Polycrisis deepening in Buckinghamshire but Aviva is coming to the rescue!

People don't realise Citizens Advice Bucks is a charity. The truth is, that stings a little as our volunteers are working harder than most to help people across the County- 90 of them give up their time weekly- plus 32 FTE staff. We help nearly 12,000 people a year.?

Although the cost of living crisis technically started in last 2021, households have been experiencing a series of shocks since April 2019.?? And what we are experiencing is not a one-off crisis but rather the cumulative effect of these shocks, which is amplifying the effect of the current crisis.?We heard a new term has been coined this week called 'Polycrisis' (it's even made it into the Oxford Dictionary's new words list for 2022). We've been working hard to get across the sense of gravity attached to this year's winter crisis, and this term nailed it for us- disparate shocks across our society are significantly worse than the composite parts. A pandemic alone- a economic downturn alone, an energy crisis alone, a war driving up the cost of food and petrol supplies, each of these, a huge shock- combined, it is truly something to be reckoned with.

As a charity- we've always been here for our communities when they are in crisis in Buckinghamshire. We are tackling rural hardship- as well as the urban issues those face that live in the housing estates of our urban areas. We are helping those who need us most- those with mental health issues, and disabilities, those who are frail, elderly and vulnerable, as well as those who are disabled. We also help on issues that count the most- housing, money, benefits issues, employment and much more, but also the kinds of issues that affect our working population.

We partner with foodbanks, mental health services, and 160 local providers. Many people point out the shortcomings of the service, saying we are not 'there' in their locality. But the truth is, we are everywhere. Whether you are nestled in a village like Nash, or in a council estate in Aylesbury, we are here for everyone in Buckinghamshire. We not there always physically- but with more ways than ever to access our support- we are certainly more there for Buckinghamshire then we have ever been. We would love to be bigger, but like every charity, we work very hard for our funding. We deliver across every town in Bucks, and every village too- so whilst you might not see us, it doesn't mean we are not helping people. We are not running drop ins anymore- quite simply as this is not an efficient model for us to help as many people as possible- and with more people than ever needing our help- efficiency is important to us.

We've been working with Crowdfunder UK and Aviva raising a crisis fund-to whom we are tremendously grateful, to help us respond to the cost of living crisis and pump up our much needed services and money advice help-?already in the past year we have helped 1,200 people who have been at risk of homelessness, and over 1000 people with debt solutions. Thanks so much to all the Aviva employees who have granted us donations in the past few days, it really has made a huge difference.

We've managed to raise nearly ￡10,000 so far, but with up to ￡50,000 in match funding up for grabs, we are not stopping there! We are going to keep pushing so we can help more people.

What will we be doing with the funding?

Our money advice team needs more funding to continue its vital work, with many funders currently only funding for short term grants, and thus all funds raised will help us to continue to provide debt and income maximisation advice- essentially, helping people out of the tough financial situations they are facing.

We are also running a Cost of ?Living Crisis Support group on Facebook- helping communities get through the crisis together- we are inviting all charities and local councils to get involved in posting to the group- Cost of Living Crisis Support Buckinghamshire | Facebook

Cost of Living Briefing?

The ‘cost of living crisis’ refers to the fall in ‘real’ disposable incomes (that is, adjusted for inflation and after taxes and benefits) that the UK has experienced since late 2021. Its cause is predominantly high inflation which outstrips wage and benefit increases.? It has been exacerbated by recent tax increases.?

It has a disproportionate effect on poorer households are currently experiencing higher inflation than those that are better off. The Institute for Fiscal Studies estimated – based on the share of budgets spent on different broad product groups – the annual inflation rate for the poorest 10% of households to be 10.9% in April (1). By contrast, the richest 10% of households had the lowest rate of inflation, at 7.9%. This is because energy costs – the major driver of recent inflation – makes up a greater proportion of household budgets for low-income households.?

Notwithstanding disparate effects, the impact of inflation on poorer households is likely to be greater as a richer household might be able to absorb higher energy costs, for example by reducing how much it saves, but that option will not be available for many low-income households.?

The recent announcements from government regarding an energy price cap reflect a huge intervention which makes a significant difference across all households, in particular those with highest energy costs, rather than those with lowest income.? However, initial analysis from the Resolution Foundation shows that, despite this energy bills are still likely to double over this winter and further increases are projected for next winter as well.?

Cumulative effects of crisis – April 2019 to August 2022?

The chart below shows the impact the crisis has had on the profile of advice sought from Citizens Advice Bucks since April 2019.? This reflects the sharp fall in disposable income since Q3 2019, with some subsequent recovery mainly for those with middle or higher incomes, and falls again in Q1 2022.? These figures reflect over 22,000 clients with over 110,000 issues (enquiry areas).?

