WWW.IPPR.

ORG

WhenTimesAreTough:
Fourfamilies’stories
Livingwithdisability,copingfinancially: thestoryofNick’sfamily(Newcastle)
Balancingthebudgetasaloneparent:thestoryofKaren’sfamily(London)
Copingwithredundancy:thestoryofAnna’sfamily(Glasgow)
Payingapremiumforpoverty:thestoryofSophie’sfamily(Nottingham)

December2009
©ippr2009

InstituteforPublicPolicyResearch
Challengingideas– Changingpolicy
2 ippr|ConsumerSpendingandDebt:Fourfamilies’stories

Aboutippr
TheInstituteforPublicPolicyResearch(ippr)istheUK’sleadingprogressivethinktank,
producingcutting-edgeresearchandinnovativepolicyideasforajust,democraticand
sustainableworld.
Since1988,wehavebeenattheforefrontofprogressivedebateandpolicymakinginthe
UK.Throughourindependentresearchandanalysiswedefinenewagendasforchangeand
providepracticalsolutionstochallengesacrossthefullrangeofpublicpolicyissues.
WithofficesinbothLondonandNewcastle,weensureouroutlookisasbroad-basedas
possible,whileourGlobalChangeprogrammeextendsourpartnershipsandinfluence
beyondtheUK,givingusatrulyworld-classreputationforhighqualityresearch.
ippr,30-32SouthamptonStreet,LondonWC2E7RA.Tel:+44(0)2074706100E:info@ippr.org
www.ippr.org.RegisteredCharityNo.800065

ThispaperwasfirstpublishedinDecember2009.©ippr2009

Acknowledgements
ipprwouldliketothanktheConsumerSpendingandDebtproject’sfunders,Friends
ProvidentFoundation.DaliaBen-GalimandRachelSeal-Jonesatipprresearchedandwrote
thecasestudies.GeorginaKyriacoueditedandformattedthereport.
Finally,abigthankyoutoallthefamilieswhotookpartintheresearchfortheirtimeand
input.

Background:theconsumerspendinganddebtcasestudies
ipprhasexaminedhow58low-incomefamiliesmanagetheirday-to-dayfinances.The
innovativeresearch,whichtookplaceinLondon,Newcastle,NottinghamandGlasgowin
2008–2009,hasprovidedinsightintothepressuresthatmanylow-incomefamiliesfaceas
theystruggletobalancetheirincomeandexpenditure.
Wearepublishingfourcasestudiesfromtheresearchtoillustratetheimpactofbroadsocial
andeconomictrendsathouseholdlevelandshareknowledgeanddata.Eachcasestudyhas
beenchosentoprovideanindividualfamilynarrativearoundpovertyandtheeconomic
crisis.Theyfocuson:
•Livingwithadisability –howonefamilyinNewcasleiscopingafteranaccidentleft
themainbreadwinnerdisabledandunabletowork.(p3)
•Loneparentsandlowpay–whyemploymenthasnotbeenarouteoutofpovertyfor
onelone-parentfamilyinLondon.(p6)
•Redundancy –howredundancyhasdramaticallychangedthefinancialcircumstancesof
onehouseholdinGlasgowanditsimpactondailyfamilylife.(p9)
•Thepovertypremium –perceptionsofthecurrentfinancialcrisisthroughtheeyesof
onefamilyinNottinghamandhowthisaffectsthepremiumlow-incomefamiliespayon
essentialgoodsandservices.(p13)
Allnamesinthisreporthavebeenchanged.
3 ippr|Livingwithdisability,copingfinancially:thestoryofNick’sfamily

Livingwithdisability,copingfinancially:thestoryofNick’sfamily
Familiesthatincludeanadultwithadisabilityaremorelikelytobelivinginpovertythan
familieswithnodisabledadult.Thiscasestudyexaminestheimpactofdisabilityonone
family,fromNewcastle.

