Duty of care

12 Jun 09
Frontline public sector services are what people turn to when they’re hit by unemployment, repossessions and debt crises.
By Alex Klaushofer

27 February 2009

Frontline public sector services are what people turn to when they’re hit by unemployment, repossessions and debt crises. Alex Klaushofer talks to the workers struggling to cope with the ever-rising demand

It’s a rainy Wednesday in Paddington, and several mothers are watching their babies playing with some large wooden toys on a brightly coloured mat. ‘Here they enjoy lots of toys which I can’t get them because space is very tight at home and we can’t afford to move to a larger flat,’ says Patricia, who shares a one-bedroom flat with her husband and ten-month-old twins.

In many ways, Patricia – who is attending a parenting session run by the charity Home-Start Westminster – is a typical victim of recession, 2009-style. She has a partner with a good job and plans to return to work part-time, but life has been getting tougher. With the rising cost of living, on top of high central London rents, the family could probably be categorised as ‘working poor’. Patricia says: ‘Everything we need for the twins is still going up, and we have less money.’

Sapna, whose nine-month-old is playing with the others, is in a similar position. Her husband, who works as an accountant for a small software company, was faced with a stark choice before Christmas: redundancy or less pay. ‘The rent went up, food went up, and he got a pay cut,’ she says.

Scheme manager Christa Shultz says the recession is hitting service users hard. ‘A lot of the reasons we work with people is because they’re overwhelmed anyway,’ she says. ‘This just tightens the screw more.’

Requests for the psychotherapy sessions offered by Home-Start have risen in the past few months. ‘More people are specifically asking for emotional support,’ Shultz says. ‘People who said “no” are now coming back and asking for it.’

While the new poor are struggling to adapt, those already in poverty are being hit even harder. Unpublished research by the Institute for Public Policy Research shows how families in London, Newcastle, Nottingham and Glasgow are being affected. Researchers interviewed 60 low-income families – defined as living on 60% below median income – about their spending and borrowing. Family outings and socialising with other children were some of the main things to go as money got tighter.

‘That was an area I could feel was a very sore point for parents – they felt they couldn’t provide for their children in the way they wanted to,’ says researcher Lucia Durante.

The families are falling back on tried-and-tested ways of survival: borrowing from relatives, starting informal neighbourhood credit schemes and swapping homegrown vegetables.

Hard times for poor people, old and new, is increasing demand on service providers. By October and November last year, two-thirds of councils were already reporting increases in housing and other benefits, according to research by the Audit Commission. In January, a Local Government Association survey of council chiefs in England found that applications for housing benefit had risen or were expected to rise in nine out of ten local authority areas, along with homelessness in eight out of ten council areas.

In Wales, councils are experiencing a ‘massive increase’ in demand in some service areas, according to Welsh Local Government Association chief executive Steve Thomas. ‘There are huge pressures on families and the resilience of families,’ he says. ‘There’s a lot more pressure on social services in terms of carers.’

At National Debtline, which gives free debt advice over the phone, demand has never been higher. ‘It is unprecedentedly busy at the moment,’ says a spokeswoman. ‘We’re up to 1,600 calls a day, which is the highest it’s ever been.’ In December, traditionally a quiet period in the debt world as people shelve their money worries until the New Year, the service had 20,000 calls, the highest on record and double the number the previous year.

The charity – which is funded by a mixture of private sector and government grants – was recently awarded an extra £6m of government funding to recruit 50 new advisers. But the recruitment and training process is so lengthy that it will be early 2010 before the service has raised its capacity levels.

One of the main issues troubling the users of such services is how to keep a roof over their heads. There were 13,161 more home repossessions in the third quarter of 2008 than in the same period in 2007, according to the Financial Services Authority – a 92% rise. In response, Citizens Advice called on lenders to treat borrowers in trouble sympathetically, adding that it was dealing with 325 new cases involving mortgage arrears every working day. Then last week the Council of Mortgage Lenders announced that repossessions rose by 54% last year, to 40,000. It predicts that by the end of this year 75,000 homes will have been repossessed.

