The fourth report, in a series of six-monthly updates, reveals the lowest income group is experiencing a greater struggle than previously reported. This group has taken on more debts to cover sudden and unforeseen changes in benefit entitlement and the deepening impact of the ‘bedroom tax'.
Hugh Owen, Riverside’s director of policy and research, highlighted that a quarter of participants, all with poor credit ratings, have taken on new debts since their last interviews.
"They’re paying extortionate interest rates from high street credit stores, up to 64.7 per cent, plus penalties for missed payments. A missed £17 monthly payment snowballed into a £175 bailiff’s charge for one tenant.”
The gap between the highest and lowest household incomes has widened by 9 per cent, with the spread of incomes ranging from £350 a month to £2,691.
Hugh Owen added:
“People are feeling the impact of a more draconian and inflexible approach to conditionality. One participant even saw their benefits reduced as a result of a sanction imposed on Christmas Eve, just because they missed an appointment while attending a Job Centre-backed basic skills programme.”
Others are seeing their incomes reduced through unplanned breaks in benefit claims, while they await the outcome of Work Capability Assessments. The financial stress is impacting on their mental, as well as physical health.
Andrew, 42, from Wirral, has diabetes with kidney and arterial problems. He’s found himself in a ‘fit to work, not fit to work’ benefit cycle for the last few years. When his health deteriorated he was awarded the higher support element of Employment and Support Allowance.
His increased income meant he could improve his diet and as a result his mental and physical health too. A medical assessment deemed him fit to work and benefits stopped.
He said: “…they decided I was fit for work, yet I am in worse health now than I was a year ago. So I went to the Job Centre…..I was in bits as I was having a bad day with my legs. She said you shouldn’t even be here. I said I’ve got to open a new claim or I will be entitled to nothing.”
Riverside employs money advisors to support those in danger of spiralling into further debt, as well as working with a range of organisations such as StepChange debt charity and My Home Finance affordable lenders. It also supports credit unions in its neighbourhoods across the country.
