Y Pwyllgor Cydraddoldeb a Chyfiawnder Cymdeithasol

Equality and Social Justice Committee


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Altaf Hussain MS
Jane Dodds MS
Jenny Rathbone MS Cadeirydd y Pwyllgor
Committee Chair
Ken Skates MS
Sarah Murphy MS
Sioned Williams MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Cerys Furlong Prif Weithredwr Chwarae Teg
Chief Executive, Chwarae Teg
Claire Savage Swyddog Polisi, Undebau Credyd Cymru
Policy Officer, Credit Unions of Wales
Daniel Arrowsmith Rheolwr Cydymffurfiaeth Reoleiddiol a Pholisi, Cymdeithas Undebau Credyd Prydain
Policy and Regulatory Compliance Manager, Association of British Credit Unions
Dr Steffan Evans Swyddog Polisi ac Ymchwil, Sefydliad Bevan
Policy and Research Officer, Bevan Foundation
Karen Davies Prif Weithredwr Purple Shoots
Chief Executive, Purple Shoots
Lee Tiratira Arweinydd Tîm Ieuenctid a Gweithiwr Prosiect, Tim Cymorth Lleiafrifoedd Ethnig a Ieuenctid Cymru
Youth Team Lead and Project Worker, Ethnic Minorities and Youth Support Team
Lisa Hayward Swyddog Polisi Diwygio Lles, Cymdeithas Llywodraeth Leol Cymru
Welfare Reform Policy Officer, Welsh Local Government Association
Rob Simkins Rheolwr Ymgyrchoedd, Shelter Cymru
Campaigns Manager, Shelter Cymru
Sara Burch Rheolwr Undeb Credyd Gateway
Manager, Gateway Credit Union

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Aled Evans Cynghorydd Cyfreithiol
Legal Adviser
Claire Fiddes Ail Glerc
Second Clerk
Gareth Thomas Ymchwilydd
Rhys Morgan Clerc
Sam Mason Cynghorydd Cyfreithiol
Legal Adviser
Yan Thomas Dirprwy Glerc
Deputy Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Mae hon yn fersiwn ddrafft o’r cofnod. 

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. This is a draft version of the record. 

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 13:28.

The committee met in the Senedd and by video-conference.

The meeting began at 13:28.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Good afternoon. I'd like to welcome you all, Members and members of the public, to the meeting of the Equality and Social Justice Committee. In accordance with Standing Order 34.19, I've determined that the public are excluded from this meeting in order to protect public health. In accordance with Standing Order 34.21, notice of this decision was included on the agenda for this meeting. The public items of this meeting are being broadcast live on Senedd.tv. The meeting is bilingual, and simultaneous translation from Welsh to English is available. I’ve not received any apologies from Members today, so I welcome you all to the meeting.

I need to declare an interest in relation to the third scrutiny panel we're holding today, in that I'm a member of the Cardiff and Vale Credit Union. Are there any other Members who need to make a declaration?

Yes, I need to declare that I'm a member of the Bridgend Lifesavers Credit Union.

Thank you, Sarah. Any other declarations of interest? If not, I assume no. If, by any chance, I drop out of this meeting for technical reasons, I propose, in accordance with Standing Order 17.22, that Sarah Murphy will temporarily Chair the meeting while I try to rejoin. Hopefully that won't happen, as I'm in the Senedd today.

6. Papurau i'w nodi
6. Papers to note

Before we move on to our first witness panel, I'd just like to ask Members to note the five papers that are on our agenda today as item 6—6.1, 6.2, 6.3 and I think it was 6.4—plus the late paper that was tabled from Hannah Blythyn in relation to the legislative consent memorandum on the armed forces. Are Members content to note those papers?

2. Dyled a'r pandemig—gwasanaethau cyhoeddus
2. Debt and the pandemic—public services

I'd very much, now, like to welcome Rob Simkins, who's from Shelter Cymru—their campaign manager—to our inquiry into debt and the pandemic, and we're hoping to be joined very shortly by Lisa Hayward from the Welsh Local Government Association. So, first of all, welcome, Rob Simkins. I just wondered if you could just outline, dealing with debt during a pandemic, what sort of impact that's had on the way in which Shelter has supported those who use your services.

Yes, certainly. Thanks for having me this afternoon. So, in terms of the way it has impacted on us, we have a dedicated team of debt and money advisers, in addition to our specialist housing advisers as well. They have been dealing with inquiries and referrals from our services and also from other stakeholders, including local authorities, right the way through the pandemic. The demand has been mixed; it's certainly at points been busy, to say the least, for them, and at others it's dropped off. I'm happy to go into more depth and detail on why that is and any reasons behind it, if that would be helpful. Our advice services have been, as you might expect, busy over the period and continue to be so. Luckily, we have this team of in-house specialists with us.

What evidence do you have about which groups have been disproportionately affected by debt during the pandemic?

It probably doesn't come as any surprise to Members here, or the wider public, that we've noticed pockets of people, certain demographics, who have been more disproportionately affected by debt than others throughout the pandemic. So, our own paper, 'Life in Lockdown in Wales', which I'd be happy to share with the committee, shows that people on lower incomes and people with children were more disproportionately affected, and then, backing up our caseworkers' experience, we've seen the Bevan Foundation's 'Debt in the pandemic' report, which also shows that other groups, such as renters, people with disabilities, 25 to 49 year-olds who disproportionately rent—there are higher levels of renters among that age group as part of the generation rent age group—lone parents and ethnic minority groups as well have been disproportionately affected. I'm happy to talk about the sort of support structures that have been put in place and how effective they've been or not, if that's helpful at all.

Okay. That's fine. Before we move on to that, I just wondered if you could tell me what impact—. One of the big causes of people getting into debt is that they've got an addiction of some sort or another, whether it's to gambling, alcohol or drugs, which becomes the overriding driver in their lives until they get support. I just wondered if you can say anything about how much addiction is a major cause of debt, and whether you think it's got worse as a result of the pandemic. There's a certain amount of evidence, for example, that online gambling has increased as a result of the lockdown.

From our advisers, it definitely does factor in the casework that they see, but, actually, predominantly, the number of people that we support with money and debt issues are largely due to rent arrears and council tax. Those tend to be the two main sources of casework that are brought to us, really. Not quite so much everything else, but certainly addiction does feature through that. But, yes, council tax and arrears are normally the two main ones that we see.

Okay. Very good. Moving on, I know that Sioned Williams wants to ask you some questions.

Helo. Prynhawn da. Ie, jest eisiau, efallai, mynd ychydig yn ddyfnach a gofyn sut mae Shelter yn benodol wedi helpu pobl gyda dyled yn ystod y pandemig. Sut mae pobl wedi dod i wybod am y gwasanaethau ŷch chi'n eu cynnig, neu sut ŷch chi'n medru eu cyfeirio nhw at gymorth arbenigol? A faint o ymgysylltu sydd wedi cael ei wneud yn hynny o beth?

Good afternoon. I just wanted to look at this in a little more depth and to ask how Shelter specifically has been helping people with debt during the pandemic. How have people been made aware of the services that you provide, or how can you signpost people to more specialist help where necessary? And what level of engagement has there been in that regard?

Certainly. The way in which our debt advice team works is that we've got some advisers who are embedded within local authorities, and others who operate in a slightly different way, in a more self-referral and open-referral way. So, the way in which our casework systems work is that if, say, for example, a housing law caseworker supported somebody who is experiencing money and debt issues, we've got that expertise in-house and we can refer. In terms of the impact of the pandemic on our debt advice team in particular, the colleagues that we have that are embedded within local authorities have actually found that workload has increased for them, because those links and networks are there within the local authorities, though it's probably worth saying that those often rely on individuals and don't yet seem to be baked into a working culture, which is something that we'd probably like to see developed. Colleagues that are working in a more self-referral, open-referral way have had to be a bit more creative, let's say, in reaching out to people who might be experiencing debt and money issues and have been reliant on their own networks in their areas, so, for example, referrals from other third sector organisations or being able to just build up networks and links within communities. So, the different ways it works have led to different ways in which people have come through to us. But in terms of advertising our support more widely and generally, we've worked quite closely with a range of partners, including the Welsh Government, to advertise our services widely and to different demographics, and we'd be happy to provide more evidence on that, if helpful, at a later date.


Diolch. Felly rŷch chi'n teimlo bod hynny wedi bod yn effeithiol. Ŷch chi'n teimlo bod y ffordd mae pobl wedi cael gwybod am y gwasanaethau wedi gweithio neu ydy'r pandemig wedi dangos ichi fod angen gweithio mewn ffordd wahanol?

Thank you. So, you feel that that's worked effectively. Do you think that the way people have been made aware of these services has worked or has the pandemic demonstrated to you that you need to work in a different way, perhaps?

I think it's definitely given us some learning points, to say the least. I think, certainly, the examples I gave earlier around colleagues that are embedded in local services seeing less disruption to their uptake has been an important point for us to note. And I think, like I said, embedding those referrals and those ways of working within local authorities and across local authorities would be something that we'd like to see, because, like I said, our open-referral units didn't see that at all. Actually, there was a tapering off sometimes with demand.

I think in terms of the way that people access our services, actually, our colleagues in the debt advice team were really positive around the way in which people can engage remotely, and found that that's removed so many barriers for people in being able to actually access these specialist advice and support services. So, the examples we'd get were colleagues that were embedded in local authorities would normally go to a third-party location and people would be expected to come into that location and meet them beforehand, and if they didn't turn up for whatever reason, if they weren't able to make it, then that would have an impact on their productivity, that period of time would be lost. Obviously, there are plenty of reasons as to why people couldn't get in, for transport reasons, especially in more rural parts of Wales, for example. So, being able to just connect with people virtually in the comfort of their own home, where they can talk about the issues that they're facing and the support they need with a cup of tea, has actually relaxed a lot of people that have come through our advice services and removed the barriers to accessing them.

So, I think we'd certainly recommend more of that in the future, and that does seem to be a preferred way of working among our colleagues and if, for whatever reason, people aren't able to access that appointment at that particular time, it means that they can get on with other stuff, they're not out of the office, they're able to just crack on with more things and it's not time wasted. So, certainly, something that's positive—a bit of an accidental positive, I guess, really.

Grêt, diolch yn fawr, mae hynny'n rili ddiddorol. Un cwestiwn bach olaf: ŷch chi fel sefydliad yn teimlo bod digon o ffocws ar atal dyled a beth yw'ch barn chi ynglŷn â'r angen am fwy o addysg ariannol? Beth sy'n cael ei wneud i nodi pwy sydd mewn perygl o or-ddyled cyn eu bod nhw'n cyrraedd y sefyllfa yna o argyfwng? Ac ŷch chi'n teimlo, er enghraifft, efallai y byddai rhoi dyletswydd statudol ar sefydliadau ac efallai ar gyrff cyhoeddus, fel roeddech chi'n sôn am yr awdurdodau lleol fanna—a fyddai hynny'n gallu gwella'r sefyllfa, dyletswydd statudol ar atal dyled?

Thank you very much, that's very interesting. Just a final question: as an organisation, do you think there has been sufficient focus on debt prevention and what's your view on the need for more financial education? What's being done to identify who is at risk of overindebtedness before they reach that crisis situation? And do you feel, for example, that perhaps placing a statutory duty on organisations and public bodies, and you mentioned local authorities—could that improve the situation, a statutory duty on preventing overindebtedness?

