Agenda Item No:

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Making the Most of Your Money – A scrutiny review of financial inclusion and wellbeing in Northamptonshire.

Councillor Phil Larratt Chairman of the Customers & Communities Scrutiny Committee.

In a recent study it was established that in 2010 almost 2.5 million people in the UK were unemployed. Approximately 6 million people were unemployed, „economically inactive‟ but wanting work, or employed part – time and unable to find full time work.

In 2008/09 13 million people were in poverty, 5.8 million in „deep poverty‟ with a household income a third below the poverty line, the highest proportion on record. Although the number of children in poverty in workless families fell in 2008/09 to 1.6 million the number in working families in poverty rose to 2.1m the highest on record.

The number of 16 year olds who did not gain 5 GCSEs at any level and 19 year olds without a level 2 qualification fell in 2009.

Unemployment in 2010 amongst 16-24 year olds at 20 percent was the highest in 18 years and 3 times that of adults. Jobseeker‟s Allowance claimants peaked at 1.6 million in 2009 and 1 in 8 of the economically active people claimed at least once in 2 years. Some of the implications for these groups include health and mental health issues, a lack of access to essential services and increased costs for the services they do obtain and debt management.

It is against this background that the working group started the scrutiny review of financial inclusion and wellbeing to establish if vulnerable people in the community were being forced into using illegal money lenders. By its nature this is a difficult area to gather information on, however by broadening the scope of the review to include a number of related elements the working group have been able to establish a picture of where affordable credit is an issue and therefore the potential for people to use legal and illegal door step lenders is higher.

I would like to thank the members of the working group Councillors David Hugheston - Roberts, Stan Heggs, Graham Lawman, Stephen Legg and Dennis Meredith for participating in this review and the commitment they made in delivering the final report.

Special thanks are also given to David Hedger Head of Trading Standards, Matt

Earnshaw as part of the East/South Midlands Financial Inclusion Champions Team, Karl Walkinshaw from the Consumer Finance Education Body and Breda Carter, Democratic Services. I would also like to express my appreciation to all those who gave their time to meet with the working group and contribute to the scrutiny review. 3

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Contents Page

1. Background 7

2. Methodology 10

3. Credit Unions 11

4. Community Finance Development 13 Institutions (CDFIs)

5. Advocacy Services 16

6. Financial Education & Capability 20

7. Personal Finance Education Group and Schools 20

8. Housing Associations & Housing Offices 23

9. Embedding Financial Inclusion in Service Delivery 25

10. Best Practice 28

11. Summary of Recommendations 32

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1. Background 1.1 As part of the Customers & Communities Scrutiny Committee work programme 2009/10 councilors identified loan shark and illegal money lending as a concern within their divisions. Meetings took place with the Head of Trading Standards and the information from these indicated that there was little or no intelligence to establish how serious the problem was in the county. Dialogue with the Regional Illegal Money Lending Team, set up to primarily address hotspots in Derby, Leicester and Nottingham, indicated that there was only very limited intelligence regarding such activity in Northamptonshire. However loan sharking by its very nature goes on under the radar and with more communities and households being affected by the current economic climate and needing to make ends meet it is reasonable to believe that loan sharking has increased. It was also recognized that there were other forms of door step lenders that although legal charged their customers very high interest repayment rates which could only add to the burden of their loan.

1.2 In the course of carrying out the scrutiny review the working group have been support with data and information provided by the Financial Inclusion Team from the East and South Midlands who had been tasked by the Government to raise the profile of issues related to financial inclusion and capability and work with organizations, bodies and local authorities to integrate financial inclusion and education into their service delivery. Whilst working with the Financial Inclusion Champion for the area it was highlighted that support was available to the council and other organizations to embed this agenda from the Consumer Finance Education Body (CFEB). CFEB are sponsored by the financial sector and deliver a range of support and information which cuts across many sections of the community. Further information on the approach to this is detailed later in the report.

1.3 Data provided by Experian, as part of a Government funded study, identified financially excluded „hot spot‟ areas of Northamptonshire using a combination of factors which included: Lower super output areas (areas that indicate clusters of deprivation) and areas where over 50 percent of the population over 18 had an income of less than £15000 a year Less than 40 percent of this group had basic bank accounts or of those that did have a basic bank account over 20 percent had returned standing orders or direct debits in the last 12 months or both. This information highlighted 2 themes: Areas that had less than 40 percent of the adult population with bank accounts were likely to be without access to the most fundamental of banking services. In areas with over 20 percent of the adult population with basic bank accounts have returned standing order or direct debits, effectively costing them to have a bank account due to bank charges as no over draft facility is available. This data indicated that Corby, Wellingborough and Kettering are areas where financial exclusion is a particular issue with some areas in the south of the

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county also being affected. 1.4 Data from the Financial Inclusion Champion Team East/South Midlands highlighted the following issues in the county: All districts have seen a significant rise in the rate of bankruptcies between 2000 and 2008. Corby has seen the biggest increase however Kettering has the highest rate. Corby has the highest unmet demand for affordable credit in the top 10 percent nationally followed by Kettering and Wellingborough. Northampton also had 5 wards in the top 10 percent nationally although not with the same level of need. An estimated 4981 households in Northamptonshire do not have access to a bank account base on an estimated 2 percent of the East Midlands Region. Savings – South Northamptonshire has the highest levels and Corby the lowest below the county and national average. Fuel poverty is consistent across the county although it is more of an issue in rural areas. Daventry and South Northamptonshire have the greatest levels of fuel poor households, Northampton the lowest. There are 3 million people borrowing at a rate of 164 percent Annual Percentage Rate (APR) or more. Social renters account for 70 percent. Estimated prevalence of illegal lending is 2.1 percent in communities within the most deprived nationally. Of those in social housing 81 percent have no savings and 35 percent of those on low incomes have no insurance of any kind. Residents in social housing were 133 percent more likely to experience burglary than owner occupiers. An estimated 5.6 percent of people in the 5 percent most deprived LSOA use loan sharks. An estimated 2 percent of households in the East Midlands region do not have access to a bank account. 1.5 So what is financial inclusion and why does it matter? Financial Inclusion is having access to financial services and products to participate in modern day life. These include affordable and responsible credit; access to appropriate bank accounts; face to face debt advice; basic home contents insurance and access to saving facilities. The links between financial inclusion and capability (knowing where to get advice and the best deal) and mental health, improved self esteem and improved confidence to name a few are becoming more evident 1.6 Financial Inclusion & Health 1.7 The NHS has a helpline for those feeling stressed because of job insecurity, redundancy, debt or financial problems (0300 123 2000). Health advisors will listen and offer practical advice, signpost to other resources and put them in touch with people who can help. Findings from the Royal College of Psychiatrists report on debt and mental