Thefamily’sstory
Nickis42andlivesinNewcastlewithhiswifeAlisonandtheirtwochildren,Jack(12)and
Grace(6).In2007,Nickhadabadfallatworkthatinjuredhisbacktotheextentthatheis
inconstantpainandcannolongerwork.Despitemanyoperations,therehasbeenno
improvementtohisconditionandhehasbeentoldbythedoctorsthatthereisnothingmore
theycando.Nicktakesmorphinedailyandattendsapainclinic.Herecentlybeganacourse
ofacupuncturewhichhehopeswillhelptoalleviatehispain.Nickhasverylimitedmobility.
Nick’saccidenthashadahugeimpactonhisfamilyandtheyarenowstrugglingtopaytheir
mortgage.Nickalsofeelshehasnotbeengivenalltheinformationaboutthebenefitsheis
entitledto.Hewouldlikesupporttohelphimfindworkthatissuitableforhisneeds.
Nick’swifeAlisonworksparttimeatadepartmentstore.Sheisunabletoincreaseherhours
becausesheneedstocollectthechildrenfromschool,andNickhadbeenunabletodrive
sincehisaccident.Despitesomeredundanciesatthestore,Nickfeelsthathiswife’sjobis
secure.Shehas,however,recentlyhadherhourscutbackandshecannolongerworkany
overtimeorunsocialhours.Thishasimpactedonthefamily’sincomeandtheyhavehadto
tightentheirbelts.

Managingthefamilyfinances
Nickisinchargeofthehousehold’sfinancesandmakesthespendingdecisions.Together
withhiswife,theytrytoplanforeventssuchasschoolholidaysandbirthdays.
Nick’slimitedmobilityhasledhimtochooseacurrentaccountthathecanaccessthrough
hislocalPostOffice.Heusesdirectdebitstopayforhisbillsandmortgage,butfor
everythingelseheusescash.Hedoesthisbecausehefindsiteasiertokeeptrackofhis
spending.Nickavoidsusingdebitandcreditcardsanddoesnothaveanoverdraftashe
considersthema‘wasteoftime’.
Nickbudgetsverycarefullyandkeepsastrictrecordofhisexpenditure.Helikestoaccount
foreverypenny.Becauseheisinreceiptofbenefits,thefamily’sincomeisfairlysteady.
However,thesebenefitshavenotincreasedwiththecostofliving,makingitmoredifficult

Nick's average weekly expenditure (weekly income £433)

Telephone/internet
120% (£14)
Other expenditure
100% (£30)
Car (£26)
80%
Entertainment (£45)

60% Food (£129)

40% Council tax (£26)

20% Utilities (£36)

Mortgage (£145)
0%
4 ippr|Livingwithdisability,copingfinancially:thestoryofNick’sfamily

forNick.Hisutilitybills,foodshoppingandcounciltaxhavegoneup,leavingthefamilywith
lessmoneyleftoverattheendofthemonththanbefore.
Thefamilyhaveanaverageincomeof£433aweek.Asthegraphdemonstrates,thebiggest
expenseisthemortgagewhichcosts£145aweek,athirdoftheirincome.Payingthe
mortgageisthefamily’sbiggestpriorityandaconstantstruggle.Theyarecurrentlyin
arrears.
Nick’sfamilyspendjustunderathirdoftheirweeklyincomeonfood.Nickhasfoundcoping
withtherisingfoodbillastruggleandthefamilyhaschangedtheirshoppinghabits.Theyno
longerdoabigshopatthesupermarket,butbuyfreshfooddailyatthelocalshopand
makemealsforthechildrenfromscratch,toavoidwastingfood.Nicktriestotakeadvantage
ofspecialoffersbutalsoiswaryofbuyingitemsthattheydonotactuallyneed.Hehasbeen
tryingtoplanmealsinadvancetokeepthecostsoffooddown.