On the ground, Citizens Advice bureaux are feeling the pressure. Steve Wiseman, chief executive officer of Norwich & Norfolk CAB, says that enquiries to the bureau have risen by 25% this financial year and 38% concern debt. ‘It’s the pre-existing problems, where people have lots of unmanageable debt,’ he says. ‘In previous recessions, people didn’t carry the degree of debt they have before being made redundant.’

Although the bureau is a reasonable size, with 35 paid staff and 134 volunteers, it is finding it hard to cope. Services have been modified so that advisers can see more people, more quickly. ‘It’s a struggle, because demand is great and a lot of people do need the full advice,’ says Wiseman.

Norwich might turn out to be a barometer of how this recession is playing out as more than a third of the jobs in the city– 36% – are in financial services and the construction industry. This means that, excluding London, it is the city most likely to be affected by the credit crunch, according to accountancy firm UHY Hacker Young.

Wiseman has noticed that this recession is hitting a different demographic than previous downturns. ‘You’re affecting a wider tranche of people than before,’ he says. ‘I think it’s going to have a greater effect on the middle classes.’

Norwich City Council is also feeling the impact. Finance director Barry Marshall reports that take-up of housing and council tax benefits has risen significantly in recent months. October’s figures were up by 29% over the previous year, while November’s and December’s rose by 8% and 10% respectively.

The Department for Work and Pensions has now given the council £124,000 to help it process the extra claims, Marshall says. Before then, ‘we were being a little tested,’ he admits, adding that now he expects to ‘manage quite well with that resource’.

Other research suggests that areas long known for their poverty will also be badly hit. Liverpool is most at risk, according to a study by the Centre for Cities think-tank . Despite its brief renaissance as European Capital of Culture 2008, the city remains the most socially deprived in the UK, with the highest percentage of working age adults on benefits.

As a result, when recession strikes, people have little or nothing to fall back on. And Liverpool City Council is already feeling the strain. Housing benefit and council tax claims rose by 40% towards the end of last year, compared with the same period in 2007, while calls on the council’s benefits maximisation service rose by 10%–15%.

Martin Jungnitz, head of benefits services at Liverpool Direct Limited, the joint venture between the council and BT, says there are also more calls from people checking their entitlement to help with the rent. He, too, sees differences between this recession and previous slumps: ‘The early indications are that we’re getting more demand from working-age customers – people in work or people seeking work,’ he says.

The service is gearing up for greater demand from this new kind of service user, with plans to make the website more accessible. ‘We’re conscious that some people will be new to claiming benefits,’ says Jungnitz. Discussions have begun with Jobcentre Plus about possible partnership working in the event of major job losses on Merseyside. ‘We would do outreach,’ he says.

In London, Westminster City Council has been holding regular crisis preparation meetings since November. ‘We sat down as a council and thought about each department and where we might be able to contribute to alleviating the worst effects of the recession,’ says Marian Harrington, director of adult services.

Recognising that central London would be particularly badly hit, the authority launched its City Recovery Programme, a package of measures including a freeze on council tax for 2009/10 and loans for those struggling with mortgages. Its Community Debt Advice Project also started this month, in which Westminster CAB and community-based workshops advise individuals and small businesses.

Another scheme targets adult education services at those who have been made redundant, aiming to get 500 people back into work through tailored classes and support.

At the same time, there has been a 20% rise in demand for older people’s services over the past year. Harrington doesn’t think that this is necessarily recession-related but she is expecting demand to rise as times get tougher. ‘I think it will increase with the recession,’ she says. ‘People who might have funded things themselves will be coming to us.’

Meanwhile, children’s services director Michael O’Connor is anticipating a rise in school admissions as more of the capital’s middle classes decide they can no longer afford the school fees. ‘I think that might be an issue because in Westminster we’ve got a lot of people in private education,’ he says.