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health found: Increased levels of debt increase the risk of mental health issues. Large economic recessions affect more people, some of which would not have experience of coping with hardship and so may be at more risk of mental health problems than those living within these circumstances already. Debt can have a negative impact on personal identity...creating uncertainty about what happens next and as well as engendering feelings of stigma and shame. People with debt and mental health problems often do not seek help for financial difficulties. Customers with debts often do not disclose mental health problems to creditors due to concerns about being believed, fears of the information being used against them, or feelings of embarrassment. 1.8 Financial Inclusion and Community Safety 1.9 National research by the Prison Inspectorate evidences that 50 percent of inmates were assessed as having inadequate or problematic financial circumstances on entry to custody. Many offenders face debt problems and this can affect them their families during sentence and after release. 1.10 Research from the „Banking on a Fresh Start‟ project in HMP Forest Bank Salford found that 69 percent of inmates either had never had a bank account or no longer had one since entering prison. The lack of a bank account when leaving prison created problems gaining access to accommodation, employment and education. Those prisoners supported on the project to get bank accounts were less likely to reoffend. In comparison to a national average of 67 percent those re-offending in comparison to the project participant rate of 37 percent. 1.11 Domestic abuse is another area where debt can have an impact. Research from Refuge stated 89 percent of women who suffered domestic violence also reported „economic abuse‟ – this involves a partner interfering with their work or education, controlling access to finance, refusing to contribute towards child and household costs and the related costs of this debt. The research states that this form of domestic abuse is largely overlooked and leads to unmanageable levels of debt for some women. 1.12 Debt has been shown to be a major factor in family breakdowns, in 2007 nearly 11 million people suffered relationship problems caused by debt and money worries, this will only have worsened during the financial recession. Family breakdown has a direct impact on outcomes for a child. A child from a broken home is 75 percent more likely to fail at school, 70 percent more likely to be involved with drugs and 40 percent more likely to have serious debt problems. 1.13 Many families facing financial problems need to borrow small amounts of money between £50 and £300. Evidence suggests that lending money on unsecured loans at high rates of interest without having a license from the Office of Fair Trading („loan sharking‟) is on the increase. The lack of affordable credit is creating the condition where a significant number of people have little option but to borrow from illegal sources. At least 165000 people already use

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loan sharks in the UK and loan sharks are generally engaged in other criminal activity. 1.14 In short people who are financially excluded pay more for their purchases and services including utilities, which creates further tension on the limited resource they have available. This can lead to health and family problems with the potential to end up either a victim of crime or becoming engaged in criminal activity. It can be argued that children living in these circumstances may not be equipped with the knowledge to make informed financial decisions and result in the cycle repeating itself. 1.15 Early Conclusions From the data and information provided to the working group in the previous section they have arrived at several conclusions. Corby, Kettering and Wellingborough are adversely affected by a lack of affordable credit. Certain areas of Northampton and the south of the county are also affected. Those on low incomes under £15000 either don‟t have or don‟t use bank accounts excluding them from accessing the best value deals and services. Those that did have bank accounts often incurred bank charges for overdrawing without prior arrangement which further exacerbated the problem. More guidance and education is needed to help those on low income budget and manage their money to avoid this cost. Those in areas of deprivation or living in social housing are less likely to have contents insurance but more likely to be victims of burglary. If these people need money for an emergency or to meet household bills they cannot access mainstream banking and are likely to turn to legal door step lenders charging much higher interest rates or illegal door step lenders (loan sharks) that along with high interest rates often use intimidation and are involved in other criminal activity. Credit unions need a higher profile as a way to save and borrow money and access needs to be improved across the county. This also applies to loans supplied by Midland Community Finance and Delta Loans through Department of Works and Pensions although this is time sensitive as funding has not been guaranteed beyond March 2011. It is uncertain what will be in place after that time. 2. Methodology 2.1 To carry out the scrutiny review the Chairman and Deputy Chairman met with the Head of Trading Standards and the Financial Inclusion Champion for East and South East Midlands. Following the meeting a plan of evidence gathering sessions was put together that would meet with stakeholders to discuss: What the barriers and challenges were to financial inclusion and capability? What work was taking place? What are the needs of the community?

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What would they like to see happen in the future? 2.2 A Beacon event was held in February 2010 to raise the profile of financial inclusion and bring as many stakeholders together in one place to hear about good practice and discuss the challenges that their organizations faced. 2.3 The working group would also consider best practice being carried out by other authorities and scrutiny that had taken place. To support this an information gathering visit to Clockwise Credit Union in Leicester was also undertaken as it is nationally recognized as an outstanding example of what can be achieved. Other evidence gathering took place with: Credit Unions – Commsave (Northampton), Five Wells (Wellingborough), Golden Sheaf (Kettering), Northampton also Delta Loans Midland Community Finance Limited Citizen Advice Bureaus and Welfare Rights Organisations Personal Finance Education Group (PFEG) Consumer Finance Education Body (CFEB) Wellingborough Housing Association Rockingham Forest Housing Association Northampton Borough Council – Housing Options Officer Northampton Borough Council – Portfolio Holder for Housing Written evidence provided by Kettering Borough Council

3. Credit Unions 3.1 Credit Unions are financial co-operatives that operate on the basis of a „common bond‟ for instance members have to live or work in Northampton. They are owned and run by the members and overseen by a voluntary Board of Directors drawn from the membership. Credit Unions promote thrift and offer easy ways to save and affordable loans, membership is a nominal fee of £1or £2. People can save in various ways either at pay points, payroll deductions, bank standing order or direct debit depending on the credit union. 3.2 In the main most credit unions offer 2 types of loan product – the first is for members who have saved for 13 weeks and the amount that can be borrowed is a multiple of savings held. Members must continue to save during the period of the loan. Interest rates for loans are much more affordable (1% a month on a decreasing balance). The second type of loan is capacity based and loans that are agreed based upon a affordability criteria. These loans compare favourably when compared with using credit cards, cheque exchangers or any form of door step lenders. A bank account is not necessary to become a member. 3.3 Credit unions are also regulated by the Financial Services Authority (FSA) and have an industry body called the Association of British Credit Unions Limited (ABCUL). Credit unions also hold a fidelity bond that insures against theft or fraud so that member‟s money is protected. Members‟ savings are fully protected in the same way as banks and building societies (up to £100k) by the Financial Services Compensation Scheme.

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3.4 Credit unions are a local and ethical way to save, with no external shareholders to satisfy. Currently they do not offer interest on savings although any surplus profits can be distributed as a dividend payment of up to 8 percent. They are not for those wishing to receive a high return on an investment, however if you wanted a holiday fund or to start saving individually or as a family they would be a realistic option as they also provide junior accounts. 3.5 There are 5 credit unions in Northamptonshire which are listed in the table below.

Credit Union Location Common Bond

Commsave Moulton Park Northampton Employed by Royal Mail or family member of Royal Mail employee in England 2B High Street, Wellingborough, NN8 Five Wells Live or work in Wellingborough 4HR. Tel: 01933 27811. or the borough of

Wellingborough Golden Sheaf c/o Welfare Rights 17 London Road, Live or work in Kettering & Corby Kettering NN16 0EF Tel: 01536 482284

Northampton CAB offices, 4th Floor Mercers Row Live or work in the borough of Northampton Northampton Tel: 01604 250016 Saturdays based at Thorplands Weston Favell Live or work in Weston Favell Community Shop and District - and surrounding district. 34 Farmfield Court Thorplands Northampton Northampton Tel: 01604 403702

3.6 During meetings with the working group a number of themes emerged. The main one is the capacity of credit unions to expand and become financially sustainable. All the credit unions apart from Commsave are reliant on their membership growing for this to happen however this is dependent on resource which is limited due to a reliance on volunteers - a chicken and egg situation. 3.7 Commsave however had the opposite challenge in that membership (postal workers in England) is high at 90 percent of work force contributing by payroll deductions. This means that they have significant funds that are not being utilised for loans and therefore not fulfilling the potential return that a full loan book could achieve. The office has 2 full time and 2 part time staff to run the business which is supported by a website. Workplace representatives are also in locations to authenticate ID and verify applications. They have a high profile within the company however their biggest strength is also a risk given the uncertainty around the future makeup of the postal service. New legislation could be the key to allowing common bonds to be extended and opportunities to work with other companies or social landlords. 3.8 Northampton Credit Union (NCU) started as an employee based credit union at Northampton Borough Council however the Common Bond now covers those that live or work in the Northampton Borough - payroll deductions were at 80 percent. They were successful in bidding for Department of Works and