Every year financial pressures drives the local demand in specific advice areas higher and higher:?

1. Benefits escalate (26% rise in enquiries since April 2019) as clients struggle for income or to manage on limited income with a sharp increase around disability.?
2. Debt escalates (61% rise) as income stalls and existing debt becomes unmanageable or new debt is taken on in the form of credit card debt (lower- and middle-income brackets) and unsecured loans (lower income bracket).? For Bucks the top debt issue is consistently rent arrears (see housing below).?
3. Employment escalates (10% rise) initially with enquiries around furlough but now with queries around pay and entitlement, dismissal and terms and conditions of employment which are income related fields?
4. Housing escalates (80% rise) – many lower income earners struggled to pay rent over COVID and now have insufficient income to cover basic needs (rent, heating and eating)?
5. Relationships and Family (87% rise) – we can assume this is the social fall out of unbearable financial pressure on households.?
6. Utilities (Static (0.2% rise) – Numbers are static, typically enquiries are seasonal – this is a continuing trend. The breakdown of queries has changed with a 15% rise in queries for “energy efficiency measures” and 15% reduction in “Provision” queries - illustrative of the tightening market (see detailed figures below).???

A recent piece of work done by Citizens Advice Bucks?for a local Housing Association created budgets for average household types using a set of average costs.?All household types were running deficit budgets with the exception of those receiving maximum entitlement for severe disability. ??The recently announced energy price ceiling does not change this situation.

Someone is in negative budget when their necessary expenditure exceeds their income.

Buckinghamshire Statistics - January - August 2022?

The following figures show how what was has been a longer-term trajectory in the above areas has played out over past 8 months.??

• Benefits queries?up 28.8%?
• Debt?up 4.8%?
• Employment issues?up 10%?
• Housing?up 12.5% - Particularly rent arrears?
• Relationship and family?up 3.7%?
• Utilities?up 2.7%??

Utilities would normally increase in Quarter 3, however this may be constrained by the lack of opportunity to switch and save.? In 2020, nationally 479,000 households per month switched their electricity supplier and 401,000 households per month switched their gas (2).? Public perception may also limit advice seeking as people see help as limited to grants/vouchers and government intervention. “Only just over half of consumers who have fallen behind have tried to engage with their supplier for support – this is a notable decrease since last quarter (-7% vs Q3’21). Consistently with last quarter, only a small proportion of this (a fifth, 10% overall) is because the supplier reached out first – meaning there may be an opportunity for suppliers to be more proactive” (3).??

Other indicators we can see of increasing financial strain on our clients are:?

• Foodbank use 12.5% up with more food vouchers issued in August than any previous month this year?
• Tax Advice is up 130% with people seeking to preserve their incomes?
• Travel/consumer queries are down 23% and 40.5% respectively possibly reflecting more acute need elsewhere and lower incomes & confirming low disposable incomes.?
• Education increasing 10% with a focus on access, discrimination & child conduct often reflective of the social impact of strain on families?
• Recorded debt (the amount of debt our clients are in when they reach us) is at an all-time high and the table below illustrates how that has been increasing since 2019/20.? It looks set to reach even higher amounts this year when it will be increasingly difficult for people to service.?

The following table shows a pre-crisis average bill, the new average (incorporating the energy price ceiling) and the effects of further government financial support (3) broken down by demographic categories.??

Despite significant government intervention many in Bucks population will be worse off by an average of ￡245 as a result of rising energy prices this year (2022-2023).?? This does not include the effect of other price rises on household budgets.? The lowest income households with limited disposable income will be worse hit.? It is anticipated energy prices will continue to rise beyond this year.?

In 2022 we have reached a position where, nationally, the proportion of people helped by Citizens Advice, who are in a deficit budget is 40%.? This figure is mirrored in Buckinghamshire.? The solutions to clients are constrained by the systemic and economic realities:?