Savingsinajar
Thefamilyarecurrentlyspendingmorethantheirincome,havespentalltheirlong-term
savingsanddonotfeelthattheyareabletosaveexceptforspecificoccasionssuchas
Christmas.TheydeposittheirsmallchangeinjarsovertheyeartosaveforChristmas.
However,NickfindssavingforChristmasquitedepressingasit’sjustacontinuouscycleyear
onyear:
You’vesavedupsoyouhadthatlittlebitofmoneybutthenyou’rejustflat,
youhavegotnothing…you’vegottostartagain.
TheyhavebeenluckythisyearbecauseAlisonreceivedabonusingiftvouchersasareward
forworkingatthesamecompanyfor25years.Theyusedthevoucherstohelpwiththecost
ofChristmas.NickhasalsomanagedtospendlessonChristmasthaninpreviousyears,by
takingadvantageofbuyingitemsinthesales.ButtheyarealreadyworryingaboutChristmas
nextyear.
Thefamilyfeeltheyareneverreallyabletoputsignificantamountsofmoneyaside,as
somethingalwaysseemstocomeup.BeforeNick’saccident,NickandAlisonsavedforyears,
butalltheirsavingshavesincebeenspentpayingtheirmortgage.Nicktriestoputaside£25
eachmonthincasethingsgowrong,suchasthecomputerbreaking,orincaseNickneeds
togetataxitothehospital.Hewouldreallyliketohavesomesavingssotheycouldgoon
holidayandhavesomethingsetasideincaseofanemergency.Theyareplanningtosave
regularlyeachmonthbysettingupadirectdebitintoasavingsaccount.
Nickdoesnotusecredit.Hereliesonhisfamilywhenheneedstoborrowmoney.Hediduse
creditinthepast,butasheisnolongerworkinghaslostaccesstohiscreditfacility.Nick
owessomemoneyonhiscreditcard,buthehasnegotiatedanagreementwiththecredit
cardcompanyandheiscurrentlypayingbackwhathecanafford.Thehighratesofinterest
haveleftNickdisillusionedwithusingcreditandtherecessionhassharpenedhiscynicism
towardsthebankingindustry:
I’vehadthembefore,you’rebleeding,knackered…theykillyou,don’tthey
…swines.That’showIdon’tunderstandthesebanksand…NorthernRock
andstufflikethat,beingbailedoutandtheygetpaid,theygetbonuses,how
canyougetbonuseswhenit’stheirfault?
Thisdistrustwithbankinginstitutionswasacommonthemefromtheresearch.Thecurrent
economicclimatehasbredsuspicionandafeelingofinjustice,heightenedbythedisparity
betweenbankers’bonusesandgovernmentbailouts.Thishasledpeopletoquestionthe
rationaleforsuchhighratesofinterestandmanyfamilieswerefeelingincreasinglydistanced
frommainstreamfinancialinstitutions.
5 ippr|Livingwithdisability,copingfinancially:thestoryofNick’sfamily