I think just talking more widely about our services in the way that the people come to us, prevention is definitely better than cure, just as a general rule, anyway, and we say that with our housing law casework and we'd say that with debt as well. We'd much rather be reaching out to people and catching them before they're coming to us at crisis point, rather than picking up the pieces afterwards. I think, certainly, having some more consistency across local authorities in the way in which support is delivered would be something that we would support and something that we would be happy to engage with and help do that process. I appreciate it's for local authorities to determine that within their own areas, but even sometimes within local authorities the way in which support is administered can differ. So, I think, yes, about a statutory duty, we're happy to have that conversation, certainly. We'd be really interested in being in any of those sorts of conversations. But I think the main thing for us, yes, prevention is absolutely better than cure, and that's across all of the work that we do, and some sort of consistency across local authorities would actually make a huge difference as well. 


Very good. I think Ken Skates wanted to come in now. 

Thanks, Chair. Good afternoon, Rob, and thanks for your evidence—written evidence and for appearing today. I'm hoping to just get a bit more information and intelligence on the impact that the pandemic has had on housing debt. Obviously, there are some people who have probably been able to, through the course of lockdown last year and part of this year, reduce household debt. Equally, there are probably many families, many people, who have seen their household housing debt increase quite considerably. What sort of evidence, what sort of information and data do you have that demonstrates how and who have increased the most in terms of the housing debt that they have?

Our 'Life in Lockdown in Wales' report that I mentioned earlier gives a similar picture—. I'm sure colleagues are aware of that report, and plenty of others, especially those by the Bevan Foundation, but the pictures that we paint are that people who are on lower incomes, people in receipt of universal credit and other benefits are the ones who have been most adversely impacted. And people within liberation demographics and people with children and protected characteristics, again. So, probably not very surprising at all, really. So, they're the people who have been most affected by it. 

Actually, in terms of household debt, we've seen an increase in council tax arrears and, actually some of the ways in which those have been attempted to be recovered have been problematic as well. So, yes, I think the picture is pretty stark and those on lower incomes, those with protected characteristics are disproportionately impacted at the sharp end of it. And we've seen, in some instances—I'll get the word out in the end—people on higher incomes have actually been able to save. And so, what we've seen are societal inequalities actually widen in the pandemic, which is obviously quite concerning and troubling for all of us, and I'm sure Members share that concern as well. 

Yes, absolutely. And in terms of those on the lowest incomes, is there evidence to suggest that the proportion of debt that they have has increased in terms of higher levels of interest borrowing? So, the higher rates of credit card use and pay-day loans, and so forth. Has there been an increase in that?

We've seen a worrying amount of that and also, actually, and probably related to this point, is that the gap between people applying for universal credit and receiving their first payment and then other forms of support they can access has actually been a real problem for us, and our caseworkers are reporting back that it's driving people into the hands of probably illegitimate lenders as well. So, I think, yes, people who are on lower incomes are stuck between a rock and a hard place, really, and are trying to get hold of that support and are often being pushed through these cracks and falling through gaps and being pushed into, like you say, pay-day loans and higher rates of interest because at points that's all they've got to turn to. And obviously that then further exacerbates the problem and entrenches the issues that these people face. 

Do you think that there's a call for further exploring holiday loans—or loan holidays, I should say, not holiday loans—loan holidays, for the purpose of just easing the repayment of debt for people?

Our issue with loans is that, obviously, that money is going to have to be paid back at some point. And what we're seeing, especially for the people on the lowest income, coming to universal credit, furlough having ended, energy prices rising, and we're due a tax increase in the new year as well is, actually, loans can be helpful to ease intermittent cash-flow problems, but actually they continue to exacerbate the problem, which is why we were really pleased to see the tenancy saver loan scrapped and turned into a tenancy hardship grant, because that immediately goes about reducing the debt issues that people face. 

So, yes, while they might be temporarily helpful, actually, that money still has to be paid back. And what needs to happen is people who are experiencing debt and who have been pushed into debt have to be shown some flexibility, and we have to take account of the extraordinary circumstances that we're in and not be aggressive in chasing up the debt and giving people that flexibility and working with them to ensure that we're not further exacerbating the issues they face and we're not pushing them further into debt and desperation. So, yes, all help is appreciated, but actually, things like the grants that were put in place are really kind of what we would prefer to see.


Thank you, Chair, and thank you, Rob, for the evidence you've given beforehand and today. I'm going to be looking a little bit more at how the council tax debt has been managed during the pandemic. You've already mentioned that council tax arrears seems to be the main issue that people are coming to you with. We know that there is an inconsistency across Wales in terms of the local authorities and which ones are and aren't using bailiffs, and my colleague Jane's going to come in after me now and drill down a little bit more into that. But I just wanted to ask you some questions about what you mentioned in your report about the illegal evictions; you've warned that this is really shooting up in numbers, and you also mention about the police assisting with these illegal evictions.

I'm just wondering if you could give us an idea of what that experience is like for somebody when this happens to them. Can you just give us a little bit of an example of that?

Yes. So, in terms of illegal evictions and harassment, obviously, this is incredibly disruptive and traumatic for a lot of people that have to experience this. To lose your home and to be pushed into homelessness, potentially, is beyond difficult at the best of times, let alone during a global pandemic as well. But to do it in a way where you are evicted unlawfully, harassed to the point of not feeling safe in your own home, it's unacceptable, isn't it, really?

We've seen some instances of police forces helping to assist unlawful evictions and obviously, we're fairly certain that malice is not the reason behind that, and we've reached out to police and crime commissioners and chief constables across all of the areas in Wales to offer some support and training for officers, to recognise when this situation is in hand and so they're not helping to perpetuate some of the people that we're seeing at the moment, with a significant increase of people homeless and living in temporary accommodation.

But yes, to put a different spin on that as well: our advisers are having to deal with this and are getting people call them up on weekends, call them up outside of office hours and are having to assist people in extraordinary circumstances and dealing with some pretty awful behaviour and practice, as detailed in our evidence. So, the knock-on effect isn't just on—though it rests primarily with the people who are pushed into homelessness, who will lose their home through malpractice, it extends wider than that. And then also, the support networks that these people then have to fall into and the safety nets they have to fall into, so the ripples go quite widely and it's not just this poor group of people who are pushed into homelessness; actually, the whole system and the whole society and community takes the strain of that, so it's really, really serious, and an issue that we've faced quite significant numbers of throughout the pandemic, especially when there was obviously the moratorium on evictions.

So, you mentioned there, you don't think that it's maliciousness behind it, so what do you think is behind it, then? Can you explain a little bit more: what is an illegal eviction? What counts as an illegal eviction, and in what capacity are the police therefore there?

To clarify, I don't think the maliciousness is on behalf of the police who assist in this occasionally. There are certainly instances of malicious behaviour from landlords who are illegally evicting, and it obviously goes without saying that this is a minority of landlords that carry out this malpractice.

But in terms of an illegal eviction and what it looks like, we saw quite a lot of attempts to serve section 21 or no-fault evictions throughout the pandemic, especially when there was a moratorium on evictions, and whether this is due to ignorance on a landlord or estate agent's behalf, or whether it is due to someone trying to game the system and hope that the tenants don't know their rights or don't reach out for support; it differs on a case-by-case basis. But we've seen plenty of that and our caseworkers have been working really hard, and we saw a significant number of the section 21 evictions that we saw were obviously invalid, and even when the moratorium on evictions was lifted and that six-month notice period was maintained, which we support, we've seen instances of people coming to us and our services with two months' worth of notice or less than the six months' worth of notice, we've seen people actively hounded out of their homes by landlords who, for whatever reason, want to have that property back, whether that is to re-let it or to move in because they need somewhere to live themselves. We've had people come to our advice services and say their landlord has basically moved in with them—it's all manner of different things, it's quite wide ranging, but the one thing that unites all of the instances is that they're extremely difficult to negotiate and they often place a huge amount of unnecessary strain and drama on people living in rented accommodation at a time where there's plenty of that flying around anyway. If you haven't got a safe home, you can't lead a healthy, happy and productive life, and ultimately illegal evictions prohibit that.


Thanks, Rob. Just this last question, if that's okay, Chair. I was just going to ask: what does happen? They come to you, like you said, and your staff and your team do the best that they can, but what does happen? Do they go back into the system? Do they get put back on lists? Do they go back to the local authority?

It differs on a case-by-case basis, as I'm sure you expect. But everything from people being pushed into rough-sleeping, which is the very, very worst of the outcomes, but does still happen, and we've seen numbers of rough sleepers increase above 100 in Wales recently, which is extremely worrying, and should be for all of us. But yes, they come into our system. If we're able to support them and stop the eviction, that can happen sometimes, but even then, if you've been harassed by a landlord, you're not going to want to stay in that home long term, so it presents further issues down the line. But yes, significant numbers of people end up in temporary accommodation which, as we know, is a massive strain on communities and society, and actually, for the people who are living in it, can often be entirely unsuitable. We've got instances of key workers living in shared accommodation where there are a couple of microwaves between tens of people. Yes, as a rule of thumb that's probably better than having to rough-sleep or sofa surf, but how on earth can anyone be expected to live a healthy, happy and productive life when they're living in a hostel with some people with really quite complex needs, who need that support in place, and are living in a stressful situation? So, yes, the impact does vary widely. It can be overturned and stopped right the way through to people being pushed out and literally having to live on the streets or sleep in their cars. So, none of it's good, essentially.

Okay. Before I bring in, hopefully, Lisa Hayward, I just wanted to ask Rob what correspondence you had with either Rent Smart Wales, because clearly these landlords are in breach of their licence, and indeed with the police, who are seen to be blithely assisting an illegal eviction. I just wondered if you'd had any correspondence with either of those organisations.

Yes, we have really, really good connections with Rent Smart Wales, we meet with them regularly and have consistently raised this as an issue. We work hard with them to mitigate this. In terms of the police, we wrote to all of the police and crime commissioners and chief constables of every force, because this wasn't an isolated incident—there are instances of this happening right the way across all the police force areas, and we've had some good initial engagement there from both chief constables and police and crime commissioners. We've got meetings booked in and good correspondence going on there. I guess the devil's in the detail—we'll see how that pans out, really. But, yes, the initial engagement has been positive, and we'd be happy to report back to Members if they were interested individually or to the committee on those further down the line.

Yes, I wondered if you could send us some information on specific incidents and the response you've had, because I'm sure outside this meeting we'll be wanting to follow this up, because obviously it's undermining the law that we've already established for Wales. Okay, thank you.

Lisa Hayward, are you able to join the meeting? If so, I know that Jane Dodds is keen to ask you some questions.

I am here, but unfortunately it's via a mobile link on a telephone, so it's very patchy and there's no picture, but I am here for questions.

Okay, thank you very much for joining us. Jane, are you able to pose some questions to Lisa?

Oes gyda chi—. Ydych chi'n gallu clywed y Gymraeg yn Saesneg, efallai? Na.

Can you hear the interpretation?

English, please, sorry.

English. Okay, no problem. Lisa, thank you very much for joining us. We've heard a lot from Rob in relation to the issues around debt, and particularly council tax debt. I guess I'm just wondering—a very direct question here. It seems to me that what we're talking about is that people are incredibly poor, and they're getting much, much poorer. Straight to the point: what would you say to our committee in order to help people who are in debt right now?  


