Housing & Community Safety Select Committee (ceased to operate 03/06/2015) Minutes

Thursday, 23rd January, 2014
Jim Cooke Suite, Stockton Central Library, Church Road, Stockton-on-Tees, TS18 1AU
Please note: all Minutes are subject to approval at the next Meeting

Attendance Details

Cllr Julia Cherrett(Chairman), Cllr Derrick Brown(Vice-Chairman), Cllr Michael Clark, Cllr Evaline Cunningham, Cllr Phillip Dennis, Cllr Robert Gibson, Cllr Mohammed Javed, Cllr David Wilburn
Julie Higgins, Julie Nixon, Dave Kitching(DNS), Peter Mennear, Sarah Whaley, Jenna McDonald(LDS)
In Attendance:
Cllr Carol Clark, Cllr Nigel Cooke, Cllr Gillian Corr, Cllr Eileen Johnson, Cllr Alan Lewis, Cllr Jean O'Donnell Greg Brown(Thrive), Nicola Hall, Kath Heathcote(Five Lamps), Diane Patterson(Tees Credit Union)
Apologies for absence:
Cllr Womphrey, Cllr Andrew Sherris
Item Description Decision
AGREED that the minutes were signed by the Chairman as a correct record.
AGREED that the minutes be approved.
AGREED that:

1. the information be noted

2. Information requested be provided as detailed above.
AGREED that the information be noted and suggestion be put forward to Scrutiny Liaison Forum.


The evacuation procedure was noted.
There were no Declarations of Interest
The minutes of the the meeting held on 17th October 2013 were signed by the Chairman as a correct record.
Members queried whether the information requested at the meeting which was held on the 5th December 2013 regarding the identity of the independent person making decisions on sanctions had been received. The Scrutiny Officer explained to the Committee that a letter had been sent to Job Centre Plus and no further information had been received to date however this would hopefully follow in the near future.

Consideration was then given to the draft minutes of the meeting held on 5th December 2013.
Members were asked to consider a verbal update on Universal Credit, under-occupation and Discretionary Housing Payments. In addition the Committee were asked to consider evidence from Thrive, Trading Standards, Tees Credit Union and Five Lamps in relation to the Scrutiny Review of Welfare Reform and Financial Inclusion.

The main issues discussed were as follows:

-Officers highlighted under-occupancy had reduced from 2600 to 2100. The reduction had been seen due to people moving house or becoming exempt. The DWP had recently advised that some residents, who had been in their homes since before January 1996, should not have had the under-occupation charge applied to them. This was a national issue. Currently 136 potential cases had been identified in Stockton. This figure was likely to reduce as the claimants had to have been in receipt of benefit continuously since 1996, save for some exceptions. Those affected would have the under-occupation charge removed and would be eligible for a credit payment. Each case would be looked at individually to establish entitlement and to decide who the credit would be paid to - some residents could prefer the payment to go direct to their landlords, some could prefer to have the money themselves. Members were informed that the credit would be paid for from central government through housing benefit subsidy. The government intended to revoke this regulation and indications were that this would be in March 2014. The under-occupation rule would then have to be re-applied.

- There had been a significant increase in Discretionary Housing Payments(DHP), 250 applications were still to be considered due to the increase. Members heard that although there was a significant increase in applications there had been no additional resources allocated, and £213k out of a DHP Fund of £390k had been spent to date.

- Members discussed the effects under occupancy was having on residents living on their own. Registered Providers had a limited number of 1 bedroom properties available driving residents out of well managed quality homes. Members queried whether an increasing number of private landlords were turning people away who were claiming housing benefit making it doubly difficult for single people to find suitable accommodation. However it was noted that this had not been reported to date in Stockton.

Members received a presentation 'Drowning in Debt Campaign' from a representative from the Thrive organisation.

The main issues discussed were as follows:

- Increasing issues surrounding Job Centre Sanctions and the effects it was having on people getting further into debt.