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Pensions funding to distribute loans to those who cannot access affordable credit (financially excluded) and provide a local alternative for people who would otherwise have to go to door step lenders legal or otherwise. It enabled them to employ full time staff however NCU recognises that the time frame is too short to become sustainable after 6 months and funding will be required to continue the level of service. Growing the membership is the only way to make the credit union sustainable. 3.9 Northampton Credit Union are working in partnership with NBC housing solutions team and share offices with Northampton Citizen Advice Bureau and have recently moved into new premises on Mercers Row. The situating of both organizations is effective as a partnership as it is a cross pollination of people in need of both services and can reduce the time spent for clients traveling to and throw with documentation and ID. 3.10 Northampton Credit Union highlighted that door step lenders and loan sharks often have a foothold in the county where accessing credit is difficult. Having local collection points and volunteers is critical to address this and the best advocates are those that have benefited from being members of the credit union and spread the word. Libraries, Sure Start Centres and schools are key to raising awareness and getting people involved. 3.11 Golden Sheaf Credit Union covers Kettering and Corby although there are capacity issues with the expansion into Corby. At the time of the meeting they were in talks with Corby Volunteer Centre for space sharing but capacity to move it forward was an issue. Direct payments are arranged with Kettering General Hospital and Kettering Borough Council and they agreed with Northampton Credit Union that the most effective place for collection points is within communities such as libraries, one stop shops and housing offices. A one stop show is available at Kettering Borough Municipal Offices on Fridays between 4.00pm and 5.00pm. 3.12 Five Wells Credit Union‟s Common Bond covers Wellingborough and the borough. They also had capacity issues but the loyalty of their volunteers is identified as the key to their success and they also work with partners on fun days to promote membership. Hemmingwell is very successful and there is sense of achievement and people‟s self worth increased as many of them could not access main stream banking. Five Wells have in the past worked informally with Midland Community Finance and hope to extend their common bond to Higham Ferrers and Rushden in 2011.

4. Community Finance Development Institutions (CDFIs) 4.1 Community Development Finance Institutions (CDFIs) lend money to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. They help deprived communities by offering loans and support at an affordable rate to people who cannot access credit elsewhere. 4.2 Midland Community Finance (MCF) have been in operation since May 2003 in Derby when they recognized the need to provide affordable credit in local communities. The impact of the investment has considerably improved the disposable incomes of lower income households and a stimulus to the local

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economy. MCF were successful in bidding for DWP funding to deliver affordable credit to local people who cannot get credit from banks and building societies in Corby, Kettering and Wellingborough. Northampton Credit Union have also been successful in bidding to deliver the same scheme under the banner of Delta Loans in Northampton (paragraph 3.8 above). 4.3 During the meeting with the working group it was emphasized that the recession had created further problems for those households with poor credit history as banks were not willing to lend. The cost of lending had also increased for many people and small businesses. 4.4 MCF used a traditional banking approach and provides access to basic bank accounts, budget planning and support on money matters. They are an interim phase between banks and credit unions. The loans provided by MCF and Delta Loans have a higher interest rate (approx 26%) than that of credit unions (approx 13%) due in the main to the higher risk involved, although this is still much better rate than traditional licensed door step lenders (see table at paragraph 4.6 below). The natural path for a customer once they completed their loan would be to join a credit union where they could be supported and educated financially, then onto main stream banking.

Lender Weekly No of APR Total Interest Total amount payment Weeks charged repayable

Provident £10.50 52 272.2% £246.00 £546.00

Greenwoods £9.60 55 220.9% £228.00 £528.00

Shopacheck £10.50 50 254.5% £252.00 £525.00 Delta Loan £9.00 36 26.8% £26.28 £326.28 (credit union)

The table supplied to the working group by Northampton Credit Union illustrates the rate of interest applied to loans

4.5 The key for success is raising awareness of MCF, Delta Loans and credit unions within communities that are disadvantaged. Even in Derby where MCF originated there are still people that had not heard of them and they like credit unions need to be sustainable in the long term. MCF have offices in Corby‟s One Stop Shop which is very busy and there is also an office in the Volunteer Bureau. Two members of staff support the offices, the post in Corby is full time, the other part time and shares 2 days in Corby and 1 in Kettering, although this can change dependent on demand. The waiting time for a loan is between 5 – 10 days. 4.6 Borough and district councils had a significant role to play in raising awareness of these organizations every avenue should be exploited that links in with communities. The funding from the DWP is time limited until March 2011 which means there is a level of uncertainty to the continuation of provision by MCF and Delta Loans. The loans books will have to be sustainable to ensure a

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service can continue. 4.7 Conclusions 4.8 From the evidence gathering sessions with credit unions the working group have formed the following conclusions: 4.9 Capacity is the main barrier to expanding the membership of the credit unions that serve the local communities. However in theory there is no barrier to the back office functions being shared or carried out by another organization with sufficient capacity - this would allow credit unions to build their businesses and expand the services they provide. 4.10 Door step lending and loan sharking in vulnerable areas needs to be addressed by raising the profile of affordable credit that is locally accessible. Credit unions and financial advice and guidance need to be in places that are accessible for the most vulnerable groups in the community. The focus should be to promote and educate people on the benefits of becoming a member of a credit union, increasing membership of credit unions and the number of volunteers acting as advocates. Banks are also obligated to provide basic bank accounts so this needs to be delivered alongside education on how to manage personal finance. 4.11 Corby, Kettering and Wellingborough are identified as „hotspots‟ for the financially excluded although there are organizations that cover these areas. However there is also a lack of affordable credit to a lesser degree the south of the county. NCU have aspirations to apply for an extension of their common bond to reach these areas. The lack of capacity affects the ability of the credit unions to respond to this need and creates an inequality in the county and also affects their levels of sustainability. Five Wells and Northampton Credit Unions have expressed an interest in extending their Common Bond but do not have the resource at the moment and Golden Sheaf has extended their bond to include Corby did not seem to have the resource to move it forward on the ground at the time of the review. A wider range of services would also increase credit unions prospects of improving sustainability but this is also dependent on resource and funding. 4.12 There are good relationships between the credit unions and Citizen Advice Bureaus, Welfare Advice Organisations and social landlords that should continue to be utilised for financial advice especially given the increase in demand for debt and arrears advice. However there continues to be an argument for greater co-ordination and partnership working. The newly formed Financial Inclusion forum in Northampton and the more established one in the north has served to bring these organisations together. 4.13 Affordable credit in the county is overstretched while others are not widely known about or delivered. Are young people that start out in low paid jobs being given access to bank accounts and getting good finance habits? Or do they get into a cycle of borrowing from payday to payday? How does the council fulfil their responsibility to support Looked after Children that will leave authority care? 4.14 Financial education is important to prevent today‟s recession affecting tomorrow‟s work force. The education of young people in the county should include financial awareness to give them the tools to manage their future finances and avoid being trapped in debt. Recessions are from their very nature

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cyclical so the young people of today will inevitably have to deal with similar circumstances in the future. 4.15 The Association of British Credit Unions Limited (ABCUL) are developing a project with Experian that will deliver and support credit unions with back office functions, accounting services, products and marketing however from discussions this is potentially still approximately 18 months away from being delivered and will require credit unions to buy into the service.

4.16 Update since evidence gathering sessions

4.17 The Board of Commsave Credit Union have discussed but discounted extending their common bond into live or work in Northamptonshire in the next 2-3 years and as a result would not be in a position to offer a full back office solution to existing credit unions in Northamptonshire.

4.18 Five Wells Credit Union moved to new offices in December 2010 and the table paragraph 3.5 states the new address. The credit union has also added a collection point at Thompson Court (Wellingborough Housing Association offices) membership for Wellingborough Housing tenants is £2.00 and Five Wells is also trialing a Christmas club for tenants for Christmas 2011. All the schemes at this location are saving plans.