Yes, you are absolutely right, and we've got some great evidence from the Money and Pensions Service about spiralling levels of debt. I think we are on the precipice of what is going to make it much worse with the removal of the universal credit uplift, despite intense lobbying. So, that situation is only going to deteriorate, unfortunately. When we look at the council tax side, because that's where my main focus has come on this, it's a difficult one to keep saying that all we want to do is engage with customers; all the local authorities want to do is engage. We can actually use all the resources, then, for signposting to actually do a little bit more holistic support with customers who find themselves in those situations. Unfortunately, we're all too well aware of the situation of having a bill that you can't face and avoiding the situation, and what we really desperately want to do is to encourage engagement and actually identify the support, and make sure that people are actually accessing the support as well, because you need to do more than just signpost. You need to ensure that they are able to take it up and access the support. 

Thank you. Lisa—and I'd like to ask Rob this very, very brief question here—it's back to the solution. What do you think about the idea of a debt bonfire, or a bonfire of debt? 

It's a difficult one again, isn't it, on that one? Because we need to approach debt and actually break it down into what has genuinely been incurred by those who can't pay. And what we've had, particularly in the past on council tax, because it's not a popular tax, is the separation between the can't pay and the won't pay. We can't assume that everybody who is in debt is in a dreadful financial situation. Some will quite blithely ignore any request that is made to them with regard to debt. I've been trying to read up a little bit on this recently, about actually having a bit of a 'wipe the slate clean' with regards to debt, and it's a very tricky one to get a handle on, really, thinking of the public finance perspective as well. So, unfortunately, I haven't got an answer, but I'm really intrigued to know what the other panelists think of that question.  

Thanks, Lisa. May I ask Rob? Thank you. Diolch yn fawr iawn. 

As we mentioned earlier, anything in terms of grant-based support rather than loan-based support would definitely be something that we'd be interested in. We'd be happy to have that conversation, but, certainly, I think the conversation around moving away from a discretionary, having to prove your eligibility type of access and support and debt write-off to something that's more person centred and entitlement based would be something that we would support in that space. I think we'd be happy to have those conversations as well. 

Okay. Thank you. Altaf, do you want to come in on your questions about the DAF? 

Thank you very much. Thanks, both, nice to hear from you. A lot of things there. Debt is a problem. Now, since we are coming to the end of this DAF maybe in March 2022, do you think it should be available to these people who have taken this for a longer period, and should the Government make it permanent for those people who have it?

That's the discretionary assistance fund, is it?

The DAF has been important for us and for our debt advice team to help mitigate some of the effects of debt and navigate people through. Actually, one of the main reasons the DAF has been useful for us is around helping that gap between applying for universal credit and receiving the first payment. I think the changes made to allow people to apply for it more often we definitely welcome, and we support those, though we do know that according to the Bevan Foundation's report, £100,000-worth of DAF applications have been rejected due to difficulty in proving eligibility. So, I think, yes, let's keep the support. However, I think, again, the conversation needs to be had around moving away from this discretionary, eligibility-focused approach and moving towards a more rights-based, person-centred approach. The reason we say that isn't because we just want to make things awkward for local authorities or other support networks. It's because, actually, people having to prove their eligibility can be really, really traumatising. Nobody wants to apply for this support in the first place, really, unless they absolutely have to. So, having people turn up to a face that they perhaps don't know, or more often than not don't know, and essentially present what some people might construe as a sob story to try and prove their eligibility for support, is really, really traumatising and actually a huge barrier. People don't want to do that, quite rightly. It's dehumanising. So, I think, yes, let's keep the support but let's have a conversation around how we can remove the barriers to accessing that support and people engaging with it and make it a less dehumanising and more person-centred process for everyone. That will mean more pounds getting into the pockets of the people who need it the most.


How about those who are experiencing a recurrence of these debts? Do you think it should be available to them as well?

I think, to an extent, some of that is on a case-by-case basis. People who are in a recurrence of debt, it often depends on the situation that they're in, but clearly they need support, and that needs to be a mixture of financial literacy and advocacy to help them manage their budget. And just on that, obviously, all of the hard work that our support team have done to manage people's budgets is now about to be scrapped in the face of the universal credit cut, and that is going to have to involve loads of rework doing that now on a more difficult thing. But I think, yes, you can't just solve issues by chucking money at it. You need to give people the advocacy and the ability to do it independently, and manage their finances as well, and that's part of the work that our team do. They do a lot of work with people to try and improve their financial literacy and understand the context around the situation that they're in, how they've managed to get there, and how they can prevent it from happening again in the future, in a similar manner to all of our homelessness casework as well.

Before you go on, Altaf, I wonder if I could just come in and just sort of take us back a step before you go to the future. Lisa, I just wanted to ask you about the comments in your written evidence that

'Whilst no LA was keen to imprison debtors it did provide a valuable tool by "forcing" the debtor to deal with their financial affairs.'

I wonder if you could just elaborate on what you mean by that. Are you saying you want the right to be able to get the courts to send people to prison for their indebtedness, or, if not, what were you trying to say there? We seem to have lost Lisa.

Part of the process was the—

Have you got me now? Sorry. As part of the process of committal that used to happen, once you had obtained the liability order and you wanted to then proceed, you had what was called the means enquiry, which then kind of forced the debtor to engage, because then they had to actually fill in a proper means enquiry form. That was key in actually getting a true picture of the situation of that individual, and that was when we could really work out those who genuinely couldn't pay council tax and identify what support was available to them, checking whether or not there were any other benefits, et cetera, that they were entitled to. But the most important part was it kind of forced that council tax payer to engage with the local authority. That's the part that is key, and that we would like—. To be able to proceed with that, you've got to get a liability order. That's putting another cost on the debtor, and for those who genuinely can't afford it, it seems a little bit crazy that you're putting another charge on them to try and find out a bit of information. There should actually be a requirement that they participate in a means enquiry. But that was part of the actual committal process, so we can't do that without having a liability order, and a liability order is a charge on the debtor. The actual loss of committal—nobody wants to send anybody to prison for non-payment. What we really want to do is to ensure that those who can pay do, and that those who can't are getting all the financial support that they should be getting. We certainly don't want committal back on that approach again.

Are you suggesting there is some additional legislative tool that you need, in the absence of wanting to send anybody to prison?


There are options that could be explored, and it's part of some work that will be ongoing at the moment, and actually, this is the reason why it's all a little bit confusing for me, because today, I'm actually starting work within Welsh Government, working in the local taxation team. So, yes, there are areas that we can explore with the practitioners out there across the local authorities, who've got vast experience in how best to approach this. Because we keep forgetting that council tax is actually a vital source of local authority income and we have to keep that at the forefront of our minds as well, whilst ensuring that everybody gets the support that they are entitled to. And we are very fortunate in Wales in having a council tax reduction scheme that gives somebody 100 per cent entitlement if that's what they're entitled to. There's no 'working age and you have to pay your fixed percentage'; if you should receive full entitlement, you will receive full entitlement. And that is an absolute blessing to have that scheme. What we want to make sure of is that we can do all the right enquiries with all our council tax payers to make sure that they are getting the support that they need and we can point them in the right direction to get them sorted.

Can I bring Sioned Williams back in? Sioned, you wanted to ask a question.

Thanks, Jenny. Just to follow up quickly on something that we explored just before you joined. I'd be very interested to get your view, really, following on from what you told us in answer to that last question, on the way that you're using that system you've just described as a way of ensuring engagement. So, what's your view—? Obviously, the ideal, as we've heard from Rob from Shelter—and I think colleagues would agree with me here, and I'm sure that you would agree with me as well—is that prevention is better than cure. So, given that there are these mitigating support measures available for people and that we don't want to imprison people and we don't want to threaten them, what's your view on what prevention measures you think would be successful in this? What, from a local authority's point of view, would work? Because we know from some of the evidence that we've had here that people aren't accessing the right support for whatever reason. And yes, some of that support would prevent people from having to face some of the consequences you were describing. So, what's your view on that? Because obviously, it would be better, I would assume, for us all to be going from the other side of the telescope, if you see what I mean, rather than focusing on something that would threaten someone into engagement. 

Absolutely, yes. With the council tax administration and enforcement regulations, they stipulate the process that you have to follow to recover a council tax debt. Obtaining the liability order, which has to be done, then, at the magistrates' court, normally imposes a cost on the debtor of around £70 as well. So, what you want to be able to do is to take those other steps to actually be able to generate the means enquiry part of the process without needing the liability order, because that puts the extra cost onto that debtor. You want to kind of rearrange some of the stages in that process to ensure that the debtor doesn't necessarily think, 'I've had a summons from the council', because any letter that comes through from council tax is naturally feared as being the worst. What you really want to try and do is actually put—whether it's additional stages in the process, not actually make the process any quicker, but make it longer to ensure that the council tax payer has got every opportunity that they can to put their situation right and to work with those who need it.

I know we've done a lot of work with some of the local authority revenue managers and practitioners and they very often feel that they have to go down that process of getting a liability order, which then, by default, kind of forces some engagement with the council tax debtor, but we've given them an extra charge in the process and that doesn't sit right with people. You know, you haven't paid your bill, there could be a reason for it; well, the only way we can force you to engage is by putting another charge on top of you via the liability order. Surely there's a better way or a quicker way that we can look to change that process, moving forward.  

Lisa, you represent 22 local authorities; how would you identify those who are operating best practice in terms of successfully engaging with debtors before it spirals out of control?

Previously, we had done an awful lot of work on benchmarking within the Welsh Local Government Association, working with all the authorities to look at those who were top, middle and bottom of the collection rates table. What we did find was that there were no stark contrasts between them. It all depended on a variety of circumstances, even down to the amount of resources that are available within that local authority, what the levels of council tax are within each local authority as well and the different demographics that you are dealing with. There was no authority—. I’m going back a few years to when we did some real in-depth workshops on benchmarking and good practice, and the top performers were not doing anything different to the poorer performers at the bottom. A lot of it did come down to quite significant variance in the council tax charge itself and how it can vary. You probably have already seen the difference in the band D charges from Pembrokeshire in west Wales, which is one of the cheapest in the country, to Merthyr Tydfil and Blaenau Gwent, which are the highest, but also probably the most deprived areas as well. So, there’s more than one thing you have to pull into the equation.

Probably about four years ago, we launched into a whole series of workshops with local authorities with the sole aim of pulling out these people at the top of the collection table: what do they do and what can we make sure that everyone else is then doing? They were all, kind of, doing the same. We couldn’t actually pull out an answer, unfortunately. Everybody is keen on engagement. They will use inspectors, visiting officers, whatever—the person-to-person approach, having people trying to go out and knock doors. Admittedly, that’s been curtailed, naturally, in the last 18 months, but, for some, that is still the best approach. It’s the most resource intensive and the most costly, but it yields the best results as well. Similarly, with debt advice services and everything like that, the more you do it on a face-to-face, person basis, it might be more costly, but the rewards are much more beneficial for all.  


Okay. Thank you for that. Altaf, would you like to come back in on looking to the future?

Thank you, yes. Thank you, Rob, and thank you. Now, we're coming out of the pandemic. It looks like vaccination is very helpful, it is giving us some great results, and you did talk about the steps you’ve taken, like a moratorium on evictions and pausing debt collection. You talked about payment holidays and furlough schemes. Then you also talked about section 21. Now, since we’re coming out of the pandemic, do you think, if these things are stopped, they’ll be increasing the debt for these people?