Theimpactofdisabilityonthefamily
Nickfeelsthefamilyhavenotreceivedthesupporttheyshouldhavesincehisaccident,and
isstillnotsurewhetherheisreceivingallthebenefitsheisentitledto:
Yougetnohelp...Youdon’tfindoutaboutanything,you’vegottofindoutfor
yourself,likefillinginformsorwhatyou’reactuallyentitledto…Twoyears
wentpastandIdidn’tclaimoranything.
ThisfeelinghasbeencompoundedbyNick’snegativeexperienceswiththeJobcentre.A
yearandahalfago,Nickwastakenoffincapacitybenefitandhadtoattendmeetingsatthe
Jobcentre,whichhefounddifficult:
IhadtogotheJobcentre.[Isaidtothem:]‘I’vegotasixmonthssicknote
frommyDoctor,howcanIsignon?Ican’tbeactivelyseekingwork.’They
saidifIdidn’tsignitIdidn’tgetanymoney.Ididn’tagreewiththatbecauseI
didn’twanttolie.Ithoughtitwasridiculous…I’mnotactivelylookingfor
work,amI?I’mtaking200mgofmorphineaday,Ican’twork.
NickcontactedhislocalMPwhowasabletoresolvetheissue,andheisnolonger
consideredtobe‘activelyseekingwork’bytheJobcentre.Nickfoundthisexperience
frustrating,particularlyashewouldliketofindemployment,butfeelshehasnotreceived
adequatesupportinfindingworkthatwasappropriateforhisneeds:
They’recomplainingaboutthenumberofpeopleonincapacity[benefit]and
allthat,theremustbesomethingthattheycando…simplejobsorwhatever
orre-trainthemorsomething.Idon’tknowwhatthereisoutthere.
Nickisconcernedthatunlessheisabletofindwork,thefamilywillbeunabletosurvive
financially:
I’mverypessimisticaboutthefuture...[we’re]justcompletelykaput…unlessI
dosomethingaboutit.
Thishasincreasedhisdesiretoretrainorfindajobthatenableshimtoworkfromhome.
WithNickbeingunabletowork,thefamilyhavehadtoadapttoadifferentlifestyle.The
familycannotaffordtospendmuchonChristmasordaytripsandholidaysarecompletely
outofthequestion.Nickfindsthisreallyhardandhatesthatthechildrendonotgetas
muchastheirfriendsdo.Hefeelsguiltythathecanonlyaffordtobuythechildrenpresents
whentheyareinthesalesandthinksthatadvertisingputspressureonparentsandchildren
tospendmorethantheycanafford,particularlyaroundChristmas.
Althoughthechildrenunderstandthattheycannotaffordtogoonholiday,Nickfindsitvery
upsetting:
WeusedtogotoCentreparcs…forhisbirthdayandherbirthdaybutwe
can’tgo[now].Mydaughtercan’tevenwatchtheadvertsbecauseshegets
upset.Breaksyourheart.
Nickfeelsthataholidaywouldbenefitallthefamily:hefindsconstantlykeepingcheckon
howmuchtheyarespendingdepressingandwouldliketohaveabreakfromworryingabout
theirfinances.Thisfeelingwassharedbymanyofthefamiliesintheproject,whofound
worryingabouttheirfinancesstressful.

Lookingforward
Nickfeelspessimisticaboutthefuture;hefindsithardtobelievethattheirsituationcan
improve.Hehashadtoturntohisextendedfamilywhenheneedstoborrowmoney.
However,Nickwouldreallyliketobeabletoworkagainandisconcernedthatthefamilywill
beunabletosurvivefinanciallyonAlison’ssalaryalone.
6 ippr|Balancingthebudgetasaloneparent:thestoryofKaren’sfamily

Balancingthebudgetasaloneparent:thestoryofKaren’sfamily
Beinginalone-parentfamilyincreasesthelikelihoodoflivinginpoverty.Overathirdofthe
familiesinippr’sresearchprojectwerelone-parentfamilies.Thiscasestudyexamineshow
Karen,aloneparentfromLondon,managesherfinances.

Thefamily’sstory
Karenis33andlivesinLondonwithherthreedaughters,aged17,14and6.Sheworksasa
merchandiser,replenishingvendingmachinesinhospitalsandoffices.Whenheryoungest
daughterstartedschool,shemovedfrompart-timetofull-timework.Sheisreallyhappyto
beworkingfulltime:
I’mhappierthatI’mworkingfulltime…becausepeoplelookdownonyou
whenyouareonbenefits,that’sthegoodside.WhenIwasparttimeIhad
moreofmyrentpaidwhichwasmucheasier,soyeah,it’salittlebitharder…
Plusit’steachingthekids.[If]youwantsomethinginlifeyouhavegottogo
outandworkforitbasically,itdoesn’tcomeeasy.
Workingfull-timepresentsKarenwithdifferentfinancialdifficulties.Shehasfoundmanaging
herfinanceshardersincesheisnowresponsibleforpayingmoreofherrentandhaslost
someofhertaxcredits.Shesaysthatworkinggivesher‘moreselfrespect’.Thesenseof
achievementitgivesheroutweighsthedrawbacks.

