The importance of treating housing costs as priority debts. Effective debt advice prevents homelessness.

By Alan Murdie

It is over 10 years since Nucleus took the decision to specialise in debt advice, ahead of financial crisis of 2008 (then known as the ‘credit crunch’). Traditionally, housing was one of the key areas of the work for Nucleus, and over this last decade we have seen it evolve into an area of debt law where money advice is an integral part of the support and services provided to prevent homelessness.

Housing debt….top of the list and the bottom line

Debt is a multi-headed beast that blights lives of many in the UK. Its most serious effects arise when it causes homelessness, directly or indirectly.
As any money adviser worth their salt will state, housing costs – rent and mortgage payments – are the top priority which must be paid ahead of any other liability. Housing costs are the most important ones to meet. Falling into debt with these will put your home at risk. And if the roof above your head is lost all other debts and liabilities become irrelevant.

Advice that needs repeating
Although this may seem obvious, this is a lesson that needs repeating.
It’s not always grasped because losing your home appears initially to be a long drawn out process but one that progressively speeds up. Easy to miss a rent or mortgage instalment when stressed or ill, undergoing a family trauma or a relationship break-up. Unfortunately, housing debts soon increase, just as a car speeds up like a car careering down a hill. Putting a brake on this process and getting the
vehicle into reverse is what effective debt and housing advice seeks to do, to prevent the otherwise inevitable crash in the form of a possession order or eviction.
The bottom line is housing costs need to be paid first ahead of other debts.
….And creditors need to realise this too

It is a message that needs to be realised more widely, and not just those in debt. Creditors, both private sector and governmental need to recognise this too. One reason why people miss out on meeting housing costs and debts is often that they are being pressurised into making other payments – what debt advisers identify as ‘non-priority’ debts.

The message needs to get across to government departments, council tax collectors, fuel companies, credit controllers and debt collectors large and small that chasing non-priority debts too harshly may end up causing homelessness through mortgage or rent areas, with end result that they get no money back either.
The better-informed creditors and branches of local government realise this, as do the more responsible financial institutions, and some are taking positive steps. But the lesson does need to keep filtering down the lower levels of many organisations who communicate directly with debtors and ourselves when acting on behalf of our clients.
Misunderstanding of the debt law and procedures and often unthinking assumptions and even prejudice against debtors is still surprisingly widespread. Tackling these are among the many goals of Nucleus and Ealing Advice with our work in this vital sector in 2019.

Economy Energy, an energy supplier with about 235,000 domestic customers, has ceased to trade.

Ofgem’s advice to Economy Energy’s customers in the meantime is:

  • Do not switch to another energy supplier.
  • Take a meter reading ready for when your new supplier contacts you.

For more info go to the Ofgem website

I’m pregnant and my employer has dismissed me for misconduct. What can I do?

An employer can fairly dismiss a pregnant employee for gross misconduct, e.g. theft or violence, but they must show there is reasonable evidence of guilt, dismissal is a reasonable sanction for the misconduct in question and the procedure is fair.

However, if you can show that the decision to dismiss you was significantly influenced by your pregnancy, you can bring a claim in the employment tribunal for pregnancy discrimination and also possibly automatically unfair dismissal.

You would have to prove facts from which the tribunal could decide, in the absence of an explanation from your employer, that you were dismissed because of your pregnancy.

Employers rarely admit racist thinking.  You may have to build up a dossier of facts which, taken together, are sufficient to show that your pregnancy could have been the reason for your dismissal.

Such facts could include:

  1. Discriminatory comments made by your employer about you or other pregnant employees.
  2. Suspicious timing – was the dismissal shortly after you announced you were pregnant?
  3. Did your employer follow their normal disciplinary procedure? g. Did they normally carry out an investigation but they didn’t in your case?
  4. Was the dismissal unreasonable in the circumstances? E.g. Was there clearly insufficient evidence of your alleged misconduct? Was the misconduct so minor that dismissal was clearly an unreasonable sanction?
  5. Were there any non-pregnant employees who committed the same misconduct but were not dismissed?
  6. Evidence of your employer’s treatment of other pregnant employees. How many pregnant employees do they employ?  Have they dismissed other pregnant employees?
  7. Failure of your employer to give their managers equal opportunities training.

Nucleus specialising in helping with discrimination cases, if you have submitted a claim already or have been dismissed in the last 3 months ring us.

How to tackle Fuel Poverty.