Coming out of the pandemic, I think it’s important to note, if you just take section 21, for example, when the moratorium on evictions was lifted earlier this year, we saw the number of section 21 evictions absolutely shoot up. If I just check my notes for my numbers so I’m not saying anything that is untrue, I think we had—. So, for example, in July 2019, we had 77 cases of section 21 evictions. In July 2021, there were 110. That’s a significant increase. So, even though there’s a six-month notice period, moving home is expensive. I’ll be the first to tell you all that. From my experience, it’s not cheap. So, I think we need to keep that six-month notice period. The Welsh Government need to be prepared, if we do start getting into a winter where case rates go up and people are suffering more, then that ban needs to come back onto the table. As unpopular as that might sound to some people, that needs to be kept up the sleeve, and we’d support the reintroduction of that if cases led to that.

I think, just looking forward, we need to make sure that Welsh Government and local authorities are getting people out of temporary accommodation and into long-term homes. That’s one of the key building blocks to build back better and fairer out of this. You need to start getting people back into long-term homes, because we believe home is everything. That 20,000 low-carbon, social home commitment is going to be absolutely key to delivering that, but also making sure that those homes are of the right size and in the right place. It’s no use having 20,000 four/five-bedroomed homes stuck in the middle of Newtown. We need to work with local authorities to make sure those homes are going in the right place, for the right people. We know that there’s a significant number of people in temporary accommodation who require smaller units. And it might not be popular or profitable to build those, but that’s what is needed, so let’s get them built and let’s get them put in the right places. I think one of the key parts of that picture as well is allocations policies. There needs to be a greater steer from Welsh Government, if local authorities won’t show leadership on this, to sort out allocation policies, and we’ve done some really good work with Swansea and produced a report on this, showing how allocation policies can be changed to be more progressive. 

And one of the things that I wanted to bring up, while we've got you in the room, is around the use of bailiffs and debt recovery across local authorities. Going forward out of this, we need to have a serious conversation about how bailiffs are used or not used, because some of the practice that we've seen and our support workers have advised on is just appalling. We've seen bailiffs serving virtual warrants of control because they, obviously, can't attend properties, and making people FaceTime them so they can take them around the house and show them what they're going to take over FaceTime. That's unacceptable behaviour, poor practice and beyond dehumanising. And we've also had people be charged for visits. They get a letter through the door saying they're going to be visited during some of the most stringent lockdown restrictions. We're pushing people into making repayment plans they can't afford, we're setting people up to fail and we're further exacerbating some of the societal inequalities that we're seeing in Wales already.

So, coming out of the pandemic, we've got a really strong opportunity here to change some practice, learn from some of the mistakes that we made before the pandemic and actually set up a system that is more person centred, and actually is going to be more successful. Lisa's comments earlier were really helpful around the way in which people are—. It's been difficult to engage people who are experiencing debt and pushed into debt. Actually, when the moratorium on evictions was on, housing associations were, obviously, not allowed to evict tenants who might have accrued and, in some cases, were accruing significant rent arrears, and, actually, they did some really good work and we helped them with some really good work to creatively engage with tenants who were in these issues. So, I think there are probably some lessons that we'd be happy to share from that, going forward, as we come out of it. But I'll stop now, because I'm taking up loads of time, sorry.


[Inaudible.]—and I think, as we come out of this pandemic, or supposedly come out of it, the removal of the top-up and how many people will come off furlough but actually return to a sustainable employment. I referred to some stats that I had from the Financial Conduct Authority's survey. People were already stating they were in debt. If they were getting a £20 uplift perhaps, that might have been helping them just to tick over. You pull that away and that is definitely going to be the safety net pulled from underneath them. So, unfortunately, I do think the situation is going to get much worse over the next few months when all these issues come to light.

The moratorium on evictions was absolutely essential, and I'm really keen to see how local authorities, housing providers and private landlords actually all work together, moving forward, now to ensure that it's not a case of back to business as usual but that we take a much more step-by-step approach and ensure that support levels are in place. 

And just to respond to Rob, really, I'm quite concerned with some of the feedback that he's had around enforcement activity, and I would just stress that if it's anything in any particular local authority area, to be contacting that local authority as well. Because, if they're employing an enforcement agent who might not be following the terms of their agreement—they've all got service level agreements and code of conducts—then we need to be aware, or the local authorities need to be aware of that straight away. We get told that there are underhand practices going on, but, of course, if we haven't got any actual evidence to proceed or do anything on them, it's kind of nothing more than hearsay, unfortunately. So, please, if there is anything, Rob, please engage with the relevant local authorities so that they can take appropriate action, because it was quite alarming to hear that.

Thank you, Lisa. The paper from Community Housing Cymru gives some quite disturbing statistics about the numbers of their tenants falling into serious arrears—about a quarter increase, a 25 per cent increase in the numbers who owe more than eight weeks' rent, and a 22 per cent increase in those owing more than 13 weeks' rent. Have you noticed a similar rise in indebtedness in council tenants?

I'm afraid I haven't got an answer for that one, unfortunately.

Okay. I wonder if you could write to us with that information, when you're able to collate it, because it would be really useful to know exactly the extent of the problem that we're dealing with.

Yes, I shall find that out for you, no problem.

Thank you very much. Are there any other Members who want to ask Lisa any other questions, because she wasn't able to join us in the first part of the meeting? This is a last opportunity before we bring this session to a close. Altaf, did you want to say anything further?

Yes, I would. You know, we're coming, as I said, out of a pandemic, and it's a huge learning curve for all of us. We've never seen such a time of pandemic, and Government has been doing everything that it could. Do you think there is scope for more grants for these people, more schemes, and maybe they might even write off some of these debts? What's your opinion? Rob.


I think certainly more grants and more financial support, and support for financial literacy, are things that we would absolutely encourage in future. I'm happy to have those conversations with any Members who'd be interested. 

Yes, I would absolutely agree with that—more targeted and focused support. But what we need to be able to do is actually to have the time and the resource to make sure that we put those funds where they can be best served and better utilised and have the best outcomes for the people as well. As Rob mentioned earlier, it's a terrible thing that we have to say, but we can't keep throwing money at a situation without the right steps being in place for somebody to improve that situation as well. So, I think we now have to go back to basics, really, and back to more of a completely holistic, joined-up service for people to ensure that the support is available for whatever they need. But, unfortunately, I do think we will need some more financial support, moving forward, to even try and get a lot of people back on their feet.

[Inaudible.]—front-line workers that local authorities employ in their hubs, or other places where council services are delivered from are sufficiently well trained to be able to identify those who need proper professional debt support?

Most of the front-line advisers or one-stop shop staff et cetera—various terms in different authorities—are trained to actually identify and look for the signs, and to ensure then that they are engaging with any other relevant department. They also have a lot of different drop-in centres, so they work in partnership with, for example, Citizens Advice and other third sector bodies, perhaps in a shared location, and it will be good to get all that back on line, as well, because, of course, the drive was, back to last March, of closing offices and going back to appointments and telephone calls only. I think we do need to concentrate resources on getting everybody back to seeing what visible support is needed. We don't want to just go back to the, 'Ah well, check out a bit of information online and here's a flyer'. It needs to be a little more visible so people can see and then actually ensure that people are getting the right support and signposting that are needed.

Okay, because it's making sure that when people come to you, ostensibly, about one thing, you actually are correctly identifying that what they really need is support about another.

Absolutely, and it needs to be a little bit more than—I used to be a customer services manager many years ago—just saying, 'Well, you need to do this and go here and do it.' It needs to be a little bit more than that, whether it's more in-house support and actually being proactive and making the appointments for them, or getting that additional information, because if someone walks into a local authority front-of-house reception area in a crisis situation, they need an answer or they need support quite quickly. They don't want to be going away with a list of 25 things that they need to do; they need to have those steps put in place for them. And, to be fair, a lot of the front-line advisers that I've engaged with over the years do think much wider. It's not a case of dealing with the query that is presented to them; it's picking up on the signs and making sure that they are able to recognise that there is other support and advice that are needed, and they will try and get that in place for the customer.

Okay. Well, clearly, there are some challenges ahead. Thank you very much, both of you, for appearing as witnesses in this inquiry. We will be sending you a transcript of what you have said, and I would urge you to ensure that you look at it and make sure that what you intended to say hasn't been misinterpreted or misheard. So, thank you very much, both of you, for attending and, hopefully, next time, Lisa, we'll be able to see you as well.

Yes, I do apologise for the technical issues today. I knew it would happen, and I apologise as well. Thank you.

All right, very good. Okay, we'll now take a short break while we prepare for the next panel members. Are you all able to come back at half past, please, so we can start this second session on time?

Gohiriwyd y cyfarfod rhwng 14:24 a 14:34.

The meeting adjourned between 14:24 and 14:34.

3. Dyled a'r pandemig—effaith ar grwpiau â nodweddion gwarchodedig
3. Debt and the pandemic—impact on groups with protected characteristics

Welcome back to this session of the Equality and Social Justice Committee and the second panel of our inquiry into debt and the pandemic. Although the public is excluded from the committee's meetings in order to protect public health, you are able to watch the proceedings broadcast live on Senedd.tv.

So, our next set of witnesses are Lee Tiratira, who is from the Ethnic Minorities and Youth Support Team. Welcome. And Cerys Furlong, chief executive, Chwarae Teg. We do hope that the technical system will hold up in this session; we had one or two problems in the other session. But, if we do lose you, we'll get our technical team to make every attempt to ensure that we reconnect you as soon as possible.

So, I wonder if I can just start by asking you to think why you think particular groups of people that you two represent are most affected by debt as a result of the pandemic. Cerys, would you like to start?


Yes, I'm happy to, and nice to see new members of the committee. Thanks for having us today. So, I understand the committee's aims in looking at this, and I think it's a really important topic, so thank you for that. I think we're not necessarily able to answer all of the committee's questions, because, in lots of cases, they refer to specifics on debt for women, in our case, in the pandemic, and we don't yet have all of that data; we're not fully abreast of the impact that it's had on women's lives in relation to debt and the pandemic.

Having said that, what we do know, through our own research, and the work of other organisations, is that women are at a higher risk of experiencing debt than men. We know, and I'm sure the committee will be aware from previous work that they and others have done, that the social security system is not fit for purpose and does create specific problems for women, making them more susceptible to indebtedness. And we believe that there is work that can be done to improve Welsh benefits, where they exist, to support women and prevent them getting into debt. And a lot of this is rooted—and I'm sure we'll have a chance to talk about this—to women's position in the labour market more broadly, and we know that that's a key driver of, or a risk of, getting into debt or not. So, only by tackling those systemic and structural issues around women in the workplace can we really address the problem of debt.

And just a couple of further things to say, I guess: we know already that women are more likely to be living in poverty than men, and that includes working households as well as not-working households. Women are more likely to be single-parent households than men, and single parents are at greater risk of poverty and debt than two-parent households. And I said that everything was interlinked with work and pay: pay rates are lower in Wales generally, and some of our sectors have been more vulnerable to the shocks of the pandemic, for increasing the risk of people going into poverty or debt. There are some specific examples around how women experience and respond to debt that I think are different, on a basis of gender, than for men, and some of our work over the pandemic has shown that women are more likely to put themselves further at risk, take the brunt of family debt, skip meals, go without basic toiletries and things like that, in order to ensure that their children and their partners are fully cared for, and that is certainly true of the pandemic. I hope that gives a broad introduction.

Just on the specifics, you mentioned that, in the work you commissioned from the Bevan Foundation, almost half the women who'd survived domestic abuse were in debt as a result of the abuse they had experienced. How does the law need to change in order to protect women from not just having the trauma, but also being dumped on financially in that way?