Aconstantstruggle
Karenhasalwaysbudgetedcarefully,butdespitebeinginpaidemployment,managingher
financesisaconstantstruggle.Sheisfocusedonclearingherpreviousdebtsothatshecan
begintosaveforherandherchildren’sfutures.
Theclosureofmanywellknownhighstreetshopshasleftherconcernedforherownjob
security.Shehastobemorecarefulwithhermoneyandthishashadanimpactonher
spendinghabits:
Youcan’tgospendingloadsofmoney…justincaseyouhaven’tgotajob.
Asthegraphbelowindicates,Karenbudgetscarefullytomakesurethatshespendsonly
whatshehas.Herweeklyincomeis£345.AlargeproportionofKaren’sexpenditureison
food.Theriseinfoodpriceshasmeantthatsheisspendingsignificantlymorethansheused
toonfood,currently£61aweek–18percentofherincome.

Karen's average weekly expenditure from a weekly income of £345

120%
Telephone/internet
100% (£10)
Council tax (£20)

80% School meals (£26)

60% Utilities (£38)

Food (£61)
40%
Rent (£78)
20%
Debt repayment
(£110)
0%
7 ippr|Balancingthebudgetasaloneparent:thestoryofKaren’sfamily

Findingthemoneyforschooldinnersforallthreeofherchildrenisaparticularchallengefor
Karen.Shespendsabout£3adayonschoolmealsforher14-year-olddaughterand£2.20a
dayonher6-year-olddaughter,totalling£26foraweek’sworthofschoolmeals(8percent
ofherweeklyincome).Whenshecannotaffordtogivethechildrenmoneyforschoolmeals,
shemakesthempackedlunchesinstead,whichisalotcheaper.However,sheprefersnotto
havetodothisasshefeelsthatitisimportantthattheygetahotlunch,especiallyinwinter.
Karenisusedtosavingandbudgeting.Livingonalowincome,shefindscataloguesuseful
forspreadingthecostofexpensivehouseholdappliances.
Ifyou’reonalowbudgetandyouneedanewwashingmachine,youneeda
newtumbledryer,youneedanewsofa,theyarehandybut…someofthem
havegotahighAPR.

Saving,borrowingandconsumerpressure
Karendoesnothaveanylong-termsavingsbutwishesthatshedidasshefeelsthismighthave
preventedherfrombuildingupsomuchdebtonhercreditcard.Karenfeelssheisunableto
saveotherthanintheshorttermbecauseofherlowincome.Shedoes,however,savefor
birthdaysandotheroccasionslikeChristmas.WhenKarenstrugglestomakeendsmeet,she
telephonesherfatherwholendshermoneyandshepayshimbackalittleeachweek.
KarentriestospreadthecostofChristmasbybuyingpresentsthroughouttheyear.Shealso
givesherfather£10to£20tohelphersaveforChristmas,whichsheknowsshewould
otherwiseendupspendingonthechildren.Despitethisplanning,thepost-Christmasperiod
isparticularlydifficult.KarengetspaidearlieraroundChristmas,soafterwardsthereisn’t
muchmoneyleftover.
SchoolholidaysarealsodifficultforKaren.Sheisonlyabletoafforddaytripsifthereare
specialoffersavailable.Karenalsotriestofindcheapwaysofentertainingthechildrensuch
asgoingforpicnics.
Karencannotalwaysaffordthethingsthatherchildrenneed.Heryoungestchildseemsto
constantlyneednewshoesandfrequentlyrequeststhingsshehasseenadvertisedon
television.Buyingforherteenagersisevenmoreexpensivebecausetheywantbranded
clothingtokeepupwiththeirfriends.Karen’soldestdaughterunderstandsthatmoneyis
tight,butthe14-year-oldcannotunderstandwhyshecannothavethesamethingsasher
friends.Karenoftenendsupgoingwithoutherselfsothatthechildrencanhavethethings
thattheywant.
It’sdefinitelyTVandpeerpressure.Iftheirfriendsgotoschoolandthey’ve
gotsomething,they’reonthelatestnewtrainersandstuff,they’regoingto
wantthem,aren’tthey?...My17-year-oldunderstandsyoucan’thave
everythingyouwantbutmy14-year-oldcan’tunderstandwhyshecan’thave
abrandnewpairoftrainerseverymonthlikehermatedoes.Itisdifficult
sometimes,awfullyexpensiveandyougowithoutyourself,youdefinitelygo
withoutyourselfonceyouhavechildren.