Recommendations

R1) That the Making the Most of Your Money – Financial Inclusion and Wellbeing Scrutiny Review is sent the to the Chamber of Commerce to highlight the opportunities for businesses to take advantage of the services offered by the Consumer Finance Education Body and raise awareness and promote credit unions and community development financial institutions in the county;

R2) That the Cabinet agrees to consider making County Council staff members carrying out voluntary work on behalf of credit unions eligible for paid-time off as those staff members volunteering as school governors; and

R3) That the Cabinet encourage the existing credit unions and community development finance institutions (CDFIs) to continue dialogue on how best to meet the needs of the county including aspects of of back office functions, mergers and common bond extensions and considers how it can support this process.

5. Advocacy Services 5.1 Advocacy Services are provided in a range of groups or organizations, the most well known are the Citizens Advice Bureau (CAB), Welfare Right and Community Law organizations. The working group met with members of Community Law Service in Northampton and Corby CAB and Welfare Rights. 5.2 Community Law Service started as a benefit service in 2000 and is a holistic

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one stop shop that covers housing debt, benefits, housing, family and employment law. There are 2 offices in Northampton one of which is on a short term lease. The organisation also provides outreach in over 30 locations such as CABs, doctors surgeries etc and would also like to supply this service in East Northamptonshire and other areas. 5.3 Most of the work is carried out using Legal Aid funding including working with clients to establish the best option for their debt problems. This can include pay plans, insolvency work, debt relief orders and bankruptcy cases. Members of the team also attend court repossession sessions to help clients and represent them in court to defend against charging orders. The number of Insolvency Voluntary Agreements (IVA) is the highest it had been in 18 months and in general bankruptcy is an option to keep people in housing. All work is carried out on a case by case basis not piecemeal. There is a 7 week waiting list for clients and huge pressure as there is £15.2 billion pounds worth of unsecured debt in Northamptonshire. 5.4 Financial inclusion is also delivered as part of this work budgeting, prioritising debts and promoting insurance is carried out by all workers. The Coop and Barclays have opened 1300 bank accounts with debit cards for those that have not been declared bankrupt. However at the time of the meeting the Coophad asked for no more referrals as they did not have the capacity to meet demand. This is a safer option for those that have been declared bankrupt. A large proportion of their work is with the clients of housing associations and housing offices to reverse repossessions and arrears. It‟s a proactive approach that pays for itself and helps all parties. More investment is needed in debt advice and this is supported by research carried out by Leeds City Council who have an advanced financial inclusion strategy and found that for every £1 invested £6 went back into the local economy. 5.5 In the current economic climate a large number of people with mortgage debt or secured debts often get a charge on the property and there are a significant number of companies trying to get secondary charges applied to properties for credit card debts. These debts can then be sold on to agencies for a little as 10 percent profit – the statutory interest is 8 percent, all this reduces the equity in a property. The number of people that have taken out IVAs and now could not afford them has also increased the workload significantly. People are unprepared and have not taken out or been unable to afford insurance cover for their mortgages in the event of a critical illness, accident or unemployment. Equity release schemes can be good for older people but are not the solution in the main. 5.6 With the increase in unemployment significant confusion had arisen from a lack of clear advice being given in job centres when claiming benefits. A particular concern is the number of people claiming Jobseekers Allowance who had sold their homes often at a reduced price as they are unaware that help is available with mortgage payments. It is critical that the correct advice and information is given at the right time especially as it has the potential to become a cycle and affect people‟s mental and physical health. 5.7 The Benefits Manager works with Northampton Borough Council to promote benefit take up and health surgeries. Community Law also work with Wellingborough Housing Association and Rockingham Forest Housing

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Association to maximise tenant‟s income and solve tenant debt. Many rent arrears are due to a lack of understanding and claiming the correct benefits. The promotion of shared ownership instead of purchasing ex council houses meant that there is an opportunity for clients to receive benefit on the rental part of the mortgage however there is also the added complication that in many cases the mortgage element is not taken into account during assessments. 5.8 The main concern is a lack of resource to cater for demand, there is a lack of investment in financial inclusion and where there has been it has been short term. Local authorities also have an expectation that the sector is self funding so external funded needed to be accessed. There is an opportunity to charge those that can afford to pay for advice by becoming a social enterprise company as it was an ethical service and free to those who are eligible. 5.9 Corby Citizen Advice Bureau and Welfare Rights (CCAB&WR) endorsed all the comments made by Community Law and also that in many cases there was no choice but to try and get those capable of helping themselves to do so. CABs offered different services and Corby also included welfare rights as the previous organisation that had delivered it had closed. They carried out casework for benefits and debt and also had a disabled appeals worker (the only one in the county). 5.10 The organisation was funded by two thirds management project funding not grants. However in March 2011 funding would again have to applied for and a lack of success would mean a gap not just for Corby CAB and Welfare Rights but other voluntary organisations as well. There was £80 million debt in the county and of that £9 million is in Corby without the services provided by Corby CAB & WR and Community Law Services there would be a gap in provision. The economic situation at the moment made prioritising crucial for organisations. Preventative work would reap benefits by providing financial education which could turn lives around but organisations may have to make hard decisions in the light of future funding restrictions. 5.11 The data provided by Experian relating to bank accounts for those earning below £15000 indicated that there is a lack of knowledge in how to manage their money. The data could usefully be combined with local knowledge on the most deprived wards to give a more detailed picture. However the root cause of debt is deprivation and this is not being addressed - maximising the income of these clients is key so it was crucial to look at benefits and debt together. 5.12 Corby CAB and Welfare Rights also provide training on debt relief to council workers to help people stay in their homes. Bankruptcies have increased significantly and many people decide not to stay in their homes. In a recent case a client with £1200 a month interest repayments on their mortgage whose partner had become unemployed could no longer afford the property-this was not unusual by today‟s standards. Seeing 12 clients in 1 day is not unusual for caseworkers. Cases at magistrate‟s courts had increased for repossessions and Wellingborough has the highest number of these cases. Another common theme is the significant number of people that get into a cycle of debt due to a lack of education and information. An example of this is a person who is paid weekly and has to borrow on a Friday as their wage has gone to cover debts accrued over the week. They cannot pay or use their bank accounts as they are overdrawn and the banks will not release the funds until the debt is cleared.

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They end up borrowing from friends and family or going to Cheque Cashiers who deduct a fee of 15 percent from the value. This just starts the cycle all over again. It would be beneficial to employers to have advice that was impartial which they could give to employees in this situation. Schemes like Healthsure were valuable but it was just fire fighting. 5.13 As the only CAB with a disabled caseworker and with appeals increasing there was a knock on effect, this could mean that a client was living without income for potentially 12 months. 5.14 Update since evidence gathering session 5.15 The temporary office of Community Law Services in St Giles Street Northampton has been very successful and the management or looking to sign a permanent lease with the landlords. However the NCC‟s draft budget 2010 - 11 will have significant impacts for this organization and other Citizen Advice Bureaus due to a reduction in funding at a time when demand for their services has increased. 5.16 In addition Community Law Service is part of a shop development in Wellingborough in partnership with Wellingborough Homes and are considering opening another Advice Shop in Rushden High Street in the New Year however this will be dependent on how various funding applications go including of course funding from the County Council. 5.17 CABs are among a range of organisations that are currently in receipt of grant funding under the Strategic Grants Programme. This programme of investment has undergone a total review during the current financial year, the outcome of which is the development and adoption of a Commissioning Strategy, in essence moving the council away from grant funding to a process of commissioning for outcomes. 5.18 All existing organisations were formally notified in July 2010 that the Strategic Grants programme would no longer exist beyond March 31st 2011. One of the proposals coming out of the Review related to the provision of Advice Services but with the specific focus on Debt and Financial Advice. Work was carried out in consultation with the members of the Advice and Information Thematic Partnerships towards the development of commissioning intentions with the view to tender for a contract (commencing 2011-12) for the provision of service. 5.19 As a result of financial challenges that NCC faces savings have had to be identified and the impact of the draft budget proposals directly in relation to the proposed advice services contract is that the Council will not be investing in this proposal. This is subject to the outcome of the draft budget consultations and final decision in February 2011. Conclusions 5.20 It was accepted that it is a challenging time for public finances and that there are no quick fixes – the support, guidance and training provided by these organizations is invaluable and does not come at nil cost as it increases the work load for organisations like CABs and Welfare Rights with little or no financial gain. There is still scope for better working together as resources continue to reduce. Potentially Corby‟s hours could reduce if redundancies are made during a time of increased need. It will create a situation where demand

