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February 8, 2012

Collaborate to fill the gaps

Much has been made of the forthcoming welfare reforms and many people are bracing themselves for when the full force of these changes take effect. As the safety net of the state is rolled back, it’s inevitable that some communities will be affected much more severely than others.  All the more reason for different parts of the community sector to come together to build new services and fill some of these gaps that are opening up. Interesting example of this in Ayrshire


Housing associations are enlisting credit unions to stave off an anticipated wave of rent arrears and evictions when the UK Government’s universal credit replaces housing benefit in 2013

Two Ayrshire housing associations have approached local credit unions to seek their services for tenants, and the issue has been raised at a national meeting of housing association chief executives, according to Carol McHarg of 1st Alliance (Ayrshire) Credit Union.

The news comes as the Scottish Government has expressed an interest in capping the rate of interest that high-cost payday lenders such as can charge borrowers. Enterprise Minister Fergus Ewing told a parliamentary debate on payday lenders: “If there is a cap for credit unions, why is there no cap for other lenders?” Ewing also attended a meeting of the Cross-Party Group on Credit Unions on 18 January to discuss a potential levy on payday lenders to fund the promotion of credit unions.

Speaking to Holyrood, McHarg said: “It’s really hard for people on benefits to budget sometimes, and all of a sudden having this extra money coming in creates harder choices – do you buy your kid a pair of shoes or do you pay the rent that week?” Reforms to benefits included in the Welfare Bill currently making its way through Westminster will lead to a universal credit paid directly to social housing tenants, rather than to housing associations and private landlords, as housing benefit is now.

A COSLA briefing on the implications of the Coalition Government’s welfare reforms had previously warned of “an increase of rent arrears and evictions, sending households spiralling into debt and facing homelessness”. The Scottish Federation of Housing Associations warned its members to “take action in the interest of your tenants” ahead of the introduction of the reforms.

Andy Young, policy and strategy manager at the SFHA said: “Housing associations and co-operatives in Scotland promote a range of financial-inclusion initiatives to help tenants on low incomes to manage their finances. These will become more important as tenants’ incomes are threatened by unemployment, wage freezes and welfare reforms.

“SFHA promotes a range of tenancy sustainment initiatives to our members. Our 2010 publication Preventing and Alleviating Homelessness Guidance highlights financial inclusion issues and the existence and scope of credit unions “However, the welfare reforms currently being proposed by the Westminster Coalition Government will limit the Housing Benefit of some of the most vulnerable tenants and make life more difficult for them financially, and in paying their rent.

“That is why we are urging the UK Government to consider a number of changes to the reforms, including continuing to give tenants the right to choose to have their rent paid directly to their landlord to avoid getting into arrears.”