Copingwithdebt
Karenregretseverhavingacreditcard,becausetheAPRisveryhighandshehasbeen
unabletoclearthisdebt.
IwishI’dnevergotthatone[hercreditcard].Weallmakemistakes,wellsome
peopledo.Iwon’tbedoingitagain;theAPRisjustsohighonit…It’smy
ownfaultforgettingmyselfintodebtinthefirstplace,Icouldkickmyself
really,butsometimeswhentimesarehard,likewhenIhadmypart-timejob,
beforeIwentfull-time…Iranupafewdebtsthen.
Karenalsogetsvouchersfromalenderthatcanbeusedinmanyhighstreetshops.Although
thesevouchersarecheaperthanastandardcashloanfromadoorsteplender,theystillhave
8 ippr|Balancingthebudgetasaloneparent:thestoryofKaren’sfamily

highratesofinterest.Asdemonstratedinthegraph,Karenisspending32percentofher
weeklyincomeondebtrepayments,ahuge£110.Sheishopingthatifshecanpayoffher
creditcardinhugechunkslikethis,shewillbedebtfreeinafewmonths’time.Before
decidingtopayoffhercreditcardinlargechunks,Karenhadbeenpayingback£100a
month,with£40goingoncharges;shefeltherdebtwasnevergoingtobecleared.Sheis
frustratedasshehasbeenpayingoffhercreditcardforayear,butsheisstillnowherenear
clearingit.Sheisangrywithherselfforgettingintodebtinthefirstplace,butfeelsthat
runningupsomeofthatdebtwasinevitable.
Karenisangrythatshehastopaymoreforhercreditbecauseshehashadafewlate
payments;shetriedtogetabankloantoclearherdebtbutwasrefused.Sheisfrustrated
thatthebankwillnotgiveheraloanwithalowerAPRof7.9percentbutwillhappilygive
heracreditcardwithanAPRof26.9percent.
BecauseIhavehadafewlatepaymentsIcan’tgetabankloanbutIcanget
aProvident[loan],Icangetacatalogue,IcangetacreditcardandIcanget
everythingelsebutthebankwon’tgivemealoan,andthatreallygratesme.
Thelatepaymentsweremadebecausethedatesheispaidherwageschangedwhenshe
wentfrompart-timetofull-timework,stretchingherfinancesattheendofthemonth.
Karentoldherbankthisandaskedtochangethedatesonwhichherdirectdebitslefther
account,butthiswasrefused.Karenhatestheinflexibilityofthebankswhochargeherfor
beinglatewithherpayments,evenaftersheexplainshercircumstancestothem.Sheis
especiallyangeredbythefactthateachlatepaymentresultsinacharge,pushingherfurther
intodebt.
Itgetsyouinmoredebtbecauseyou’regettinga£12amonthchargeaswell
ontopofit.Iknowitdoesn’tsoundmuchbutifyouaddthatupovertheyear
that’squitealotofmoneyandit’snotfair.
Thiswasacommonthemeamongotherfamiliesintheproject.Manyfoundbanksinflexible
andunhelpfulwhichhasbredmistrustandanunwillingnesstousebankingservices,
particularlybecauseunauthorisedandlatepaymentsautomaticallyresultincharges.
Karenreceivedfinancialadvicebutfoundthatitdidnotmeetherneeds.Shecontactedan
independentcompany,whoshehopedcouldhelphertobettermanageherdebt.Shewas
hopingthatshewouldbeabletogetaconsolidationloantopayoffherdebtinonelump
sum,andthenpayofftheloanthroughmonthlyrepaymentsatalowerAPRrate.However,
shedecidedagainsttheconsolidationloan,asitwouldhavemeantlosinghercreditrating;
Karendecidedthatwasimpracticalasshewouldbeunabletoorderfromcatalogueswhichis
theonlywayshecanaffordlargeappliances.
Ifyourwashingmachinebreaksdownyou’rescrewed,basically,because
whereareyougoingtogetonefrom?Tohelpyououtofdebttheywantyou
togobankrupt.