And, of course, crime is another area likely to increase. Community protection director Dean Ingledrew, who runs the council’s contribution to Westminster’s Crime and Disorder Partnership, paints an alarming picture of the future. He predicts substantial increases in burglary, stealing from cars and pickpocketing, particularly as people now routinely carry valuable goods such as laptops, mobiles and iPods around with them.

He also expects alcohol-fuelled disorder to rise, as people favour ‘vertical drinking’ rather than a sit-down meal with a bottle of wine, and pubs and bars lure cash-strapped customers with a pint-for-a-pound offers. ‘I think that will lead to more antisocial behaviour and more violence in the streets,’ he says. ‘I’m going to be watching the licensing industry with some interest to see its impact on the city as the recession unfolds.’

He predicts that the recession will affect relationships in the community and the home, triggering a rise in domestic violence and local tensions. ‘When people get frustrated, they become intolerant and that manifests itself in different ways,’ he says.

Ironically, after a decade in which public sector reform has been top of the agenda, it’s now beginning to look as if the acid test of performance will be how well public service providers respond to the recession. The increase in demand for services, often from new groups of service-users, is providing opportunity aplenty for innovation and good practice. But it also raises the spectre of budget cuts and service failure.

One area already in trouble is the government’s plans to get people back to work. The push for efficiency savings led to the axing of 18,000 job centre staff between 2004 and 2007 and the closure of around 500 jobcentres and benefit offices. This month, the Public and Commercial Services union, which represents Jobcentre Plus staff, warned that the system was creaking under the strain of rising unemployment.

The Department for Work and Pensions concedes that demand has risen exponentially. ‘Jobcentre Plus’s original plans, before the downturn, assumed about 45,000 Jobseeker’s Allowance claims a week, based on previous experience,’ says a spokeswoman. ‘But now 80,000 claims a week is quite usual and we have seen peaks of 100,000. Our contact centres took around 170,000 phone calls a week during January, 48% higher than the same time last year.’

The government is now rapidly backtracking and is giving the DWP an extra £1.3bn to help it cope over the next two years. The department has recruited 2,500 more staff since November, and is currently recruiting 6,000 more.

And on the day the latest unemployment figures hit 1.97 million, employment minister Tony McNulty made the mistake – during an appearance on the BBC Newsnight programme – of trying to reassure an angry audience in Birmingham that the service would help match jobs to their skills. Several people, including a woman recently made redundant from Woolworths, told him in no uncertain terms that Jobcentre Plus had done nothing to help them.

Cabinet secretary Sir Gus O’Donnell recently tried to spin the problem, citing staff’s handling of the dramatic rise in benefit claims as evidence of the public sector’s capability. ‘What other organisation, public or private, could cope so well with so substantial an increase in its workload over a period of just a few months?’ he told the Royal Society of Arts on February 18.

It has also emerged that the government needs to renegotiate contracts for private sector providers under the Flexible New Deal programmes. These are intended to find jobs for people who have been unemployed for years but, with fewer jobs than when the deals were struck last year, they face an uphill task. Meanwhile, the architect of the scheme, former government adviser David Freud, has defected to the Conservatives.

In local government, there is no shortage of ideas, with some councils coming up with recession-busting initiatives. Essex County Council proposes to beat the credit famine locally by launching a ‘Bank of Essex’ to offer loans to small and medium-sized businesses, and there are also plans for a council-backed credit union.

But with one in seven councils already planning job cuts, local authorities might struggle to maintain even existing service levels, according to an LGA survey in January.

Norwich has so far avoided major service cuts in this year’s budget, economising by dropping some non-urgent road repairs and verge-cutting. But Marshall warns that, if the recession continues, more serious cuts could be in the offing. ‘If the economic situation doesn’t pick up, we will have some fairly serious decisions to make,’ he says.

Meanwhile, from his position as a frontline service provider, the aptly named Wiseman from Norfolk CAB saw it all coming. ‘We kind of foresaw the bank crisis, because we could see the banks were reporting more and more bad debts,’ he says. ‘You could see this was all going to end in tears.’

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