There are multiple things that I think could change—the way that we look at household income, rather than individual income; just some basic things about how women, when a relationship breaks down, in order to access their finances, need the consent of their ex-partner, even when that's been an abusive relationship. So, reforms to the way that the financial sector works, as much as the law itself. And you're right that over 43 per cent of domestic abuse survivors say that they're in debt as a result of that abuse. And often we hear from survivors that debt has been accumulated in their name, so without their consent or control. And it seems to me that there must be ways to reform the way that we're accountable and responsible for finance and our own personal bank accounts and savings, if we have them, in order to prevent that. 


Okay. Thank you. Lee Tiratira, the Bevan Foundation report on debt highlights black, Asian and minority ethnic communities as having been disproportionately affected. Could you describe a little bit more whether you think that's correct and which groups? Because obviously black, Asian and minority ethnic people come in all shapes and sizes, and some of them are leading lights in our health service, and you wouldn't expect them to be impacted on by debt. So, could you be a little bit more precise on exactly who in the BAME community is impacted and burdened with debt as a result of the pandemic?

Thank you for inviting me along as well. So, when we think about how individuals or certain community groups reach out, often it comes down to digital capacity and digital literacy, their understanding of systems and processes—even being aware of opportunities for support is often a barrier; not knowing something is out there. For example, the discretionary assistance funding was often shared through word of mouth, through third sector groups and community groups, which in itself poses a barrier for those who simply aren't connected, are perhaps new to Wales. So, yes, in terms of capacity and understanding of processes and procedures and support mechanisms for people, that is what we're finding is a very prevalent and pertinent issue for ethnic minority communities.

Like you quite rightly say, there are individuals and families with higher capacity to understand how to engage across digital platforms—for example, universal credit and the online journals, which also involve apps and applications individuals need to download to prove identity, for example—as opposed to families or individuals who maybe don't even use the internet at all, maybe older people who just aren't that au fait with internet technology and communicating online. So, yes, very, very broad issues that can affect people in different ways, and I think it comes down to advocacy for those who aren't digitally literate or have issues with engaging on digital platforms to reach out and access and be aware of those support options. 

I know that Sioned Williams wanted to pursue you precisely on this point. So, Sioned. 

Thank you, Chair. 

Diolch. Ie, jest eisiau holi ychydig bach ymhellach, te. Faint o ymwybyddiaeth o gymorth ynglŷn â'r cyngor sydd yna am arian, y cymorth yna i osgoi dyledion neu ymdopi â nhw, ymhlith y grwpiau rydych chi'n eu cynrychioli? Roeddech chi'n sôn tipyn bach fanna am y rhwystrau—yr un digidol yn amlwg yn un amlwg. Oes yna bethau eraill sy'n rhwystro hynny? Rŷn ni wedi clywed gan rhai o'r tystion roedden ni'n holi yn gynharach fod arfer da yn dibynnu weithiau ar un unigolyn o fewn sefydliad neu awdurdod lleol ac yn y blaen. Beth yw'ch profiad chi gyda'r grwpiau rydych chi'n eu cynrychioli? Efallai mynd i Cerys yn gyntaf. 

Yes, I just wanted to ask you in a little more depth as to how much awareness is there of support in terms of debt and money so that people can avoid indebtedness or deal with indebtedness, and what level of awareness is there among the groups that you represent. You've just mentioned some of the barriers there—there's a digital barrier, clearly, but are there any other barriers? We heard from some of the witnesses earlier that good practice can depend on one individual within an organisation or a local authority, so what's your experience with the groups that you represent? Perhaps we could go to Cerys first. 

Diolch, Sioned. As I caveated what I was saying at the outset, there is a lack of data, and there's a lack of disaggregated data that enables us to understand the different experiences of people around debt, and specifically around women and indebtedness. That's surely the case. And where there is data on debt and where it does exist, it's usually not disaggregated by gender and certainly not by other protected characteristics. And we said when we published the gender equality review two years ago that this was a problem and actually lack of data was often used as an excuse for not being able to understand and analyse people's experiences, and we've suggested a solution to that in terms of an equalities mainstreaming approach that enables us to take better account of people's experiences through a range of ways of collecting and analysing data. We know things like that women are more likely to borrow from friends and family than more formal lenders—that makes collecting data and analysing data much more difficult, hence the need to triangulate between qualitative and quantitative research and people's lived experience, and, when we say that, it shouldn't be assumed that that is wishy-washy; that is absolutely the way that Welsh Government should be analysing data and, as I said, a key recommendation of the gender equality review, but we don't see that happening yet.


Diolch, Cerys. A beth am Lee? Yr un cwestiwn o ran faint o ymwybyddiaeth sydd yna o'r—dŷch chi wedi sôn amdano fe dipyn bach—cymorth a'r cyngor sydd ar gael. A beth yw'ch awgrym chi, efallai, te, i ddod dros hynny? Rŷch chi wedi sôn yn barod am y rhwystrau digidol—beth yw'r rhwystrau eraill a sut y gall y Llywodraeth wella hynny?

Thank you, Cerys, and what about you, Lee? The same question to you in terms of what level of awareness is there—and you've already mentioned this—what awareness is there of the debt and money advice available? And what would your suggestion be in overcoming some of those difficulties? You've already mentioned some digital barriers, but what are the other barriers and how can the Government make improvements in that area?

Thanks, Sioned. Yes, so there's a lot of misinformation out there, I think. Word of mouth plays a key part in some ethnic minority communities, and if we think, there were lots of opportunities popping up on social media offering support around debt and some of those were not official, and lots of harassing calls to some people trying to get them on board. I think there needs to be clearer messaging through the third sector as a great first port of call to these community groups, especially those that are connected with individuals or families with not as great connections, local networks that are local to people, and information services maybe working closer together with the third sector as well.

I think those are some ideas of what could be done moving forwards; I think we could also reach out to newly arrived people who are coming to Wales, as soon as they arrive, to kind of connect people with options of support in more sort of formal ways early on.

Okay. Just to pursue that, Lee, clearly, we heard from Cerys that a lot of people rely on friends and families to borrow money to get them through a difficult situation, but, clearly, those who may be arriving new to the area they're now living in, they may not have any friends or families here, and, obviously, if you're an asylum seeker, you're living on tiny sums of money, so you're bound to be struggling financially. So, how do you think that organisations like yours reach out to those people to ensure that they understand what they may be entitled to, if they become refugees? 

Thank you for that. So, thinking of the discretionary assistance funding as a support mechanism for those going through financial struggles and hardship, I would say that about 50 per cent of the people I currently support did need to apply through the discretionary assistance funding. They were asylum seeker refugee individuals. I think the process often led to repeat applications for that funding; the problems didn't go away. And on a really grass-roots level, I found I had to use translators; that often led me to take about two hours for a couple of people to complete an application. I remember it quite vividly, because that's a long period of time to be doing discretionary assistance funding. I think it came down to my capacity as an advocacy worker and my workforce demands, really, and connecting that support with individuals. I think the process could have been streamlined further. I think it could be made a lot quicker, especially for those repeat applicants to these funds. I think, in fairness to that particular service, management worked really well with us in overcoming barriers as they happened, or issues that came up. But I think the whole process—again, in terms of that digital understanding—even sending images of ID and Government or Home Office letters digitally can be barriers.

One effect of the remote working aspect to advocacy workers' roles was getting people the support they needed, especially for those from asylum seeker/refugee backgrounds, it just proved really hard to do. I think there was a misunderstanding from people as to what they could actually apply for. Again, it was quite a complex process to understand, for somebody new to making an application for support. So, yes, I think workers could have more say, maybe, in the design and delivery of services, and maybe offer support in terms of how funding reaches people who are going through hardship or crisis.


Thank you for that. Sarah Murphy wanted to come in on how the Welsh Government may be able to help.

Thank you, both. Yes, I want to understand a little bit better today the effectiveness of Welsh Government support to tackle debt during the pandemic in terms of the needs of different groups, and the Bevan Foundation's excellent research on this has shown that the people at risk of going into more debt during the pandemic were renters, disabled people, 24 to 49-year-olds, lone parents and BAME households. So, just an open question, really: do you think it was enough? Do you think it was effective for those groups in particular, what was offered by Welsh Government during the pandemic? Cerys, can I come to you first?

'No', is the simple answer, but in the context of understanding the limitations and the challenges that Welsh Government faced during that time, both budgetary and capacity wise—. I suppose what I would say, following on from what Lee's talked about so well, is that you can only take from this the onus that is felt on community groups and third sector organisations at the front line, working with community groups, to pick up this gap in support and do their best with limited funds to be able to help people access the services that they are entitled to, or the funding that they're entitled to, for all the reasons that Lee has rightly talked about: lack of access or understanding, or ability to access that through digital or language exclusion, whatever it might be. I think we see that time and time again. But all through the pandemic and all through even normal times, the public sector has multiple interactions with people where this kind of support, signposting, information sharing in clearer ways could be improved. So, whether that's through doctors, schools, the council, Jobcentre Plus, whatever it might be—the Home Office, dare we say it—all of those could be improved, and we really do need to think about the information that goes out from some of those public services, and how complex it often is. Anyone who's had to fill in an application for a nursery place will know—why have one page when 25 will do? We've got to make this information much clearer, because people who are well educated and in a position of privilege—why should it be that I'm accessing breakfast school clubs for my children when the people who really need it to be able get on an earlier bus and get to their job perhaps don't know that that Welsh benefit, if you like, is there for them? Because it's a first-come-first-served rather than a who-needs-it-most-gets-it. So, I think there are improvements we can make across the board.

Thanks, Sarah. So, I'd highlight some good instances. In some services, it can come down to individuals—one individual taking an extra 30 minutes to give somebody a little bit more time to understand their circumstances. Often, that leads to a lot less miscommunication, the individuals involved feel included and that somebody's working to understand them further. I think services could really do some internal learning there around cultural competency, understanding difference. Maybe there are pressures from workforce demand and people's time. Time is so precious, but I think being able to offer a little bit more time because of a more complex set of circumstances with additional or multiple barriers for an individual family should be highlighted as really good practice—an individual's personal mastery and their own reasoning for giving extra time and consideration. I think, across the board, all sectors really could do more towards that.


Thank you, and I think that's the thing that's at the forefront of a lot of our minds now, that it's an opportunity today to really have a look at what worked and what didn't. One of the things I just wanted to drill down into a little bit is that there were things like tenancy saver loans, tenancy hardship grant, discretionary assistance fund. There were the free school meals, there was the furlough, the extra universal credit, but there are still people who are ineligible for all of those things, right? There were still people who slipped through the cracks. I know we heard about people who had all of these different things on offer, and they still weren't able to access them. So, do you have any examples of that, of people who did slip through the cracks? We could be looking at a difficult—. Well, we are going to be looking at a difficult winter and the impact, really, now of this debt. So, by highlighting this, I'd really like in the future if we could catch everybody and not have people slipping through. So, yes, do you have any examples of that? Lee.