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exceeds capacity. The priority for organisations like Corby will be survival which may come at a cost for those that need a service and can no longer access it. The inconsistency regarding the level of support and advice in the county is a concern. Improved signposting by all partners and stakeholders can only help the situation. Organisations focus on putting resource into frontline services but there should a minimum level of service, however this is difficult to achieve if there is no equity in funding. An opinion expressed by these organizations was that the situation has been further complicated by the commissioning approach which meant that they effectively competed with one another for business. This could be overcome by organizations working together to bid. The strategic funding for Northamptonshire is e-tendered from April 2010 and the funding of £260,000 was ring fenced. Historically districts and boroughs received £40,000 to support organizations locally. 6. Financial Education and Capability 6.1 The Consumer Finance Education Body (CFEB) is responsible for helping consumers understand financial matters and manage their finances better. CFEB is an independent body, established by the Financial Services Authority as required by the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2010). 6.2 CFEB provide impartial information, education and advice through a national financial advice service. And we work with trusted partners * to get our help to people at the right time. All information, tools and resources are sales free. The advice is impartial and no recommendations of specific products or firms are given, but information is given to help consumers shop around and find what is right for them. 6.3 Companies, local authorities and other organisations can take advantage of CFEB‟s resources, research and targeted programme of work to get involved in helping others to manage their finances. A wide range of free information, tools and resources are available to help bodies and organisations to deliver work to help others get a head start and take control. 6.4 CFEB is working in partnership with the scrutiny review to support the delivery information and support to the council, staff and the community it serves. A range of information can be accessed on their website. http://www.cfebuk.org.uk/

7. Personal Finance Education Group and Schools 7.1 Schools provide a unique opportunity to reach all sections of society, including many individuals who may later become far harder to reach. Providing personal finance education in schools is the best opportunity to embed a basic understanding of financial matters when young people are most receptive to learning. Now more than ever, it is important that school leavers have the financial skills to take them into the next stage of their lives, and onwards. 7.2 Personal Finance Education Group (PFEG) is an independent charity that works with CFEB to help schools and other educational settings to plan and deliver personal finance relevant to students' lives and needs. Their mission is to ensure that all young people leaving school have the confidence, skills and

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knowledge in financial matters to participate fully in society. PFEG provides free support, resources and expert consultancy to teachers and school leadership teams. It is not a 'one size fits all' philosophy, and the success of their approach is demonstrated as more and more schools are contacting PFEG for support every day. PFEG also works with government, opinion formers and key bodies with the aim of influencing education policy. There is no affiliation to any one organisation and they do not market or sell any financial products or services. 7.3 In an initiative beginning this month PFEG are working with consumer expert Martin Lewis on a national campaign to get financial education in every school the link will take anyone interested in further information directly to the website http://www.moneysavingexpert.com/latesttip/#tip_email Since student loans launched 20 years ago, as a nation, we've educated our youth into debt but never about debt. Now student loans are set to get bigger & costlier, enough's enough. We need consumer finance education in EVERY school. Teaching kids about money, debt, saving and not being impulse driven is the most potent solution we have to mis-selling scandals, debt crisis, economic inefficiencies, so we must act. Please email your MP (takes 2 mins) In the last few months we've been working with Justin Tomlinson MP and pfeg (personal finance education group) on the launch of the first ever 'All-Party Parliamentary Group for Financial Education'. This will allow all MPs to gang together, we need your help to persuade 'em. 7.4 The „My Money‟ programme is aimed at delivering work to create innovative financial education programmes in England, delivered by a consortium led by PFEG and funded by the Department for Education. It is the first programme to provide a completely joined-up approach to financial education from when a child first starts school, through the transition to working life or further and higher education. There are a number of programmes What Money Means – primary schools, Learning Money Matters – secondary schools, My Money – primary, secondary and local authorities and work sponsored by the Share Foundation to support Looked after Children. 7.5 PFEG have been working with primary schools in Northamptonshire on a programme called „What Money Means‟ which was a 5 year project sponsored by the HSBC. A tool kit has been developed for schools http://www.pfeg.org/teaching_resources/mm_primary_toolkit.html to use across the primary age ranges to support the personal, social, health and economic (PSHE) education which although not statutory places more emphasis on personal wellbeing and economic wellbeing and financial capability. It .is still considered crucial in contributing to children‟s mental health, self esteem and self worth and may be included at a future date. PFEG launched the pack to primary schools in the county on the 4 May 2010 supported by training events including a twilight session. Take up was disappointing particularly in Corby. It is a nil cost service to schools to train teachers on the PSHE agenda and time off timetable is paid for by PFEG. Although it fits within the maths curriculum information can be bespoke for different areas to create and retain interest, teacher enthusiasm is the driver for successful delivery. A good news story from the work carried out within the county is that Broughton School had become a Centre of Excellence. 7.6 The What Money Means programme is being delivered in 100 percent of

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schools in Leicestershire. Derbyshire have also adopted it as part of their transition programme sharing information between 6 and 7 year olds. 7.7 Secondary and further education programmes are delivered jointly with the Consumer Finance Education Body (CFEB) however take up at secondary level in Northamptonshire has been disappointing with fewer than 10 schools expressing an interest in taking part.

Conclusions 7.8 Schools have control over their curriculums and the local authority is not in a position to enforce changes however the ability of children to have control and manage their money is crucial to their future wellbeing and contribution to society and the working group request that the Local Education Authority encourage schools and colleges to utilise the opportunities for support that are available. 7.9 A coordinated approach between the local authority and schools is required to deliver a consistent approach to the education of young people in the county to ensure they are financially included and capable. This could also benefit those families that are currently financially excluded as they would engage and learn from the lessons taught to their children. 7.10 The Child Poverty Act places a duty on local authorities and their partners to cooperate in tackling child poverty. As part of this, authorities are required to conduct a needs assessment that will help them to understand the true picture of child poverty in their area and the needs of local families who are disadvantaged. They will then be able to use their needs assessments to develop joint child poverty strategies (also a duty as part of the Act) – setting out how their coordinated services will tackle child poverty in their area. Statutory guidance and regulations that stipulate how local authorities must meet the duties of the Act have not been published. Instead, a package of practical support has been developed by the Child Poverty Unit (CPU) in partnership with sector-based organisations. Officers from the Early Years service of the council have confirmed that work has started as part of the Child Poverty Strategy to embed financial education and capability but it is not consistent across the directorate http://www.legislation.gov.uk/ukpga/2010/9/part/2 7.11 There may be opportunity to investigate a partnership between schools and credit unions by having school credit unions that help create a saving habit and improve financial awareness although as previously discussed it will be dependent on the will of schools and the resource credit unions to start up.

Recommendations

R4) That the Cabinet Member for Children & Young People and Director for Children & Young People’s Services use their influence to raise awareness of the benefits of working with Personal Finance Education Group and the Consumer Finance Education Body to all School Forums and Governing Bodies:

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R5) The Corporate Parenting Board consider reviewing the standard of provision for financial education and guidance that is given to looked after young people during and prior to leaving the local authority care.

