society. From welfare support payments, to social care personal budgets and online payment portals for rent, we now know that the benefits of direct, online payment methods can be significant, allowing some people to access support more easily and take back control of their finances.
For example, there are several ways in which the new digital Healthy Start vouchers are more flexible for those using them: they don’t have to be used all at once, the top-ups happen automatically, and they can be used in any store that accepts Mastercard payments – without the need for retailers to have registered.
What’s clear also is that the reduction in the administration of individual payments creates valuable savings for local authorities and housing providers, at a time when they are facing significant constraints on resources.
But the concern is that as the cost of living crisis intensifies, the shift towards individual online payments may come to be seen as a replacement for other existing forms of support – with systemic problems gradually reframed as entirely those of personal responsibility.
Digitisation of payments must be an entry point to further investment in the households that would benefit most from support
No matter how efficient the technology, without a clear understanding of the complexities of poverty, any digital support scheme is setting itself up to fail. To return to Healthy Start as an example – not understanding the complexity of the lives of families on low incomes has meant that uptake has so far been extremely low, even as foodbank use soars. It’s possible that the shift to online claims will only compound this. And those eligible families who tick the box for ‘digitally included’, may only do so because they live in a remote area or have mobility issues, and so rely on online shopping (where they cannot use the vouchers).
Digitisation and automation of payments must not be seen as simply a cost-cutting exercise, or a way to throw (not enough) money at the problem. Rather it must be considered an entry point to further investment in the households that would benefit most from support, and in a way that draws upon the evidence, not the quickest fix.
Clean Slate has always placed digital tools at the heart of their money management service – from our free to access Money Health Check (which is frankly a must for everyone to complete at the moment), to a bespoke budget planner and a benefits checker complete with ‘better off calculator’ for those heading into work. During the pandemic we also provided up to £255 in supermarket e-vouchers for those in crisis to meet their immediate needs, on their own terms, and at the point of contact.
And it was incredibly effective: our financial crisis service generated an average financial gain of £1,850 per year for each client. But vouchers, and all the digital tools in our toolbox, were just the first pieces of the puzzle when it came to making these gains. Real change was only possible when combined with an intensive package of support, delivered quickly, without judgement and with priorities set entirely by the client.
When it comes to linking financial and digital inclusion, thoughtful implementation is everything. A digital shift without built-in advice and guidance services will only further exclude the most vulnerable – and mean that in the long term, for all of us, there will be a much higher price to pay.