Thanks. Yes, Sarah. On the universal credit front, we continue to see some ethnic minority people struggling with the online platform, the online journals. Providing ID and verifying it on that platform has proved quite difficult. We notice individuals misunderstanding questions. There's one example of a man who didn't understand a question that stated, 'Do your children live with you?' as he'd previously answered this question, so he omitted answering it the second time around and it led to him being requested to send back the full allowance of his universal credit. It caused immense stress for him and the family group as well, but there were more examples of individuals who simply just struggled to understand processes, sometimes in terms of the language stated in questions. And we're only fortunate enough to be connected to a small number of people in terms of advocacy work who can converse with people and fully explain questions. So, I think there is a gap in terms of people understanding processes and the questions they're asked in terms of their entitlement and universal credit. And then, with that digital support that's needed in terms of sending out images, one person was asked to display his ID in a self-portrait, but just asking that proved quite difficult and he was unable to comply. He missed out.

So, yes, the third sector isn't the answer for everybody, and I think that the answers need to come from within a bit more. We could invite more of a conversational approach with individuals, obviously invite more advocacy support. I think we could invite more translated conversations with people, allow more points of access for people to explain or say that they're finding something difficult. So, yes, hopefully that would add to solutions.

Yes, sure. Thanks for that. I suppose on a broader point, I hope this isn't stating the obvious but debt isn't as a result of the pandemic, this is a consequence of poverty that often people are in already. So, we can't just have a reactive pandemic-based response to this; we need a long-term proactive approach to the fact that certain groups of people are more likely to be living in poverty than others.

When it comes to working out what did or didn't work well or otherwise during the pandemic, I fully respect that people threw everything they had and the kitchen sink at trying to help people in what were very difficult circumstances, but we need to make sure that the data we were asking for and collected during that time, when there were discretionary things offered, and the evaluations of those, address the very questions that you're asking, to identify who slipped through the net, and then make sure that those learnings are actually embedded for next time.

What we tend to see is the same pattern of behaviour, in terms of which individuals or which sectors we support and how we do that, repeated time and time again. And there have been some—. Well, two things to say on that. One is that Welsh Government are currently piloting things like gender budgeting. Let's see what works there. So, if you foreground thinking about equalities in your decision making around designing and implementing a policy, what different outcome does that result in? How can we not just accept that people will receive unequal treatment, but we actually design in equality of outcomes so that that happens? Let's learn from some of those pilots to make sure that we embed them.

And finally, I guess just to speak to some of what Lee's talked about, when we're designing these things, even if they're quick and responsive, talk to the people like EYST and like others who are at the front line, supporting communities and individuals about, 'Does this make sense?', you know, 'How will someone receive this information?', 'Is this question confusing?' I think, too often, in our rush to get things out, we could make it more difficult by not bringing third sector and other organisations with expertise in to sense check, gender lens or whatever it might be, sense check from the perspective of the end user how that information will be received. That seems to be a quick win.


Can I bring Jane Dodds in at this point, because I think she wants to ask for something where it is fairly straightforward to track what's going on, which is around council tax and rent arrears? Jane.

Yes. Thank you so much. Thank you for giving evidence and for coming to sit before us. You've mentioned, Cerys, about the lack of data, particularly in relation to women and men and the breakdown there, but it just really would be good to hear from you what your thoughts and views are about how we can look at debt across housing and council tax, and how we could break that down into the protected groups. You don't have to tell us now exactly what that would look like, but it would be interesting to hear whether you think that's possible. Diolch yn fawr iawn.

Perhaps that's something that we can follow up on in more detail. As I said, there's a lack of data in the first place. Of the data that's there, it's difficult to segregate it. Most measures of poverty and financial resources assume that the household resource is pooled. We know that's not the case, and that particularly affects women. It particularly affects particular women. So, I think evidence needs to be collected more regularly. It should be intersectional, because we know that different groups of women experience things in different ways, and it should also not just look at debt or not debt, but look at the scale and the nature of debt, what is causing that and the impact of that on the individual and the family.

I think the data bit is probably the easiest bit to solve. What we do with that data is much more difficult, and I know Welsh Government, particularly around some of the work we did on data in the gender equality review, were quite open about saying, 'We're happy to be challenged on the data that we collect, but more importantly on what analysis you need to scrutinise us and enable us to make better decisions.' I think we tend to receive information and respond to it without giving enough time and thought into, 'Well, what does this really mean and how can we design out those things that are resulting in inequalities, rather than just continuing to repeat them?' But I'm happy to talk to colleagues to see whether there is more specific information we could bring to the committee.

Thank you, Cerys, that's much appreciated. Lee, I don't know if you had anything further to add. Thank you.

Pretty much echoing Cerys, I think we would welcome more data on subjects relating to protected characteristics in all sectors. It very much is about what we do with that data, how it will impact services and actually support people in the long run. We've had a really eye-opening last couple of years and I think what we do in terms of learning, going forward, is crucial. I think we're moving to more digital means and people are more interconnected online and things like that, and I'm really worried about people falling behind in that trend, as well.


Sorry, one thing that I forgot to mention—and actually, Lee talked about this in terms of digital literacy earlier—is investment in adult basic skills to be able to navigate some of this more effectively, and free and accessible at a community level, ideally, so that people can improve their literacy and numeracy, financial literacy and digital literacy to give them at least a shot at understanding some of the complex information that we, as public services, throw at them.

Thank you very much. Let's come to the debt collection. We know that stakeholders, like housing associations, have received considerable funding during this pandemic. Should there be a proportionate approach when collecting debt from these unfortunate people, really? Should there be any changes that Government or the sector should make while collecting this debt? What are your thoughts? Multiple—you can tell.

I'm happy to have a go at that first, if you like. We know that the debt that people are often likely to accumulate can be as a result of things like pay-day lenders and that sort of aggressive debt, not just debt from not paying council tax or housing benefit or whatever it might be. And those are much more likely to be in people's fields of vision and exposed to it than the support that the public sector can offer. So, clarity around communication and visibility is key. But to answer your question around, I guess, flexibility, yes, we would expect and encourage public sector organisations and housing associations and others to be flexible, but also to have a role in educating people, because they have a vested interest in ensuring that people are able to manage their bills and household finances. And I'm sure that housing associations would be the first to say that they do not want people to get into debt. Let's support them and help them to work with their tenants in more effective ways. But yes, I think flexibility, given the circumstances we have, would be welcome.

Thanks, Altaf, and if it's okay, I'll speak on the last two years, really. We noted holiday payments for mortgages, council tax and other loans had major financial complications for some ethnic minority families and individuals who were not fully aware of how the payment plans to repay these advances would affect them. Many jumped at the opportunity and prospect of three-month payment breaks, but felt the pinch when they realised the full extent of how it would actually impact them. And with the pandemic still ongoing now, many households have found themselves losing employment and struggling to find new employment. So, I think one thing to note is the prolonged COVID-19 symptoms that we're all really getting our heads around, and how that affects people and their employability going forwards and their management of debt.

I think you're on mute, Altaf.

Thank you very much. Looking at it, we're coming out of the pandemic, and at the same time, the approach that the Government and other sectors have taken to look after these people in debt—naturally, they will have to come out and return the debt back. But, are there any problems in coming out of the pandemic? Will these people go into more debt? What are your thoughts about it and what should Government do about it? 


I think, just to reiterate something I said earlier, women are more likely to be low paid and more likely to be in sectors that have been affected by the pandemic—

—and, therefore, their ability to repay that debt would be slower and, also, given that many women have had to take on the additional burden of caring responsibilities, including those affected by COVID-19, their ability to get back to work, and get back to work as fast as, perhaps, their male counterparts, could be further inhibiting their ability to pay off debts.

So, yes, I think in answer to your question, it will be very, very difficult for many people, through little fault of their own, who've found themselves in this position that's been exacerbated by the last two years. We will need to think very carefully about where that debt is, with public sector organisations, and what the long-term benefit is of squeezing people to pay back relatively small amounts of money and the significant impact that can have on the well-being, including mental health and well-being, of many people in Wales.  

So, do you propose anything for the Government—that they should pay for the steps that will prevent all of this?

The Welsh Government can look at reforming existing Welsh benefits, whether that's the things like free school meals that I talked about or the council tax reduction scheme—you talked about the discretionary assistance fund—to look at how they could expand eligibility and improve the take-up in the way that we've been talking about, so that those mechanisms that we have and that are there to enable people to get out of poverty, get into work and help get to a position where work does have a positive impact on their family life—that the right people are getting that support. At the moment, the evidence doesn't necessarily suggest that that's always the case. 

They should continue with that, yes. What about—Lee, what are your thoughts about it?

Thanks, Altaf. For families that are in ongoing financial hardship, it's really important that messaging and comprehension get through of their circumstances and that they understand their circumstances better. Again, I would welcome more data and research on the debt advice services and their engagement with ethnic minority communities specifically, in terms of comprehension, understanding long-term impacts and effects. 

Hopefully, those who have been put into financial hardship because of accepting advance payments and whatnot—in future, hopefully, that could be in the form of a Welsh Government grant scheme. I think that could be administered and support people better than offering payment holidays and bigger payments that hit the family in the longer term.

Okay, can I bring Ken Skates in at this point, bearing in mind that the Welsh Government doesn't have a bottomless pit of money?

Thanks, Chair. You've alluded to many of the challenges that are to come. Are there other longer term challenges that you think emanate from debt-related matters as a consequence of the pandemic?

One of the things that we haven't really touched on is the impact on children and young people of growing up in families in poverty and debt, and the strain that that puts on families. There are broader consequences of that and the impact that it might have on their education and on their outcomes in life. I think that we need to link the parental experience to the child's experience in that. 

I think what's difficult in all of these conversations that we have around this issue, including around poverty over many years, is that the Welsh Government doesn't have all of the levers that it needs to be able to support people. We know that social security should protect people from debt and it doesn't, and often it exacerbates the situation that people find themselves in. Universal credit and the problems around it are very well documented. The loss of the £20 uplift has been discussed and debated widely, and it is a big problem. So, I think we do need to continue to look carefully at the devolution of the administration of some of these benefits, so we can have a more coherent Welsh benefits system, so that people can easily access the support they need, where it's available, and that we can plug gaps where—in the context of what the Chair has rightly pointed—where the Welsh Government is able to, within its budget. So, as I said earlier, the pandemic hasn't caused this problem, it just shines a light on the underlying structural issues at play and how they leave women on low pay in debt, at a higher risk of poverty, and the impact that has on their wider families. So, we'd encourage not a reactive response to the pandemic here but a long-term look at how we actually address those structural issues in a way that will ensure that, come future shocks, whether those are economic shocks, social shocks or things like we've experienced with COVID-19, we're starting from a more equal playing field.


Thanks, Ken, and thanks for mentioning young people, Cerys. So, I'm a youth worker at heart, and I really do think about the futures of young people, especially from ethnic minority backgrounds. I think, in terms of this digital shift towards understanding things that happen online, I think we need to be more responsive to that. I think there are conversations to be had around that sort of informal, non-formal learning a person does to understand finances, how they manage their own finances, how they manage debt at a younger age. When we think about young people moving into work at younger ages, I think that's the time we need to be thinking about educating young people on managing money correctly, on accessing services correctly and appropriately, and making those connections where there aren't necessarily family-group connections or local connections—suggesting these options of support for young people. Yes, that's it.

Thank you. Yes, just one more thing, Chair. The challenge that people are going to face in terms of debt-related mental health issues. Is that something that causes you significant concern as well?

Having grown up in a family where my father went bankrupt when I was in school, I know first-hand the impact that has on children and young people, as well as working parents. And I think, sometimes, we can see it as an administrative thing, and I suppose it speaks to what Lee's talking about—educating people at a young age about the meaning of money and the consequences—the positive things that people can achieve through taking control over their own finances and making decisions about what they want to do with that money or otherwise. But, I think, my own experience, certainly, was that it's something that people do not understand at all, the long-term consequences on people's mental health and how that changes their behaviour and decisions. And I'm sure it's been a huge contributor to the rise in people needing support for mental health and well-being over the last 18 months.