We see more people than ever being in a situation where they are unable to pay their fuel bills as in the case below show. Fuel now takes up quite a high proportion of household expences – its nearly 12 % of all households.  For private tenants is a lot higher : 19% of households.

Amy is  a single parent with mental health issue, who was  on ESA HB CHB CTC and CTS  she had huge  fuel bills  and was being asked to make huge repayment or have a  prepayment meter, or money deducted from her  benefits

She was willing to make affordable repayments, but not the huge amount that was being asked for by the Fuel provider. Amy did not want any of the strategies offered, as she wanted to be able to make payment for her current usage plus something off the arrears, which would help her with budgeting.

We helped her to negotiate affordable repayment. Once the repayments were in place her adviser applied for a charitable grant which was successful and a debt of £1942.00 was written off.

Most of the big 5 fuel providers have charitable grant available to help people in need, but they will try to get the arrears paid off within the year, but you should only offer payments that are affordable for you Shopping for a better energy deal and switching tariff or energy supplier can make a big difference to your bills – around £300 a year.  You can save money and get the best deals.(see “Ofgem explain your energy bill”)

More guides on energy bills

Universal Credit is coming…..

Universal Credit (UC) is gradually being rolled out nationally and will be in full service soon. This means that all new claimants will have to claim UC rather than the legacy benefits of ESA, JSA and housing benefit.

If a claimant is living in supported housing or in temporary housing (effective from April 2018) housing benefit will be paid to cover the rent. If claiming UC it is important to remember to claim council tax reduction from your relevant local authority you live in.
If you receive a decision that your ESA has stopped due to failing the Work Capability Assessment (WCA), it is important to obtain advice before claiming UC. Once you claim UC you cannot return to legacy benefits unless you move to an area that is not a UC full service area.

What makes up UC?

Stella claimed Universal Credit (UC) as she could no longer work due to ill health.

However she approached Nucleus when she received a decision from DWP that she is fit for work despite having doctors’ letters stating she has complex health conditions preventing her from working.

Her first step would be to request the DWP to reconsider the decision, known as a mandatory reconsideration (MR).

The decision wasn’t changed and we assisted client to appeal to the Tribunal Service. She had a benefit cap applied to her UC award that reduced her basic UC award of £317.82 a month to £207.

The cap would be lifted if her appeal is upheld and she’s awarded LCWRA (equivalent to the support group of ESA). Happily her UC appeal was upheld with the LCWRA which will be backdated to the date she claimed UC.

New Regulations To Help Tackling Overcrowding (…but for HMOs only!)

vercrowding  in England

Levels of overcrowding in London are more than twice as high as the rest of England for every tenure ( but it’s worst for tenants).

In England: 

  • 1% of owner occupier households are over crowded,
  • 3 % of private tenants are living in overcrowded  housing and in Social housing
  • 4% are living in over crowded house holds

Over Crowding In London :

  • 3% of owner occupier households are over crowded,
  • 11% of private tenants are living in overcrowded  housing and in Social housing
  • 13% are living in over crowded house holds

Houses in Multiple occupation.

Londoners have it tough, with house and rental prices spiralling over the past decade, HMOs (home of multiple occupancy) have become a popular choice for the young single people and couples.

London has 40% of the country’s total HMO tenancies.

It is often the cheapest form of housing available to people and can have a reputation of being a bit “scuzzy”   and the choice of poeple with no other choice.  But most working people in London living on their won live in a HMO.The biggest complaint is small hutch like units as developers try and sqeeze and squash in as many in a building as possible.The New regulations, which came in on 1.10.18 may just start  to tackle the biggest problem.

  • Bedrooms must not fall below a minimum room size(6.52 sqm for one person and 10.23 sq. m for two persons). Only rooms that meet the minimum room sizes  can now be occupied for sleeping in in a licensed HMO, whether the room is in a shared house or is a bedsit.
  • he definition of an HMO : for licensing purposes, from 1/10/18 , will be ” any property occupied by five or more people, forming two or more separate households” and must be licenced by the local authority .
  • new minimum /standards/ numbers of bins and storage facilities for waste  to be setWe think that as the biggest change will be  that rooms  under 4.64 sqm cannot be used for sleeping ( plus the fact that any  floor area under a height standard of 1.5m is not included in the calculation.) will have the biggest change. Council can make it better Local councils   can  also apply further conditions to licence HMO local IE  building on the minimum room sizes, amenity standards (kitchen facilities, number of bathrooms etc)  the standard of HMO accommodation may , at long last , improve.
    We think that LA need to set the agenda for higher standards – they have the power to demand higher standards and should do so  for the benefit of local residents. Rogue landlords often try and cram as many bedsit units in as possible to maximise their rental income. This has been standard pratice in central London.We hope local councillors will aim to set higher standard local : they have the power. If you think people in bedsits need more room than 1 single bed plus a coffee table please do rise this with local councillors

