Hope in a time of crisis: CAP’s Labour Party Conference fringe event
In a windy, wet Liverpool, we convened a striking panel of experts to discuss how to address the long-term issue of debt-induced poverty. At a time when the outlook feels much like the weather, we can’t sit back and accept the status quo. Yet, in recent weeks, even frenzied activity has felt like inaction in the face of the mounting challenges stacking up for household finances and the economic outlook. So what hope is there?
The human cost of crisis
Chair, Mick McAteer, got straight to the heart of the current state of things. Financial crisis has a significant human cost. With over a third of CAP clients having considered suicide as a way out of debt before seeking help, the importance of making sure people receive the support they need could not be more important.
He challenged us to consider not just the immediate crisis, but to think of the future as well.
Since the 2008 financial crisis, we have made little progress in building the financial resilience of households which is why so many are entering this crisis exposed. This was a theme we also heard from Muna Yassin from Fair Money Advice. She said that since 2001 their debt advisors have seen a boom and bust cycle, and consumption-led growth has left people exposed and without the financial resilience to cope in this crisis.
Debt is not a behavioural issue that can be addressed solely through building people’s financial skills and strengths; people do not have the money they need to survive.
CAP’s Chief Executive, Paula Stringer, gave a personal flavour to this, sharing her own experiences of bankruptcy and the absolute fight people are putting in to keep themselves afloat against the odds. Half of the UK population is either in financial trouble or at risk this winter, and she warned that this crisis will have a long tail. It will take years for households to pay back the debt they’re taking on.
Political decisions matter
In this context, Sir Stephen Timms, Labour MP for East Ham and Chair of the Work and Pensions Committee, recognised the striking and important role churches and faith groups played during the pandemic, being the place that people and local authorities turned to for practical help when crisis struck. But it’s not only crises that drive people to need the help of food banks and debt advice; it’s the gradual erosion of incomes and design of social security systems which should support them through tough times.
Sir Stephen highlighted deep concerns that the new Chancellor had failed to give assurances that benefit payments will be uprated in April in line with inflation, as planned in the ‘mini budget’ debate last Friday.
With out of work benefits at their lowest level in real terms as a proportion of average earnings in the UK since they were introduced in 1911, he urged us that this is a battle we need to fight.
Economics correspondent, Richard Partington, contextualised this against the impact of the pandemic, where the richest 40% of households working from home made significant savings which are now buffering them against rising bills. Pre-existing inequalities are being exacerbated and this is another shock hitting the poorest hard. His assessment was that the cost of living crisis will be the issue that frames political debate for the next four to five years, and the parties haven’t fully grasped that yet.
Rising energy costs are also stretching the finances of charities that people need to support them through the cost of living crisis.
Mick added to this that the impact of Friday’s fiscal statement will also result in a big squeeze on public spending, also pushing more demand for the help that churches and faith groups are increasingly stepping in to provide.
The role of dignity and community
For Revd Hayley Young, faith groups being in the community allow for relationships to be at the core of what they do. It takes time to build trust and relationships, which is why churches are so well placed to step in. But with numbers in need of this help, she highlighted how this is having an impact on the wellbeing and mental health of church leaders, and that it is getting harder to give the time each person needs.
Her rallying call was for the challenge to be how we restore dignity for people, stressing that when individuals are restored, communities are restored.
From Social Value UK, which advocates for organisations to make decisions that account for their social impacts, there’s more businesses and the Government can do to put dignity and lived experience at the heart of their approach. Coproduction (not simply consulting people on what they think but involving them at every stage) as well as being trauma-informed are both part of this.
Financial poverty is a traumatic situation that has lasting impacts.
Isabelle Parasram shared how trauma-informed* responses would make people feel safe, and demonstrate action to address the problems to allow people to be able to trust those with power. She highlighted how many people cannot afford to pay bills like Council Tax. On the whole, local authorities collections teams do not ask people why they haven’t been able to pay but follow collection pipelines that do not provide people with the support that’s actually needed.
How do we reset?
The questions from the audience turned to the moral and economic case for a wealth tax. For Richard, the Government’s view that ‘a rising tide lifts all boats’ is out of touch with where the population is on this, and it’s a conversation to be having.
There was also interest in what it would look like to reset debt so that households do not carry this burden into the future when this crisis ends, and how funders need to do things differently to allow for advice services, including legal advice to be integrated into the places people need them.
The panel’s view was that there is a case for writing off some debts. Muna highlighted that while this happens on a case-by-case basis, it takes significant resources from stretched services to advocate for this. There’s a stigma associated with insolvency, and Debt Relief Orders do offer a fresh start but penalise people via credit scores. Often there can be better rewards and incentives for resolving debt problems.
Paula’s view on this was that wiping debt is only one part of the response needed; we also have to tackle the reasons people are in problem debt.
People don’t have the income they need to stop cycling back through debt advice again and again.
While we’ve seen an increase in consumer rights, rights as citizens have weakened. Mick highlighted the stark difference in many of the decisions and policies taken by the Department of Work and Pensions, and the standards to which regulators hold financial services and other creditors. People have few enforceable rights, without the resources to pursue them. Hayley reminded us that our laws and services would look very different if vulnerable people were at the centre.
The last word from Richard urged Labour to seize the opportunity to listen to evidence-based reporting of lived experience where things are not working, and campaign policies that are informed and connect with the realities of voters up and down the country.
The hope this winter
There’s no doubt the outlook for this winter is bleak, but there is hope in the numbers of people committed to giving their energy to campaigning and taking action in their communities and in organisations caring for the most vulnerable.
There is hope where people are offered dignity and their experiences are listened to and acted upon.
There is hope that the hardship of this crisis is not passing unspoken, and this is a conversation that will be continuing at the other party conferences in the next few weeks and back in parliament after that.
Join us next week at the Conservative Party conference
If you missed this week’s event, there’s still time to join us next week in Birmingham at the Conservative Party conference. Our event on Tuesday 4 October with Bright Blue, Winter is coming: how to tackle poverty in tough times, is happening at 12:15pm in Suite 116 at the Jury’s Inn.
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*Trauma-informed means to recognise the prevalence of traumatic experiences and the lasting impact this can have on the lives of individuals and how they engage with services. To be trauma-informed is to provide an environment where a person who has experienced trauma feels safe and can develop trust.
