When we joined four other housing associations and the Lloyds Foundation in 2008 to set up a money guidance programme, our aim was to help our tenants to develop money management skills, prevent debt problems and improve financial wellbeing.
Three years later, the project has shown beyond doubt that the case for supporting residents with their own household finances is a powerful one: after money advice was provided, overall rent arrears fell while the savings achieved through this reduction covered the cost of delivering the service in the first place.
For each new resident supported £214 was saved by preventing court action being taken over arrears, and a further £7,500 was saved by preventing evictions. A cost benefit analysis of the service estimated an average return to savings for reduced rent arrears of £305 over 12 months.
The cost benefit is real and positive, but the service also provided huge social and financial gains for each household that took part in the project.
The project provided a tailored service based on individual residents' needs. This included 'light touch' resident support, from posting out standard awareness letters and providing education through to direct telephone support from advisors. In more complex cases, where tenants faced multiple financial and other social issues, one-to-one case work was offered by specialist debt advisers.
One of the main demands for advice and guidance was support with opening a bank account – something which policy makers regularly report is a key need for those suffering social and financial exclusion.
Resident feedback has been extremely positive. "I now have payment arrangements and I know what my priorities are," one resident told us. "I have a lot more knowledge now on how to handle my finances," another said.
The project also broke down the barriers to support: "I suppose its better because I'm used to my landlord. I don't know if I would have been able to ask anyone else for help. I felt safe because I knew them," one tenant confided.
An independent evaluation of the project, carried out by the Financial Inclusion Centre, agreed that "money guidance has to be responsive to the needs of the target group and must be adaptable – it cannot be driven by preconceived ideas of what financially excluded people need".
The project also pioneered a shared services model, with five housing associations coming together to deliver the scheme. This improved business relationships between the participating landlords, and demonstrated social responsibility at a time when political reform across government is changing the nature of how public facing services are provided and funded.
Our results demonstrate that money guidance should be viewed by housing providers as a preventative measure; the referral of a tenant into that support must be made much earlier in the arrears process than is usual under current practice. Early intervention is the key to preventing the escalation of later financial difficulties.
A full evaluation of the project can be found here. Hyde worked with L&Q, Circle 33, AmicusHorizon and Metropolitan Housing Partnership.
Peter Richardson is Hyde Plus Financial Inclusion programme manager at Hyde Housing Association
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