8. Housing Associations & Housing Offices 8.1 Local authority housing and benefit offices and housing associations were invited to attend a meeting with the working group in October 2010. 8.2 Wellingborough Housing Associations (WHA) gave an overview of the main barriers to financial inclusion highlighting that the first step is for people to admit they have a problem. The most effective means of helping them is to support them before the problems materialized. Changes to the benefit and housing rules will create a new set of challenges and preventative work will be crucial to keep people in their homes and out of debt. Community Law have information that states there is hidden indebtedness in those over 50 years old and with the vulnerable and disabled so the elderly and young people are particularly in need of support to claim benefits that they are eligible for. 8.3 WHA work with Community Law Services to provide debt and benefits advice and in the last year tenants had accessed benefits of £888000. In addition they also worked with 5 Wells Credit Union to provide a Christmas Saving Club; MCF for affordable loans; banks to advise on basic bank accounts; JobCentre Plus to help residents back into work or training with particular support for disabled adults and lone parents. They deliver a life skills course „My Home‟ to help younger residents budget and complete their own DIY. They received a grant from the DWP to promote their financial inclusion services and following a campaign of door knocking, posters, leaflets and fun days have delivered a 10 percent uptake on affordable loans, 10 percent response rate on general financial inclusion initiatives, 30 households took up home contents insurance, 25 people returning to work or training following advice and support from Jobmates and 100 tenants opened basic bank accounts. Information on these services are provided to all tenants in an information pack. 8.4 Loan Sharks and door step lenders are in the community and WHA confirmed that residents had been threatened. They emphasized that the mental and physical wellbeing of the individual could not be separated from financial wellbeing and health. As part of this approach they are developing a series of short videos offering money advice tips and hints to tenants on their website. Working as part of the Supporting People Consortium they are contributing to improvements for housing-related support services to vulnerable people that to enable them to live as independently as possible within the community. WHA‟s future aim is to have a shop on the main street that shared space and overheads with like minded organizations. 8.5 WHA offer an extensive range of support and this could be extended outside organizations and private landlords at an agreed charge. This could potentially help schemes that were not full to become sustainable and provision would be extended. 8.6 The Housing Solution Manager at Northampton Borough Council stated that they are also delivering similar schemes in Northampton to those delivered by WHA. The Housing Solutions Team are working with Northampton Credit Union

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to promote affordable Delta Loans (part of the DWP Growth Fund) to tenants that are suitable as just having another loan was not the solution for all. The benefits were two fold in that those who are eligible have access to affordable loans and the credit union grew the membership. They have been reaching out to people most at risk by text, leaflets and the website to raise awareness but this is also supported with work around maintenance, cooking on a budget etc. A more coordinated approach between partners is required especially for hard to reach groups such as ex looked after children. 8.7 The next pressure would be on homeowners that are struggling to pay their mortgage and a huge potential increase in homelessness as debts rise and they become unable to make the payments. Negative equity could effectively mean that people still had outstanding debts when they retired. 8.8 Clients often have a mixture of problems so coordination with the Third Sector and health linked to a strategy with responsibilities would be useful. With the current funding reductions a strategic approach to delivering services was important as increase demand would add the challenges already faced. MCF and Delta Loans funding terminated in March 2011 and there is an uncertainty how and if this will be available in the future. 8.9 Rockingham Forest Housing Associations (RFHA) are a member of the North Northamptonshire Financial Inclusion Partnership (NNFI) which brought together different partners from housing associations, local authorities, welfare rights, financial inclusion champions, CFEB and the banking industry. They provided similar support to WHA and worked with MCF who attended the location for 2 days a week to provide access to loans. Community Law Services was contracted to provide a referral service so those in danger of court proceedings could be worked with. 8.10 RFHA provide life skills training courses and in December CFEB would be delivering a Making the Most of Your Money workshop and potentially a money guidance programme from CFEB next year. Good contacts have been made in insurance and with banks to provide basic bank accounts. The changes that will be coming to residents as part of the changes to benefits need to be explained, and training is provided to help them become financially capable and take up saving schemes. Other influences on financial capability could not be under estimated such as transport to and from rural locations which affected people‟s ability to and decisions to gain and keep paid employment. In terms of the future of accessible loans from MCF and Delta Loans and their funding is a concern, if the funding is not continued it is feasible that they will be looking to bridge the gap by working with partners and other organisations. 8.11 Kettering Borough Council (KBC) are addressing income and debt issues using an annual action plan that monitors take up and collates data year on year to ensure they are reaching people who need assistance the most. The authority also provides a financial awareness programme for the worst debtors in partnership with CAB, Trading Standards and Community Finance plus internal partners. Vulnerable groups are identified using mapping technology and have built up a good relationship and are working with many ethnic minority groups. KBC is also working with the County Council on Fuel Poverty. Regular landlord forums are well attended and correspondence it reviewed by internal and external groups to ensure its easy to read and understand.

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8.12 KBC have and continue to build a trust with the community and have worked hard on this over the past three years. However there is still the need to start education from an early school age on how to manage finances and try and break the cycle in many households of relying on benefits. Support for these households should include giving them skills and training to enable them to get back into employment. 8.13 In the future KBC would like to expand upon the work currently being done with regard financial awareness and expand on the work delivered within the community providing help and advice. The biggest barrier for KBC is funding because without that the time and resource allocated will be limited. Conclusions 8.14 The NNFI Partnership works well and a forum has now been set up in Northampton however there is a need for it to feed into a wider body. The ability to deliver improved outcomes for communities was the key driver so solutions needed to be flexible, pragmatic and sustainable. 8.15 District, borough and county councils can do more to promote the role and sustainability of credit unions in the county such as encouraging payroll deductions, or awareness raising. There is still a big question over what happens when funding finishes from the DWP in March 2011, the approach as it is now is limiting growth and there is still the absence of affordable lending organisations or credit unions in the south of the county.

9. Embedding Financial Inclusion in Service Delivery 9.1 The working group during their evidence gathering became aware that support and advice is freely available from PFEG and CFEB to promote and deliver activity around financial inclusion and wellbeing. They agreed very early on that it is important to deliver tangible, practical solutions along the way and to this effect have had articles on affordable credit and debt advice included in the county council publication Insight and the countywide joint publication Together with Police and NHS. In addition the working group also arranged for Making the Most of Your Money Workshops to be delivered at county council locations in October 2010 to inform and raise awareness with staff on budgeting, pensions etc. Credit Unions also invited and attended the workshops to promote their activity and the services they offer. The intention of the workshops was to give staff the opportunity to do a financial stock check and remind them how to get the best deals. A further benefit was to provide information that could help them act as advocates to friends, family and the community signposting them to financial advice or guidance. 9.2 To promote the workshops pay slips and Informer bulletins were used to promote the workshop sessions at the different council locations and the Making the Most of Your Money guide and link to the CFEB website was included on the county council intranet and received approximately 509 hits prior to the first workshop. The article included in the council publication Insight is estimated to have reached an audience of 5000 between paper and electronic formats and the Together publication was distributed to several thousand homes. 9.3 A short questionnaire was sent to those attending the workshops and in general