Thanks, Ken. I think mental ill health has been very, very prevalent, especially amongst young people from ethnic minority backgrounds. I think there's been long delays in accessing provision to support positive mental health. I think debt-related mental ill health is something I don't feel is as spoken about as other elements of mental ill health. So, I think people can be too proud to mention things. People can be really sensitive about who knows their circumstances and openly talking about things. So, yes, just to mention those added or additional barriers to talking about mental health and debt-related issues.

Yes, okay. Very briefly from me, and if you could just give me short answers: I just wondered how significant you think the debt that people may have been encouraged to acquire online is—so, a catalogue debt, other so to speak no-interest debt, which all looks very attractive, but how much have people been encouraged to take on this sort of online debt? And how big an issue is it overhanging people, as well as the more obvious things like rent and council tax arrears?


I don't have any facts and figures for you, but I would say, 'hugely'. You only have to go on any social media platform to be encouraged to buy something that you can pay for in instalments. Some are only a couple of clicks away and that money doesn’t seem real—you just click the side of your phone and money disappears out of your bank account. That’s a very different type of debt to one where you have a more structured relationship with either a lender or with a public service, where they will have a duty to ask specific questions around your ability to repay debt. So, I think when people want to always give the best to their family and ensure nobody goes without, it can be very easy to accumulate that debt very, very quickly without any trigger to encourage you to think about what the consequences of that are or how difficult it will be for you to get yourself out of that situation.

Thanks, Chair. Yes, I think we’ve been locked away for periods of time during this pandemic and different lockdowns and people have been generally more online. I don’t have the evidence to substantiate increase traffic on catalogue sites and things like that, but it’s more of a personal opinion. I think we have been exposed to more opportunities to get into debt by being online during the pandemic, so it’s natural to think that there’s an increase there, and maybe at the back end of this year and into next year we’ll see the repercussions of that. So, yes, 'To come', is my thinking.

Okay. Thank you very much, both of you, for the evidence you've given us. We'll be sending you a transcript of what you have said, and I would encourage you to really look at it closely to make sure that we have captured what you said accurately, and to correct it where necessary. Thank you very much indeed for your time and we look forward to speaking to you again.   

Thanks, Chair. Thanks, everyone.

We'll now take a 10-minute break before we come to our third panel.

Gohiriwyd y cyfarfod rhwng 15:22 a 15:33.

The meeting adjourned between 15:22 and 15:33.

4. Dyled a'r pandemig—credyd fforddiadwy
4. Debt and the pandemic—affordable credit

Welcome back to the Equality and Social Justice Committee's inquiry into debt and the pandemic, and we're now going to be hearing from our third panel. And all the meeting, the discussion, will be broadcast live on Senedd.tv. So, I'd like to welcome our next four witnesses—Claire Savage from the Credit Unions of Wales, Sara Burch, the manager of Gateway Credit Union Wales, Daniel Arrowsmith, who's representing the Association of British Credit Unions Limited, and Karen Davies, chief executive of Purple Shoots. So, welcome, all four of you. Before I ask other Members to come in, I wonder if you can just briefly say how your organisations have been impacted by the pandemic, as well as, very briefly, how the people you serve have been impacted by the pandemic. Who would like to go first? Claire Savage, you're the first on my screen.

Okay. For credit unions, as traditional sorts of bricks and mortar savings and loans providers, it was a real significant challenge in the pandemic. We, obviously, like a lot of places, had staff home schooling and volunteers who were shielding—and volunteers are quite key to our credit unions. We kept offices open where it was safe to do so, and a significant number of credit unions did that and continued lending to new and existing members, but, obviously, we needed new IT equipment and new ways of working, and remote working as well, which wasn't something that was standard prior to the pandemic. We saw our arrears increase initially at the start of the pandemic, but they really did level off as the various support measures came in place for people, and we saw loans decrease by about 9 per cent over the year to quarter 1 of 2021, while savings went up about 14 per cent to reach £51 million at the start of this year.

For members, I think, obviously, this pandemic has affected people in different ways. So, while savings have increased significantly overall, that doesn't mean that all members have found the pandemic particularly easy. But we do know that measures such as the furlough scheme, the uplift in universal credit, increase in local housing allowance and all the other measures that were brought in have clearly helped our members through these difficult economic times. And there is some evidence that those who have managed to save have also been able to address other debts and sort out their finances as well.


If I can now turn to Sara Burch, and I wondered if you could, in your answer, tell us whether the people you serve are of a particular demographic, or the general public. How has Gateway coped with the pandemic?

I'm manager of Gateway. We're serving predominately Torfaen and Monmouthshire, but also a wider area now, and I think our experiences are probably fairly typical. It was a huge operational challenge for us, and at the beginning of the pandemic, nobody knew what was going to happen. We didn't know whether, if we closed the door, for instance, we would have a huge queue of people wanting to take money out. 

In terms of how it has affected our members, we have a mixed demographic, predominantly low and middle-income workers and people on benefits, including a large number of disabled members. So, I suppose there are several groups. There were some members who, probably, worked for local authority or other employers whose incomes were the same, but they were now working from home and able to save money. Then you had people where, perhaps, at a level household level, it was a significant amount of economic challenge for them. So, if our typical member is a care assistant or a teaching assistant, very often she found herself as the only earner in the household, rather than the second earner in the household, as people who were self-employed were unable to work. And, similarly, at a household level, I suppose a member in Monmouthshire who we were able to help with the tenancy saver loan is a typical example of a household impact, where they had adult children who were previously employed in tourism and hospitality, who had previously been contributing to the household. So, the household income has been quite different.

Thank you. Daniel Arrowsmith, is your association serving all types of people, or are there particular demographics who use your credit unions?


Can I just stop you a moment? I don't know whether I'm the only person who's finding the sound is distorted at the moment, and I'm not quite sure why that is. It may be just something I'm suffering from in this room. You were crystal clear when we tested your voice earlier. Just try again now, maybe it's been resolved.


Okay, I understand. Is that any better?


Daniel, can I suggest that we first of all come to Karen Davies, and then we'll come back to you? 

There's something wrong in the connection. Karen Davies. Who is your community that you serve?

Purple Shoots is a little bit different from the credit unions. We are a responsible finance provider, so we don't do savings, and the demographic that we work with is entirely the people at the very bottom end of the economy. So, we're lending to people who are usually unemployed, they could be because of a caring responsibility or a disability, or it just could be because they can't get work or have been made redundant, but they're the people that nobody else will support, and our loans are for business purposes, so they enable people to get a business off the ground. So, we're a little bit different, so I think our experience has been a bit different too.

At the beginning of the pandemic, our income dropped off a cliff. Loads of our clients couldn't make repayments to us because their businesses had to close and they didn't qualify for any other support that the various Government agencies offered, for various reasons, so they all had to go back onto universal credit, which doesn't cover business costs. So, we had to absorb a lot of repayment holidays for them, which created a huge problem for us, but it did actually help our clients by giving them the holidays that they needed. Their businesses have largely survived, which is a good thing, and a lot of them have picked back up on their repayments since then. The worst moment was the very beginning with the original lockdown; the subsequent lockdowns were a little bit easier. But now, as they're picking back up, because they've had no support over such a long period and they haven't been able to generate income for such a long period, they are struggling. They're reopening, but reopening with absolutely nothing, so they're coming back to us for further loans to help them get things restarted, which is a difficult judgment for us to make.

The other thing that's affected us is the fact that we've had to go to remote working, and most of our dealings with clients are face to face, and our typical client group are not very comfortable with online dealings, so that's been a difficulty that we've had to overcome. In terms of their general indebtedness, the people who I've described who had to go onto repayment holidays, a lot of them have really struggled and we've seen a rise in other debts, where we've seen their bank statements, they've had to resort to other forms of borrowing, usually the high-cost providers, which is very annoying, and a few—I hope not many more—have gone into debt relief orders or individual voluntary arrangements, which is a pity, because I think they could probably have negotiated out of those or negotiated without going into those.

I'm painting a very gloomy picture, but the positive is that a lot of the businesses that were started by these people have survived, are right at the root of their economies and are trying to pick themselves back up again. In terms of lending, we didn't lend at all in the first lockdown, but ever since then, we've been really busy, so throughout the subsequent lockdowns and the gaps when there weren't any, we've been busy and we're busy now.

Thank you very much. Thank you for that very clear contribution in all senses. I just wondered if we're able to re-engage with Daniel Arrowsmith.

I've switched headphones now, I'm wondering if that's clearer. I've got a thumbs-up, so that's great.

Brilliant. Okay. I'm going to try and not repeat too much of what my credit union colleagues have said, but generally the picture has been quite negative for credit unions, with a reduction in loans and an increase in shares, which generally puts more pressure on the capital situation. Also, the arrears rate is higher in credit unions. So, most of this impact was felt in the first couple of months of the coronavirus pandemic, and it has recovered to a certain extent, but generally, it is quite a negative picture for credit unions, and at least some of their members.

So, I suppose the coronavirus pandemic has been a big example of a K-shaped recovery. We may see, for example, average saving rates go up, for example, but the people who are borrowing now from credit unions, they're much more likely to default and they are more risky. I think they have more complicated challenges, and it's less about maybe reducing non-essential expenditure and it's really more about the sort of situation that they're in with their income. So, I think the average borrower is closer to the margins and more likely to default than ever before.


Thank you very much, all four; very interesting contributions. Over to you, Ken Skates, to pursue some of that.

Thanks, Chair. You've all outlined very well, I think, how you've responded to the needs of customers. I was just wondering, just to add to it: what sort of policy changes have you had to make in terms of dealing with customers and have you found, during the course of the pandemic, digital exclusion to have had an impact on your customers?

If I can answer that for Gateway, and not for other credit unions, we reviewed our policy changes and certainly our risk appetite for larger loans at the outset, because things were so very uncertain, and I think most credit unions have gone through a policy change in that. We've gone through huge procedural changes, and we've made the transition, really, from being an organisation that was primarily face-to-face and paper, with a digital ability, to being an organisation that is primarily digital and phone based, but with face-to-face for those who prefer or need it. And what we're finding now, having reopened face-to-face services, is that those are only really being used by our digitally excluded members and, in many cases, our members with lower literacy, for instance, the Traveller community.

We did find, although we tried to go digital and we tried to close the doors and we were worried that people would be wanting to take their money out, in fact, we had people posting cash in envelopes through the letterbox throughout the lockdown, and that in itself has been a challenge to overcome. I think the majority of the credit unions in Wales have become quite different organisations; it's probably accelerated our digital development and certainly clarified that as a direction of travel. We've come together as an IT group to support each other in that. We've relied very much on the support that we've had from the Association of British Credit Unions Limited and from Claire, so that in fact the whole movement was probably learning together.

Perhaps I can answer from our standpoint. We have many people who are struggling with digital stuff either because they can't afford data or because they have a poor connection. So, we would have wanted to meet people like this on Zoom, but a lot of them can't do it, so we've had to do it by phone and we've always said all along with Purple Shoots that the reason our lending works as well as it does with such a high-risk group is because it's based on relational lending and meeting people. So, the jury is out really on whether a whole year of doing it by phone is going to result in higher losses or not; I don't know yet, but I'm worried about that.