Concernsforthefuture
Karendesperatelywantstobefreefromdebt.Shehopesthatoncesheis,shewillbeableto
putsomemoneyasideforsomelong-termsavings.Whenherdaughterturned17,thefamily
lostsomeoftheirentitlementtochildbenefitandtaxcredits.Karenisalsoconcernedthat
her17-year-oldwillnotbeabletofindajob,despiteherwillingnesstowork.Herdaughter
hascontactedtheJobcentrebutsofarhasnotfoundajob.Sheparticularlywantsoneso
thatshecancontributetothehousehold,tomakeupforthelossofbenefits,andtogive
hermorefinancialindependence,tobeabletobuyherownthings.Shedoesnotwanttobe
completelyreliantonhermother.
Karenisverykeentosupportherfamily,andhasactivelysoughttogetbacktowork.
Despitethepressures,sheisproudofthisachievementandofthefinancialindependenceit
hasbroughther.
9 ippr|Copingwithredundancy:thestoryofAnna’sfamily

Copingwithredundancy:thestoryofAnna’sfamily
Theeconomiccrisishasdisproportionatelyaffectedlow-incomefamilies.Aquarterofthe
familiesinippr’sprojectonconsumerspendinganddebthadexperiencedachangeintheir
workingpatterns:eitherbeingmaderedundantorhavingthenumberofhourstheyworked
cut.Thiscasestudyexaminestheimpactofredundancyononelow-incomefamily,from
Glasgow.

Thefamily’sstory
Thirty-eight-year-oldAnnaliveswithherhusbandDavidandtheirthreechildrenaged12,11
and4.Annahasnotworkedsinceshehadcancerseveralyearsagoandshestillsuffersfrom
poorhealth.Inthelastyear,thefamily’sfinanceshavebeenbadlyaffectedbyDavidbeing
maderedundantfromhisjobasaroughcasterinalocalbuildingcompany.
Theredundancyhashadasignificantimpactonthefamily–financiallyandemotionally.
Annatoldusaboutthedifficultiesshefacesinmanagingthehouseholdincomefollowing
herhusband’sredundancy.Meetingtheirmortgagerepaymentsonaseverelyreduced
incomeiscausingthegreateststrain.Annaisworriedaboutlosingtheirhomeandthelong-
termimpactthiscouldhaveonthefamily’sfuture,particularlyonherchildren.
Sincebeingmaderedundant,Davidhasbeenlookingforanewjobbuthasbeen
unsuccessful.Davidhasspokentoallofhiscontactsinthebuildingindustry,buteveryone
heknowsisinasimilarposition.Annaisconcernedthatemployerswillfavouryoungermen
overDavid,becausetheyhavefewercommitmentsandarepreparedtoworkforlessmoney.
We’retryingtofindhimanotherjob,obviouslyyouneedajobthatcoversthe
outgoings…whichishardtocomeby…fortradesmen.Thejobsthatareout
thereareminimumwageandifthatwasthecasethenwewouldneedtosell
thehousebecausewewouldnothaveenoughtocoverourmortgage.
EvenbeforeDavid’sredundancy,thefamilydidnotconsiderthemselvestobe‘welloff’.The
familystruggledandDavidworkedhardsotheycouldaffordtoenjoythemselves.Thefamily
wouldenjoyholidays,daysoutandtripstoMcDonaldsandthecinema.Thechildrenwere
abletogoonschooltrips,attendpantomimesandhavenewbikes.Thelastyearhasseen
significantchanges.