If the above effects you please do ring us on 02073734005

Justice week

Nucleus was pleased to  support the first ever Bar Justice week at the beginning of November. Highlights of the week were 25 events inside and outside of Parliament, the issue of eight specialist reports (‘The Justice Papers’) a petition to extend legal aid and the release of a short film. All made the case for free and affordable legal services for the public at a time of unparalleled demand in many areas of advice work.

Now provision is only available to a small minority and the majority of defendants in the County Court have no representation at all, having to struggle with the complex provisions of the rules of the CPR and The County Court Practice (known as The Green Book) by themselves. Faced by the power and resources of financial institutions, utility companies, state agencies and local authorities many defendants are unable to adequately present their case and defend themselves.

Legal aid and funding for social welfare law : law which affects the poorest and most vulnerable has had a huge effect on people.
Locally, we  can only take 1/4 of the benefits cases to tribunal compared with 8 years ago.
With family , directly due to cuts in legal aid and private provision, demand for help has risen form the 15th most common query to the 5th in the  last 8 years.

A short film   Justice cuts: the stories behind the numbers has been released highlighting the issues:

Nucleus can confirm the lack of legal aid is particularly acute in debt and money advice work and despite the huge increase in debt and enforcement proceedings in England and Wales since 1990;  full legal aid provision has never covered many common debt problems and has now been removed from many housing and benefit cases entirely.

These views are backed by an academic study. Justice Week promoted the findings of   Professor Martin Chalkley for the Bar Council revealing that justice funding has been cut by 27 per cent in real terms over the last 10 years as public spending actually grew by 13 per cent. Nucleus re-organised itself over this period in 2007 to specialise in money and debt advice but nonetheless experienced directly the effects of the major cuts of 2008-2011 in legal aid funding for housing, welfare and administrative law, a process continued in 2014-16.
https://www.barcouncil.org.uk/media/688940/funding_for_justice-_the_last_10_years_version_-_professor_martin_chalkley.pdf

The impact across the justice system is revealed further in The  Justice Papers written by practising barristers and workers in charities, a series subtitled ‘At the sharp end of the cuts’.

To read five of the Justice Papers published in Justice Week giving personal insights on the issues:

 

See: https://www.barcouncil.org.uk/media-centre/the-justice-papers

Further discussion of the issues with take place at the Bar and Young Bar conference in London on 24th November 2018.

 

 

 

London Legal Walk 2018

A big thanks to all of the fantastic walkers,  trustees, staff and volunteers  who joined  13,000  other walkers from  over 750 teams to help raise funds for legal advice centres across the south east.

Left to right : Zee, Roy, Jose, Jan, Pat,Iliyana, Abu  and Baljit ( behind the camera).
To sponsor  any of them  click here

Funding from local and central government as been cut between 40% and 85% for most areas of work. We work with the most vulnerable often when they are at their lowest. We help with access to benefits , employment rights, housing and indebtedness.
Most of the cuts have been to prevention work – providing people with the right advice at the right time to promote independence and self reliance to get back on their own two feet.

Who is it all for?

Why We Walk Graphic

“HAVE YOU NOTICED HOW FAT THE BAILIFFS ARE GETTING ?” THE ENFORCEMENT INDUSTRY GETS RICHER WHILST ENFORCEMENT FEES LOOPHOLE NOW PUSHES DEBTORS DEEPER INTO DEBT

William Shakespeare, Julius Caesar (1599):

[Cas.] Upon what meat doth this our Caesar feed, That he is grown so great? (Act 1.2.149-50)

[Caesar] Let me have men about me who are fat (Act 1.2.194-95)

Ealing Council’s  use of bailiff  to enforce debts has increased over the last 2 years.

 

Image result for stop the bailiff

 

It is a deservedly better-known fact that Britain’s top bailiffs are paid far more than Britain’s top judges. The reason for this are the record levels of judgment debts now being collected by enforcement agents who operate the recovery system as a profit-making business.