And the other change that we've had to implement is that we historically don't do a second loan to somebody until the first one is substantially repaid, but we've abandoned that to some extent with some of our clients, who we can see have got a good business and are trying to pick it back up again, so we are doing follow-on loans sooner than we would normally do, which is also not ideal, because it's accelerating our risk profile or increasing it a bit.

So, those are the two changes that we've made, but we are probably going to go back to face-to-face. The only other good thing about doing it digitally and on the phone is that we've managed to expand all over Wales, whereas before we've typically been in the south-east corner. So, we've done quite a lot of lending in the north, and bits that it's difficult for us to travel to. So, that's been a good thing, as long as it works.

And I suppose to give a sort of broader picture of what credit unions have been up to in terms of our services, I do agree with Sara, it's completely reflected that there has been some more rapid digitalisation, and that is a good thing for those members who find that more convenient and, I guess more importantly, safer. However, credit unions still have maintained a physical footprint. They've not shut all their offices down. Three credit unions out of the 16 in Wales have actually opened offices during the pandemic, and have done so with those new guidelines in mind. So, I think there's been a reduction in capacity, and that has been allocated to those members that need it the most, that face-to-face support.


I think we've also seen that some credit unions are quite responsive to their members and their communities. So, I know that SAVEeasy Credit Union, which has quite a rural area in west Wales, has opened a number of pop-ups and other offices over the course of the pandemic. A number of credit unions have seen significant expansion in their digital services, but I think credit union staff do remain quite committed to helping those who are digitally excluded.

Thank you very much. I'm very grateful for your evidence. My question really is about what you think could be a clear position in relation to debt agencies, and how we could support you, how they could be framed differently for the work that you do. Maybe just one sentence that says, 'This is what we could do differently if we had support.'

Well, one thing that comes to mind is that the majority of credit unions now have access to open banking, and that enables a member to give us sight of a year's worth of transactions, so that we actually understand their finances very well before lending to them. I wonder whether that would be of huge value to the debt agencies who are now—. There is some indication that some of them have moved from sitting at the table with the member, with all of the paper evidence, to actually just believing what the member tells them over the phone. And perhaps, talking to somebody over the phone, you take a different view of their finances than you would get if you saw all the numbers.

I think just to reiterate what Sara's saying, the upshift that credit unions are seeing at the moment in people who are perhaps overindebted and have succumbed to various different behaviours, which are partly due to that shift online, so, seeing more of the buy now, pay later-type schemes, and the Klarnas and the Clearpays, and people not necessarily realising how much that adds up to over a single month. So, they're not necessarily aware of how—. It's just so easy to do, isn't it? They're not necessarily aware of how this is adding up, and I think we've also seen an increase in online gambling as well through the pandemic.

Thank you. Perhaps Daniel and then Karen lastly, thank you.

Yes, I would agree with Sara in terms of the data that's available to credit unions. Open banking is one initiative that's been really positive, and allows credit unions to also identify other issues such as perhaps gambling issues and things like that, and maybe they can help address and signpost some of those.

I think there's a disparity in terms of data available for people who are in quite good financial places, those people with mortgages. I know there has been some work done on providing some data on rent arrears and things like that, and how well people pay their rent. But I think this needs to be expanded and there's currently a project looking at can there be a new register for partially settled county court judgments, because at the minute there's no incentive for a debtor to make a settlement, because they don't benefit in terms of their credit score. So, I think improving data is a large part, especially when you consider maybe, if you like, some of the uncertainty that may be faced in future. So, people have restricted their use of credit. Some of the payment holidays that have been provided aren't documented. The problem is with most creditors—I'd say credit unions stand out of this a little bit—where they see uncertainty, that's almost worse, if you like, than seeing a sub-par credit history. Credit unions are a bit more perhaps old school, and they like to look and they like to leaf through bank statements. Historically—maybe not during COVID—they like to do loan interviews and like to talk to the member about their situation, and have that member explain what's going on in their life. I think credit unions are a bit more resilient to that than most, but my worry is that some people will be disadvantaged due to the reduction of information on their credit files.  


I'm wondering whether there's a bit of an education piece to happen. I mentioned it a bit in my first answer—that we've seen a worrying tendency for people to go into unnecessary individual voluntary agreements and debt relief orders, and they're done by predatory debt management companies who are looking to make profit from people in troubles. I know this because somebody came to me for funding once to start a business, and they were going to provide to these debt agencies people from credit reports, and they were being paid £500 per referral. So, it's nasty. I know the Financial Conduct Authority knows about it and they're supposed to be acting on it, but I'm not seeing it now.

I think people need to understand that going into an IVA and a DRO is not an answer, because it's presented as one. And that's one of the biggest issues that we're seeing. Sometimes the debt that people are in is so small, it could have been managed—you know, under £5,000—and it's infuriating. I don't know whether that's something the Welsh Government could do. There are goodies out there; I like dealing with people like StepChange and Christians Against Poverty, because they deal with debt sympathetically and sensibly, but they're not well known and they haven't got budgets to promote themselves. So, I don't know if that's a solution. 

Okay. Thank you. Sioned, do you want to pick up from there? 

Diolch, Cadeirydd. Dwi eisiau dilyn lan yn syth gyda beth oeddech chi'n ei ddweud, Karen Davies, am y modd mae dyledion yn cael eu casglu. Yn eich tystiolaeth ysgrifenedig chi, wnaethoch chi fynegi pryder ynglŷn â'r ffordd mae sefydliadau'r sector cyhoeddus weithiau yn llym o ran y ffordd maen nhw yn ymdrin â phobl sydd mewn dyled. Felly, beth ŷch chi'n teimlo yw—? Allwch chi nodi, efallai, ymhellach eich pryderon am hynny yn benodol, am y ffordd mae sefydliadau sector cyhoeddus yn rheoli dyled, a beth rŷch chi'n meddwl yw'r effeithiau ar y bobl rŷch chi'n dod i gyswllt â nhw, fel wnaethoch chi esbonio tipyn bach fanna? 

Thank you, Chair. I wanted to follow up on what you've just said, Karen Davies, about the way in which debts are recouped. In your written evidence, you expressed concerns about how public sector bodies sometimes are draconian in their approach to people in debt. So, could you perhaps set out your concerns on that specifically in terms of how public sector bodies manage debt, and what do you think the impacts are on those people that you're in contact with? You've already touched on that. 

I feel I should apologise a bit for my paper, because it was a bit blunt. I see a lot of people with county court judgments against them that have been put there by local authorities. I do understand how that happens, because often perhaps council tax is the first thing that they don't pay. When I've seen communications that they've shown me from local authorities in particular, they're very officious and very threatening. Certainly, when I approach people who are defaulting, that's not our first step. It's a much softer approach. And it's not because we're weak; it's because you get a better response from that. So, I think that councils need to be aware of the language they use when they're chasing people for debt, and bear in mind that they're not familiar with the sort of terminology that they're using. Sometimes, it will frighten them and push them into getting one of these wretched debt relief orders that they don't need to be in, when it could have been resolved much more amicably. 

To give an example, one of our clients had a demand for unpaid business rates. Because of a miscalculation by the council, she'd been underpaying, but they demanded £4,000 immediately. She didn't know that she could negotiate that, and if she'd talked to me, I would have helped her negotiate, but she didn't—she just paid it and closed the business. Nobody won then. So, those are the sorts of things—. That's a really bad example, but there are other examples where I just think the tone could be different and the language could be different, to make people understand that they can negotiate. They can sort this out; it's not something that's going to render them homeless.


Diolch yn fawr. Mae hynny'n hynod o bryderus, a dweud y gwir. Beth felly ŷch chi'n meddwl gallai Llywodraeth Cymru ei wneud i wella'r sefyllfa yna? Ydy e'n gwestiwn, efallai, o ryw fath o fframwaith cenedlaethol statudol y byddai sefydliadau sector cyhoeddus, fel awdurdodau lleol, yn gorfod ufuddhau iddo fe? Mae'n siŵr bod yna—ac rŷm ni wedi clywed hyn heddiw—amrywiaeth, yn dibynnu ar awdurdodau lleol unigol, yn dibynnu ar unigolion o fewn awdurdodau lleol unigol, yn dibynnu ar y capasiti sydd gan awdurdodau lleol i ddelio â'r math hyn o beth, o ran arfer da gyda chyfathrebu, fel roeddech chi'n sôn yn fanna, i roi gwybod i bobl sut mae modd delio â'r pethau yma. Beth ŷch chi'n teimlo fyddai'n gweithio orau o ran beth all Llywodraeth Cymru ei wneud i newid hyn?

Thank you very much. That's very concerning indeed. So, what do you think the Welsh Government could do to improve that situation? Is it a question, perhaps, of having some kind of national statutory framework in place that public sector bodies, such as local authorities, would have to adhere to? It's clear—and we've heard already today—that there is great variety, depending on individual local authorities, individuals within local authorities, depending on the capacity that local authorities have in dealing with these issues, in terms of good practice around communication, as you've just mentioned, to inform people as to how they can deal with these problems. What do you think would work best in terms of what the Welsh Government can do to make changes in this area?

Do you want me to answer first? I think that's a good idea, a national framework, because if you're regulated by the FCA, as we are, we have to follow a framework in terms of how we chase our debts and what we do and so on, and I don't know that other creditors have to follow anything similar. So, yes, I think that would be a good idea—sort of a guideline of how to deal with this and what sort of advice they should give, and where to point people to if they're struggling. And then you could point them to the good people and not the bad ones.

Oes rhywun arall yn moyn dod i mewn ar hynny, o'r undebau credyd?

Does anyone else want to come in on that, from the credit unions, perhaps?

I think I will, if that's okay. I do agree with a lot of what Karen says. I would say there is a severe failure within the IVA market, and there are all sorts of issues, such as aggressive selling, aggressive lead generation, disproportionate costs, costs that don't tally with our knowledge of how much things cost. The problem is that it's been tolerated for quite a long time, because, at the end of the day, if the fees are lower than the total amount of debt, then there is some sort of saving for that individual that's in debt. But the problem with IVAs is that more are starting to break down. They're not lasting until term. So, if it breaks down in year 1 or year 2 of an IVA, then that member or that customer is actually saddled with not only the potentially extortionate fees of the IVA provider, but also they haven't made any payments to the creditors, or any appreciable payments to the creditors, so they actually end up in a worse situation than what they started in. They're not being guided to maybe the most suitable insolvency solutions, because IVAs are the most profitable solution for a provider, and they will quite often steer them away from a DRO, which might be more suitable but is a statutory instrument and it doesn't make that provider much money. So, I think there's a big failure. We don't have a strong independent regulator in the IVA space, and we would very much like to see the FCA take control of that and really see more people come out and be supportive of some reform in that sector.

Thank you. Those are both very important contributions. Do either of the other witnesses have anything further to add? There's no need to agree. We'll just assume that you do agree unless you disagree. Do you want to add something, Sara?

I very much agree with what has been said. I will say that in Torfaen and Monmouthshire I'm not aware of a major problem. We're not seeing a major problem with council tax and so on. I mean, the council may be seeing it; as a credit union, we are not. That may be because there are very strong and effective partnerships between the council, Citizens Advice, the housing associations, the DWP, and those partnerships have continued to meet and work together throughout the pandemic. So, the likelihood of somebody getting help and advice in a situation, I think, is much higher in areas that are doing that. I don't know whether that is happening across Wales.