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was positive although some responses indicated that they would have benefited from a less generic session. This is supported by requests from staff to have further targeted sessions on pensions, retirement and redundancy. 9.4 The range of financial guidance and advice literature has been delivered into all libraries including mobile libraries and meetings have been taken place to explore delivering a programme of taster sessions initially in the Central Library in Northampton and libraries integrated with Children‟s Centres. If successful this will also be rolled out to other libraries with suitable premises. 9.5 In December 2010 a joint presentation was made by the Head of Trading Standards and a speaker from CFEB to a conference for managers of Children‟s Centres from across the county. The presentation addressed the broad impact of financial exclusion and the need to embed access to financial advice, education and access to affordable credit into service delivery. CFEB outlined how Children‟s Centres could easily make use of their resources at no cost to the county council and help citizens to be more financially included. 9.6 Presentations have been delivered to Children & Young People‟s Services and Health and Adult Social Services Directorates on the 2 February 2011 by CFEB to demonstrate how they can support the county council in delivering financial inclusion and capability into services and communities in the county with an emphasis on vulnerable groups. It is also hoped that a similar opportunity to take up support delivering workshops on redundancies, pensions and retirement will be utilised by the council‟s Organisational Development and Human Resources Directorate although this has not been confirmed at the time of writing this report. 9.7 The discussions with directorates have been very constructive and enthusiastic - areas identified for training to be delivered to staff include Children Centres, Area Based Working Teams and partner organisations, Looked after Children Library Services particularly the Answer Plus service, Customer Service Teams that signpost for Children & Young People‟s Services and Health and Adult Social Services (HASS) particularly those who may be seeking advice on financial assessments. This work will also need to be discussed with the countywide Health and Wellbeing Coordinator. 9.8 Age Concern have been identified by HASS as a potential key partner as well as GPs especially given the forth coming transfer to commissioning by the GP consortia. HASS have also highlighted that the CFEB literature on planning for ahead for a retirement should include a focus that enables people to remain in their homes as part of the approach to personalised care; for instance by considering down sizing their homes to aid mobility 9.9 The authority is also being given the opportunity to pilot the Financial Health Checker which aims to: Currently in development, the financial health check (FHC) aims to encourage people (on a universal basis) to proactively manage their money, and review their financial affairs on a regular basis. It will provide users with a quick, high level assessment of their financial priorities and highlight where people can take action and build healthy financial habits to meet their short-term goals and long term needs. Users will

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be encouraged to focus on areas which pose potential risk to their personal finances e.g. lack of „rainy day‟ savings or insurance. It will deliver directive (but not regulated) advice to help people prioritise their financial needs and see where they can take action. The term “financial health check” (FHC) is a working title. As part of the current review of CFEB‟s corporate identity, the actual name of the FHC will be aligned with this. The development of the FHC is well underway. CFEB are conducting market research with consumers to test prototypes to ensure that the FHC is engaging, meets their needs and genuinely helps them manage their finances better. They are also applying behavioural science – and in particular, the MINDSPACE framework - to our overall approach to ensure we develop a FHC that encourages positive behaviour change. The vision is for the financial health check to enhance people‟s knowledge of how to manage their financial matters well and help them to take more personal responsibility for their money. CFEB will also work collaboratively with key stakeholders throughout the development of the FHC to share knowledge and ideas and ensure there is clear signposting to further advice. We have established an Advisory Group to help facilitate this. The FHC will be portable – it will be web-based, printable, capable of being emailed and we will aim to smooth the transfer from the FHC to further more specific advice, including any purchase of products. Once launched, the financial health check will be a core part of CFEB's overall strategy to help people understand financial issues and better manage their money. It will be integrated into our existing products and services, including the national financial advice service. Over the longer term (and out of the scope of this project) it is intended the FHC will be used as a model for developing a young person‟s FHC - including being adaptable for social media. 9.10 The working group has also identified a programme of ways in which it considers this work could be moved forward with partners and other local authorities, which is attached at Appendix 2. It is meant as a starting point for wider discussion and differentiates between Phase 1 activity as having existing mechanism within the Council to implement and Phase 2 which will require further dialogue. The Head of Trading Standards has agreed as an interim measure to include all the information on financial inclusion and wellbeing including local authority toolkits and mapping information to enable the information to be more easily accessed. 9.11 The working group recognises that the County Council and local authorities are currently going through their budget setting process and this will have an impact on the resource that they may be able to commit to further the aims of increasing financial capability and access to affordable credit across the county. 9.12 However as discussed in the report, the working group has identified possible opportunities for partnership working with bodies such as CFEB to assist in

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achieving these aims at no extra cost. 9.13 The working group therefore still sees the benefit in presenting the programme to the Cabinet for consideration, so that the findings of the scrutiny review can be fed into future service planning and delivery. R6) That the Cabinet agrees to considers the draft programme at Appendix 2 of this report as a way of embedding financial inclusion and capability in service delivery; R7) That Cabinet endorses the investigation of opportunities for County Council directorates to work in partnership with the Consumer Finance Education Body to embed financial inclusion in the areas of Organisational Development and Human Resources; Children & Young People’s Services; Health and Adult Social Services; the Customer Service Centre, and Library Services as set out in paragraphs 9.1 to 9.10; and R8) That the report is presented to the Public Service Board for discussion to identify the best options for delivering financial inclusion and capability across the county.

10. Best Practice 10.1 Whilst undertaking the scrutiny review the working group identified best practice that was taking place in other areas of the county and have included this for consideration in the report. 10.2 A visit to Clockwise Credit Union, Leicester, took place to see how a thriving union could be sustainable and meet the needs of the local community. Clockwise is not a typical credit union as unlike many established credit unions it does not require members to save before they borrowed, and loans are based on ability to repay and not savings. Clockwise is run as a commercial business and as such has to be sustainable. To achieve this there is a range of products for customers with a local focus to improve local community services and infrastructure. Clockwise has received funding by DWP to deliver loans to the financially excluded (as have MCF and Northampton Credit Union) and the key is to have an informed idea of how best to deliver the service. 10.3 Clockwise sells saving and loan products and this is part of the approach to becoming sustainable. By offering a range of loan products to attract a cross section of the community to borrow. Loans could be as low as £50 or as high as £7,500. The larger value loans are provided a competitive interest rate and made more secure by repayment through payroll deductions. The critical element was good lending decisions and robust collecting. 10.4 More thorough checks are carried out such as providing proof and confirmation of income and expenditure for a Full Insight Search which is undertaken every time a member applies for a loan. This search is different to a standard credit search as it gives a better picture of an individual‟s circumstances including current liabilities, credit searches and repayment histories. Standard credit searches only indicated if there was detrimental information. Individual circumstances are reviewed which included their present and past to establish the motivation in applying for a loan. An example of this is someone looking to

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consolidate their loans – someone looking to increase their disposable income to make paying the rent easier is very different from someone who consolidates and then takes another loan. 10.5 The emphasis within Clockwise Credit Union is to create a habit of saving for instance when customers came in and asked „how much have I got in my account‟ the response is „how much do you want‟ this encourages them to save for Christmas, holidays, school terms. They aim to educate and have a long term relationship to break the culture of door step lending. Many of these people‟s parents and grandparents used door step lenders and it how they are used to getting loans. 10.6 It was a common problem that people on benefits have the money for bills but see something they want and gradually get in the habit of not paying bills on time this creates a cycle of debt. Clockwise can help with loans that can be ring fenced into another account to cover those times of need e.g. Christmas and new school terms. 10.7 Since Clockwise has grown the counseling and relationship side is harder to deliver and there is a pressure on the amount of time available to give. Clockwise is funded by different streams in real terms Clockwise should be a 1 Stop Shop that provides debt advice and energy benefits advice as there is a need for this group of people as they don‟t know where or how to get help. There are significant advantages to having a debt advice worker in the location as Clockwise can provide the whole package which saves time as the person is already in the building so it was much quicker and less repetitive. Quality lending is knowing as much about the customer as possible before saying yes or no. This means looking at the total debt and whether repayments can be afforded. This also includes building the relationship so that when they have a change of circumstance and cannot make payments they come in and talk about it instead of simply not paying. 10.8 Clockwise has loaned £2.4 million to the financially excluded since 2006 and had only written off £70,000 so this reinforced the emphasis on isn‟t on lending and closing the loan but evolving the „relationship‟ and making them a good customer. It is important to highlight that those made redundant or on low income are the financially excluded of tomorrow. 10.9 Clockwise has launched a current account which has all the functions apart from the cheque book. At the time of the visit there were 800 accounts 50 percent are primary banked. This provides an alternative to the Post Office account which had not been intended as a banking tool, was not fit for purpose and created cash focused living style. 10.10 Clockwise has £2 million on loan and £2 million in savings with another £1 million in the bank that could be loaned, and believe that they will need about £3 million out on loan to start being self sustaining and no longer dependant on grants for the core business. The challenge is having the money to provide the range of services that is needed. Growth of the Credit Union was about having an identifiable and visible presence. 10.11 North Yorkshire Credit Union received support from North Yorkshire County Council (NYCC) to extend its common bond from its roots in York and Whitby. The project received political and financial support from NYCC, seven