Britain’s domestic debt burden is growing – and high enforcement fees demand by bailiffs and High Court Enforcement Officers are making a lucrative industry even richer whilst pushing many of the poorest deeper into debt.

Typically these debts arise from rent arrears, council tax, maintenance payments, student loans, fines, penalties, court judgments and benefit recovery actions which fall predominantly upon people in poverty. Once judgment is obtained the task of enforcing judgments is passed on to the privatised enforcement industry which has grown rich in the past quarter of century on the business of recovering debts owed to institutions and the state.

Much of modern debt law was originally written on the assumption that deliberate evaders and would-be evaders of debts i.e. ‘Won’t Payers’ will be coerced into paying up by the prospect of extra charges being add to the sums owed in enforceable debts.

In reality, this notion fails to appreciate that many people in debt are simply ‘Can’t Payers’ whose incomes have been squeezed by benefit cuts and rising rent and fuel costs. Since the beginning of the 1990s millions of people have caught in a twin downward spirals of debt and falling incomes which inevitably result in the commencement of automated forms of debt recovery and the computerised issue of legal proceedings.

The recovery of fees is complex area and widely misunderstood and if anything the Tribunals Courts and Enforcement Act 2007 and the regulations made under it – which was intended as a reform of the system – has actually added to the problem.

HIGH COURT ENFORCEMENT OFFICERS….A CASE IN POINT

Let us take the fees imposed by High Court Enforcement Officers as an example. This is a branch of enforcement which is increasingly well-known from a number of TV programmes highlighting their use in debt recovery.

HCEOs are private recovery officers, often attached to firms of solicitors and the fees charged by them are regulated by statute. Their work as expanded massively since 2004. In theory the High Court Enforcement Officers come round to the debtor’s home, seize goods and – if the debtor does not pay – sells the seized goods at public auction. The fees are meant to be paid by creditors and landlord, but all too often the enforcement fees are passed on to debtor by the way in which the system has operated since 2014.

As the law stands, with High Court enforcement Officers the level of fees before 6th April 2014 is determined by the High Court Enforcement Officers Regulations SI 2004/400. After this date they are subject to the Order (as amended and the scheme of the Tribunals Courts and Enforcement Act 2007 Schedule 12 and SI 2014/600, art 2 and art 7).

The regulations as amended state that under Regulation 13 (Miscellaneous Matters) before 6 April 2014 fees may be charged against either (a) ‘the person upon whose application the writ was issued’ (i.e. the creditor) or ‘the person at whose instance the execution is stopped’ (i.e. the debtor who pays up). This meant the fees were payable by either the judgment creditor or the judgment debtor.

After 6 April 2014 these rules are amended for the Schedule 12 procedure with Regulation 3A providing that fees must be paid by the person on whose application the writ was issued (that is the creditor) where the proceeds of the auctioned good can’t cover the debt.

“[(3A) Where an enforcement officer uses the Schedule 12 procedure and the proceeds, if any, are insufficient to enable the enforcement officer to recover the compliance fee, that fee (or the balance of it which remains outstanding) that fee (or the balance of it which remains outstanding) must be paid by the person on whose application the writ was issued.” [ITALICS ADDED]

This effectively means that after enforcement action has been commenced and the goods taken into control and sold, the HCEO is expected to be paid from the proceeds of the sale of goods at auction.

After that he creditor or landlord is ultimately liable for the High Court Enforcement Officer’s fee if the sums have not been satisfied by the debtor in some capacity. Liability to pay fees is on the judgment creditor unless the sum has been recovered from the debtor by way of an agreement to pay.

Broken down into plain English that means the creditor or landlord should pay the fees.

Except it’s not happening.

It’s the debtor who is having to pay the fees without the enforcement officer having done even half the work they are employed to do.

THE LOOPHOLE

The reason the system is failing is basically the whole of enforcement of goods is a legal con trick. The system of seizing goods and taking them away to sell at public auction to pay a judgment debt has probably not worked as the way it is imagined since before 1970.

Goods sold at public auction fetch a pittance. Alan Murdie, Chair of Nucleus comments “In nearly 30 years I never come across a case where the price of the goods at auction ever exceeded the debt; most cases don’t even cover the auctioneer’s fee.”

The only cases where enforcement against goods sold at auction actually pays are case involving high value cars, valuable heavy plant equipment, helicopters or aircraft. These are not possessed by the average person in rents arrears or appearing on the council tax debt list.