- A typical case study highlighting the amount of money a client had to pay on a weekly basis to many different types of lenders.

- It was highlighted that due to the many types of credit available such as Doorstep Loans, Log Book Loans and High Cost Credit etc.; it was easy for many people to get into debt which in turn impacted on themselves and their families. Concerns were raised that people were struggling to feed their families and keep themselves warm due to the proportion of money they had to repay to money lenders leaving them nothing at the end of the week.

- The Committee were shown a video which highlighted that many people with financial problems started off with one small loan. Once the loan was due to be paid in full lenders would offer clients further credit until they were swamped with debt, only affording to pay minimum payments with extortionate interest rates. Those who defaulted would in future only be offered higher interest rates and so there was a vicious circle.

- The representative from Thrive informed the Committee that they aimed to negotiate with credit providers in order to seek a better deal for customers and had already spoken to Rent to Own companies and had had some success with influencing changes to terms and conditions.

- Members expressed that local authorities should have a payroll deduction to Credit Unions. It was confirmed by a representative of Tees Credit Union that Stockton Borough Council had already signed up for this.

- Although Stockton Borough Council did not have control over pay day loans and other forms of high cost credit, Members felt that it was a worthwhile exercise to seek to promote alternatives, and to ban pay day lending advertisements on any internal and web based systems.

- The Committee heard that the Office of Fair Trading(OFT) had the authority to revoke lenders licenses if they were not complying with the law
- Questions were raised whether Thrive had training in place for young people in schools to help them manage budgets better in the future. The Committee were informed that Five Lamps offered support and advice to young people as well as adults.

- It was heard that in order for the pay day/doorstep loan culture to change society was required to change. Members heard that Thrive and Five Lamps had mentors working with many people on behavioural change. Doorstep lenders often succeeded because they were known in neighbourhoods and gained people’s trust.

- Members asked if there was a contact number available which they could hand out to residents within their wards facing financial difficulties or experiencing issues with pay day loans. The Committee were informed that directories were available with contact details which would be e-mailed to officers to pass on to Members.

- Members attention was brought to the number of clients who defaulted on loans. Some Pay Day Loan companies were writing off as much as 51% of the money they had lent out which was the reason their interest rates were so high due to the amount of risk involved and the profits available on the remaining 49%. Members of the Committee asked whether Pay Day Loan companies often took customers to court and in response were informed that this depended on the practice of the company.

- Members were informed that some people chose to go bankrupt to get out of debt.

- Members congratulated and thanked Thrive on the piece of work which was carried out in partnership with Durham University.

The Manager of Trading Standards and Licensing attended the Committee meeting to provide evidence in relation to illegal money lending.

The following issues were discussed:

- The differences between Loan Sharks and legal money lenders was that Loan Sharks were not licensed under the Consumer Credit Act 1974.

- The Committee learned that many people had suffered bad experiences with loan sharks however did not report these due to being conscious that if the loan shark was prosecuted they would then lose their last source of income when they needed it the most. Financial Inclusion Officers were there to offer guidance and help to those people who had suffered poor experiences with loan sharks. Members were informed that there was a myth that those people who reported and used loan sharks were as much in the wrong as the loan sharks themselves, The Committee heard from the Manager of Trading Standards and Licensing that this was not true.

- Loan sharks had been stopped in the Stockton area.

- It was estimated that 310,000 households in the UK were using illegal money lenders.

- 131,000% was the highest known interest rate charged by an illegal money lender.

- Members heard that there had been reports of kidnapping and threats from lenders when clients had failed to make repayments. It was highlighted that in serious cases this had led to suicide. The Committee were informed that there was support in place to help those affected by illegal money lenders, and the national Illegal Money Lending Team was hosted by Birmingham City Council.