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District Councils, the City of York Council, four Housing Associations and a local Building Society. The Credit Union is creating community access points across the county, and NYCC are also providing funding and collection points in housing offices, libraries (including mobile libraries) and Surestart centres. This investment has helped deliver a rapid expansion of services in what is a predominantly rural county. The Credit Union is also delivering financial capability sessions in the most deprived communities, which focus on training local residents in budgeting and money management skills. 10.12 My Home Finance is a social enterprise. This means all profits are put back into the business so that it can help more people. Its aim is to help those who can't access high street lending and who have to rely on loans from doorstep lenders and loan sharks who charge extortionate interest rates. The organization helps people to access credit at a more affordable rate, open a bank account and helps them save for the future. By building up their repayment history with My Home Finance, customers will be more able to access mainstream financial services in the future. 10.13 My Home Finance was set up by the National Housing Federation. It is supported by the Government, Royal Bank of Scotland, Wates Giving and many housing associations in the West Midlands. The scheme currently has 10 high street branches - 3 in Birmingham and others in Coventry, Dudley, Hereford, Tamworth, Walsall, Wolverhampton and Worcester. 10.14 The Branching out Bus (BOB) North Warwickshire Borough Council vision is „to reach out into and work with our communities to improve access to a wide range of services with trained staff able to use their skills and knowledge to specifically assist families in order to reduce economic and social inequalities’ The objective of the project is to create an outreach service that promoted benefits advice, financial capability, money management and debt advice. The service is delivered in 8 areas every week Monday to Thursday - Friday is „Flexible Friday‟ – used for specific events or targeting campaigns. It has become an a familiar and friendly source of help and created a network of services through the CAB, Council, Credit Union, local college, and Job Centre Plus. BOB has been a Catalyst for better connectivity between services tackling child poverty and now developed into a Financial Inclusion Partnership to oversee project moving forward. Sample cases A female customer in the age group 25 – 29 with two young children is being assisted with a Warm Front grant, relationship problems and a charity grant. An elderly women recently visited BOB and was assisted by CAB. During the home visit grandma was looking after her grandson. An informal conversation led to the BOB officer also making contact with the mum of the child which resulted in her being helped with various financial issues she had. Success in Schools - Credit Union have to date opened 17 School Banks (target was 8!) 762 student accounts opened. Children manage the school bank alongside support from Credit Union volunteers and school staff. Credit Union delivering lesson plans in 4 schools (target is 6). A „basic money management skills‟ for years 5 and 6 has been written and supporting material has been developed.

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School Bank case studies A discussion during a money management lesson highlighted ‘benefits’ and a little boy said that his mummy had just lost her job. Through this the little boy passed on information to his mummy who subsequently visited the OSS to seek advice and claim the benefits she was entitled to A little girl brought in 2p for her account and apologised. Her mummy didn’t see the point in saving! The little girl had saved her 2p from her sweet money to put into her account Children are now saving for bikes, school trips, birthday presents and holidays. BOB the Brand - The BOB brand has gathered momentum and is not associated with the council or carries any stigma, it has developed its own identity. It is joining up local strategic partnerships and local area agreement thinking both within the borough and across the county – becoming the vehicle for delivering Financial Inclusion. Conclusion 10.15 The sustainability and coverage of credit unions and community development financial institutes is a concern to the working group and much of their future success depends on capacity and funding from Government. All have declared a wish to grow and become sustainable however there are significant challenges to overcome. The local authority needs to take a strategic lead to investigate the options and the potential for bridge between banks and credit unions such as that sponsored by the Royal Bank of Scotland and delivered on the high street by National Housing Federation. 10.16 The Making the Most of Your Money Scrutiny Review was agreed at the Customers & Communities Scrutiny Committee meeting on 16 February 2011. During discussion of the review members of the committee requested added emphasis was given to recommendations 2 and 4 in the summary of recommendations. 10.17 While some members of the Customers & Communities Scrutiny Committee did not agree with public financed resource being utilised to support voluntary organisations the majority of the committee supported recommendation 2 and highlighted that private companies for instance Barclaycard supported schemes that enabled staff to volunteered in company time to „give something back to the community‟. The committee‟s hope is that the recommendation will firstly help to support the growth of credit unions membership - making them sustainable in the future so they will be in a position to employ paid staff and secondly to have a consistent approach to volunteering within the council. 10.18 The Customers & Communities Scrutiny Committee recognise that the Cabinet Member for Children & Young People and Director of Children & Young People‟s Services are not in a position to request schools to utilise either PFEG or CFEB support. However they feel strongly that financial education and capability is a critical element to enable young people to be in a position to manage their future welfare more effectively. This has also been recognized in the Education White Paper. The committee would therefore also request that the Cabinet Member for Children & Young People write to the Minister for Education Michael Gove MP to include financial education and capability as a

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compulsory element of the curriculum. The committee also ask that the Cabinet Member for Children & Young People write to Northamptonshire MPs requesting they support this issue and the national campaign mentioned at paragraph 7.3.

11. Summary of Recommendations

The Customers & Communities Scrutiny Committee recommend that:

R1) The Making the Most of Your Money – Financial Inclusion and Wellbeing Scrutiny Review is sent to the Chamber of Commerce to highlight the opportunities for businesses to take advantage of the services offered by the Consumer Finance Education Body and raise awareness and promote credit unions and community development financial institutions in the county;

R2) The Cabinet agrees to consider making County Council staff members carrying out voluntary work on behalf of credit unions eligible for paid time-off as those staff members volunteering as school governors;

R3) The Cabinet encourage the existing credit unions and community development finance institutions (CDFIs) to continue dialogue on how best the needs of the county can be met including aspects of back office functions, mergers and common bond extensions and considers how it can support this process;

R4) The Cabinet agree that the Cabinet Member for Children & Young People and Director for Children & Young People’s Services use their influence to raise awareness of the benefits of working with Personal Finance Education Group (PFEG) and the Consumer Finance Education Body (CFEB) to all School Forums and Governing Bodies; R5) The Cabinet endorse the Corporate Parenting Board considering a review of the provision of financial education and guidance given to young people during and prior them leaving local authority care;

R6) The Cabinet agrees to consider the draft programme at Appendix 2 of this report as a way of embedding financial inclusion and capability in service delivery; R7) That Cabinet endorses the investigation of opportunities for County Council directorates to work in partnership with the Consumer Finance Education Body to embed financial inclusion in the identified areas of Organisational Development and Human Resources; Children & Young People’s Services; Health and Adult Social Services; the Customer Service Centre, and Library Services as set out in paragraphs 9.1 to 9.10; R8) The report is presented to the Public Service Board for discussion to identify the best options for delivering financial inclusion and capability across the county; and

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R9) The progress of implementation of the recommendations is reported back to the Customers & Communities Scrutiny Committee 6 months from the presentation to Cabinet.

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Appendices

Appendix 1: Maps of hot spot areas in Northamptonshire

Appendix 2: Programme of Aims

Appendix 3: Articles promoting affordable credit

Appendix 4: Recent articles in the national and local press

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Published 8/02/2011

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