But to circumvent this problem, High Court Enforcement Officers (and other enforcement agents such as those collecting council tax) get the debtor to agree to pay up the money instalments, including the costs of the enforcement fees which otherwise would be the responsibility of the debtor. In most cases, the last thing that the High Court Enforcement Officer wants to do is actually take away goods to sell.

Effectively the fees are being demanded and paid before the actual step of enforcement, by the threat of action, rather than taking any actual enforcement action. All too often it is the enforcement officer who demands the terms of any payment, despite there being no specific power to make such an arrangement.

CONCLUSIONS

In short, the whole system is an organised bluff. Debtors pay up simply imagining they are required to pay, under threat of having goods seized. In most cases this accomplished by the High Court Enforcement Officer just standing on the doorstep. But it means with the inclusion of fees for the process that debtors may risk borrowing at rates they cannot afford or simply fail to pay other liabilities, including priority debts. The result is that they fall deeper into debt,

create new debts for themselves, whilst members of the enforcement industry enrich themselves further and the cycle continues.

PREPARING FOR THE IMPACT OF UNIVERSAL CREDIT – FEBRUARY 2018 LOCAL AUTHORITIES AND NGOs MUST PREPARE NOW FOR RENT ARREARS

In 1698 it took six weeks for Sir Christopher Wren to undertake a full damage survey on a stately home (amounting to £162, the equivalent of £19, 430 today) and for it to be processed and paid in full by the Treasury to the claimant writer John Evelyn in compensation.
Image result for universal credit

In 2017, 321 years later the DWP was taking 5-6 weeks or more to process a claim for £72 for a claimant entitled to Universal Credit.

Universal credit is due to be rolled out in Ealing and other boroughs in West London in February 2018

Recent findings

Evidence accumulated by Parliament showing the failings of the scheme and pilot areas was presented to MPs on 15 November 2017, leading to members of both the House of Commons and the House of Lords calling for reform. That is five years after the first UC legislation was passed; seven years after it was conceived.

Three days later on 18 November 2017, the personal finance programme Money Box on BBC Radio 4 revealed that claimants could be waiting for a month in December before they get any payment, apparently because it is a five-week month, something the programming of the system was not designed for.

Preparing for UC

This does not bode well for claimants in West London where the benefit is to be rolled out from February 2018.

Public bodies, advice agencies, charities and foodbank providers in West London need to start planning ahead.

So if you’re going to be affected

· Be prepared for this system not to work;

· Start saving money now if you have any spare and put some money aside as it is likely your income will fall;

· Identify which creditors to contact (most important payment are your housing costs in rent and mortgage)

· You may have to use the appeal system to get any payment you are due;

· Keep a record of what is happening.

Universal credit was created under section 1 of the Welfare Reform Act 2012. Some difficulties being recognised now were apparent as long ago as the Welfare Reform Bill stage in 2011, and certainly apparent by the time the regulations were enacted between 2012-2014. So it was foreseeable – see an article from 2015. http://benefitslegalgroup.org.uk/2014/01/doom-awaits-universal-credit/

The fact that this may only be dawned on people on so many in Parliament and public life is highly regrettable; worse still, this slow response time does not suggest that the problems ahead in the winter of 2017-2018 will be fixed speedily. Ultimately, there may be compensation claims for the mess that universal credit threatens to be. In the meantime, local government organisations are already sounding warnings about the situation, the key one being:

“If the growing crisis of UC-related rent arrears is not resolved, then there will be serious consequences for tenants and for housing providers.”

This comes from Insight, in ‘Credit Notes’ by Geoff Fimister of the Institute of Revenues, Rating and Valuation (IRRV) December 2017.

Indeed, the IRRV Chief Executive David Magor stated in an editorial on Universal Credit (UC) and housing benefit (HB) in the October 2017 issue:

‘This situation must be addressed immediately before it’s too late – and at the top of the list of recommendations should be the removal of HB from UC!’

This followed an alarming piece The Observer (17.10.17) detailing the scale of the problem: ‘Ministers are coming under intense pressure to put the brakes on the government’s flagship welfare reform programme, following damning new evidence that it is leaving thousands of low-paid workers unable to pay their

rent and at risk of homelessness.’ It revealed rent arrears are ‘running at three, four or even five times the level of those on the old system’.

No-one can say that we have not been warned, these problems will start to become acute as early as April 2018 as rent arrears pass pass the two-month mark.

Alan Murdie, LL.B, Barrister Chairman, Nucleus.