• Benefits advice can be life changing.? We have recently achieved ￡22,000 in back payments for one of our clients.? However, many, even when benefits are maximised, will not have sufficient money on which to live.? Transition to better paid jobs, employment or more hours may be possible for some but this route is not possible for many.? Benefits are set at April 2022 levels which were set in line with the Consumer Price Index in September 2021, which does not reflect current rates of inflation.?
• ?Debt Advice – can again be transformative, but even with a client that is able to engage, debt solutions take time (months) and as clients increasingly struggle to create realistic repayment plans, options such as Debt Relief Orders (which can freeze and, in some cases, write off debts) and Bankruptcy become more essential.?? It is critical that these solutions are supported particularly by housing associations and landlords (as the top debt issue is rent arrears) and a DRO does not take away liability for debt in regards to rent arrears for where the client currently lives. In fact, it helps as, by removing other obligations, the individual can focus on rent arrears payments and potentially grants can be used to clear these resulting in swifter payment.??
• Energy Advice – “switch and save” advice is no longer available here.? Possible mitigation includes negotiation with utility companies over payment arrears, checking bills, accessing energy grants (for some – although restrictive rules for these grants and for grants in general such as rules about frequency of application can fail to reflect current need) and provision of vouchers and practical tips – but these do not provide long term solutions particularly for the most vulnerable who are often on the highest tariffs (prepayment).??
• Vouchers – Fuel vouchers are scaled for “normal” winters and amounts have not increased to reflect inflation and remain short term solutions.? They are also not relevant in all circumstances e.g. domestic heating oil.? Food and supermarket vouchers become increasingly important, particularly as clients can use food vouchers or in some cases supermarket vouchers to offset energy payments.??
• ?Financial awareness and housing – as well as advice around budgeting and effective money management, people need to be aware of how to prioritise their spending (priority and non-priority debts).? For example, in a situation where someone needed to choose between paying their council tax, their rent and their heating. They would need to know that their Council Tax should be a top priority (as this is the only payment that they can be imprisoned for defaulting on), rent should come next to mitigate the risk of homelessness and heating last.? Although clearly in this case we would recommend applying for Council Tax reduction if it was not already in place.? Understanding these nuances is critical for those working in this field as well as for individuals affected.?
• ?Health - Our clients are increasingly presenting with health issues both physical and mental. Before April 2019 (April 2018 – March 2019), 30% of our clients reported a disability long-term health condition with 26% reporting mental health ill-health as a feature. So far this calendar year, 45% of clients seeking help so far this calendar year, reported Disability/long term health conditions and of those, 31% have reported mental health to be a feature of their ill health adding to the complexity of the situation they are attempting to navigate. ?

?Case Study: Sally (Client name changed)?

Sally lives in a housing association property and has been supporting herself on a low fixed income (Universal Credit).? Sally started working a part time job in order to increase her income, due to poor health Sally is only capable of part time work. (Circa 2020).? Sally’s small serviceable debts began to spiral as her outgoings rose. Sally now has rent arrears, electricity arrears and fell behind on council tax payments. (Circa 2021).?

Sally helped by us, was able to get food vouchers and charitable grants so that she can offset the spends, freeing income towards her priority debts.

Due to her health worsening and the situation taking a toll on her mental health, Sally discussed with us applying for Personal Independence Payment. Sally has been assisted in her claim (2022).? Sadly, Sally’s health has worsened to the extent that she has had to cease working and has been instructed by doctors that she will not be fit for work until at the earliest, February 2023.

Sally was helped through application for a discretionary payment in order to resolve her current rent arrears. Sally was helped to rectify a problem with her Universal Credit payment with help from us.

Sally has had her income maximised as far as we can through the use of benefits and so has to budget on the funds she has available.

Her rental charges are a housing association lower rate and all other expenses have been reviewed and are either reasonable in expense or national average.??

Sally is still struggling to afford to maintain her reasonable/modest lifestyle and so still needs support in affording food.??

Sally is a good example of a client who typically has lived within her means but has fallen into debt through ill health, without excessive/unreasonable or anything beyond essential. Yet she is still in debt, even after our intervention.

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The cost of living crisis is already placing many thousands of people across Buckinghamshire in a position where they are unable to pay for the bare essentials.? It is also putting the community and voluntary sector and its workforce under increasing and unremitting strain.? And despite the mitigations being put in place by government, the number of people affected will continue to increase as will the need for targeted support.????

?Whilst true resolution of this challenge can only come through systemic change, it is incumbent on us at a local level to do all we can to make the lives of those affected sustainable and to prevent those who are at risk from falling into poverty. Failure to tackle these issues will result in increasing need by also increasing cost to Buckinghamshire driven by rising acute need manifesting itself through indicators such as homelessness, hunger and physical and mental ill-health.? The picture is tough, but a collaborative approach where every single organisation in Buckinghamshire plays its part regardless of its purpose, will make a difference.?

1. ?Institute for Fiscal Studies, https://ifs.org.uk/publications/16066?
2. https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/895143/QEP_Q1_2020.pdf?
3. https://www.ofgem.gov.uk/publications/consumer-perceptions-energy-market-q4-2021?
4. ￡650 cost of living (COL) payment (Means tested to April 2022 benefit rates), ￡400 one off bill discount, ￡150 disability payment, ￡150-300 for Pensioners on top of winter fuel allowance?