-Discussion took place around why many people sought money from illegal money lenders as there seemed to be a misconception that the majority of clients were involved in funding alcohol and drugs, however it was confirmed that only 3 out of 10 people borrow money for those reasons. The majority of people were using the loans for every day essential living expenses such as utility bills and food, following a change in their circumstances.

The Committee received evidence from the manager of Tees Credit Union.

- The Committee was informed that in 2006 all three credit unions in the Borough began to merge. There was on-going work looking at how the Credit Unions could develop further in conjunction with partners including Stockton Borough Council, Catalyst and Tri-Star Homes.

- The Credit Union offered cards to residents who met the criteria to assist with budgeting and these pre-paid cards could be used in supermarkets as well as having online current account facilities. The ‘envelope facility’ was introduced which allowed residents to put money aside to pay for certain bills.

- Members were shown a list of collection points of where they could go to a Credit Union and were informed that more collection points were being opened in order to encourage more people to save money. The Committee heard that the Credit Union operated through some paid staff and volunteers. Credit Unions would aim to work with different sectors such as local community shop owners and organisations such as Five Lamps.

- Members suggested that it would be helpful to know where to refer those residents who may have been having financial problems.

The Infinity financial inclusion partnership was mapping out local services and had produced documents outlining the services available.

- As well as saving facilities, the credit union was working with partners including Tristar and Five Lamps to offer loans to certain groups and offering alternative methods of sourcing furniture.

- The Committee discussed the need for Credit Unions to have more of a High-street Presence in order for them to reach more people. It was noted that the credit union undertook cross-promotional activities with a furniture replacement store.

During 2012-13, the credit union was 40% funded via grants, and would be submitting bids for further support. A business marketing plan was being developed.

An officer from Five Lamps addressed the Committee and presented them with information surrounding their initiative 'Back on Track, Welfare Assistance Support in Stockton Borough'.

The main issues discussed were:

- There were 3 integrated areas of the business which were, Economic Development Service, Youth Services and Financial Inclusion/Housing Division.

- Five Lamps was a registered charity and was working to support the Credit Union and offered a personal loans service to those who were in need of financial help. The APR charged by Five Lamps on personal loans was between 49.9% - 89.9% and this reflected the nature of operating in the high cost credit market but it still represented a better option than pay day loans, for example. As a charity, any profits were re-invested and the term of loans was restricted.

- Five Lamps offered one to one sessions with clients experiencing financial struggle by helping them understand how to set budgets, explaining aspects of loans such as the meaning of APR.

- Five Lamps were working with Prisoners from Kirklevington Prison to make them aware of loans, interest rates and how they could best budget their money.

The pilot Back on Track Welfare Assistant Scheme was provided by Five Lamps on behalf of Stockton Council, The Welfare Assistant Scheme aimed to focus on Crisis Support and Settlement Support.

Two other local authorities used Five Lamps to provide their schemes and similar trends were reported across all three. There had been an increase in applications in the July/August period and it was thought that this reflected the school holiday period, and issues such as the lack of school dinners.

Members were informed that the funding for Back on Track would be withdrawn by Government at the end of 2014-15. The Council would be seeking options for the use of remaining funding and this would be reported to the Committee to inform the review.

- Five Lamps were due to publish a report on ‘lessons learnt’ in the Welfare Assistant Scheme in March 2014. Five Lamps needed to make sure that they were meeting the needs of the Welfare Reform.
Consideration was given to the work programme and the following items were noted:

- That the next meeting of this Committee would focus on an update on the trends in advice and guidance, and the Q3 welfare monitoring report, and agree findings from the review.

- That issues raised by both the Arts Leisure and Culture Review of Child Poverty and the Housing and Community Safety Review of Welfare Reform would be considered at the same Cabinet meeting in April.

- In March, Scrutiny Liaison Forum and Executive Scrutiny Committee would consider work programme topics for 2014-15 and the Committee agreed to put forward Welfare Reform as a topic for further consideration as issues such as Universal Credit had not yet been resolved.

There was no Chairs Update.

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