Impactofredundancyonthefamily
AlthoughthefamilywereawarethatintheeconomicclimateDavid’sredundancywasa
possibility,theywereunpreparedforhowdramaticallyitwouldchangetheirlives.Annaand
Davidmayhavetoselltheirhouse.AnnaandDavidhaveinsurancepolicesforboththeir
mortgageandtheircar.Thishasgiventhemsomesecurityandbreathingspacealthough
Annasayssheneverdreamtthattheywouldendupinasituationwheretheywererelianton
theirinsurance.
Despitethesesafetynets,thefamilyareinaprecariousposition.Althoughtheinsurance
coversasignificantproportionoftheirmortgageandcarfora12-monthperiod,thereisstill
enormouspressureonthefamily.IfDavidisunabletogetajobinthenextfewmonths,the
familywillhavenootherchoicebuttoselltheirhome.
David’sredundancyisalsohavingasignificantimpactontheemotionalwellbeingofthefamily.
WhenDavidwasfirstmaderedundant,hekepthimselfoccupiedwithDIYaroundthehouse
butnowthatisfinishedheisgrowingincreasinglydespondent.Healsousedtolovekeeping
fit,buthasstoppedgoingout.Annahasrecentlystartedtakinganti-depressants;shereached
herlowestinJanuarywhenshe‘couldn’tseethelightattheendofthetunnel’.Annahopes
thatinthefutureshewillbeabletogetajobbecausesheistiredofbeinginthehouse.She
wouldalsoliketobeabletosavesomemoney,butatthemoment,thatisnotpossible.
10 ippr|Copingwithredundancy:thestoryofAnna’sfamily

Managingthefamilyfinances
ThefamilyhavehadtomanagetheirmoneycarefullysinceDavidwasmaderedundant.The
initialtransitionperiodwherethefamilywerewaitingfortheinsurancepaymentsand
Jobseeker’sAllowancetobeprocessedwasparticularlydifficult.Sincethen,thefamilyhas
struggledtocovertheoutgoingsofalargefamilyonaverylimitedincome.
Theiraverageweeklyincomeis£479,£225ofwhichisfromtheinsurancecompanytocover
thecostoftheirmortgageandloan.Theremainderismadeupfromtaxcredits(£72)and
statebenefits(£182)aweek.Theirbiggestexpenseistheirmortgageandsecuredloanon
thecarwhichmakeuphalfoftheirexpenditureat£238aweek,morethantheinsurance
companyispayingout.

Anna's average weekly expenditure from a weekly income of £479 Other (£45)

120%
TV costs (£31)
100%
Food (£35)
80%
Insurance (£39)
60%
Debt repayment
40% (£39)
Gas and electricity
20% (£64)
Mortgage and
0% secured loan (£238)

Findingthemoneyforanyadditionalpurchasesisdifficult.Annauseshercreditcardsto
purchasebiggeritems.Atthemomentsheisunabletoclearthebalanceonhercreditcards,
butpaysoffsomeofthedebtmonthlysoshecancontinuetousethecardsregularly.The
bankhastoldthecoupletheyarenolongereligibleforanoverdraftasDavidisnow
unemployed.Thefamilyarealsopayingofftheiroverdraft,whichwillcostthem£15aweek
forayear.Eightpercentoftheirincomeisspentondebtrepayments,at£39aweek.Thisis
morethanthefamilyspendontheirweeklyfoodshop.Thishasleftthefamilyincreasingly
reliantontheircreditcardstomakeuptheshortfallintheirincome.
EvenbeforeDavid’sredundancythefamilybudgetwasbeingsqueezed,primarilydrivenby
increasesinfoodpricesandutilitycosts.Annaiscurrentlypayinganaverageof£64aweek
ongasandelectricity,13percentoftheirincome,andmorethantheyarespendingon
food.Familiesareconsideredtobein‘fuelpoverty’whentheyspendmorethan10percent
oftheirincomeonfuel;Anna’sfamilythusfallintothiscategory.
Annaisfrustratedthatgasandoilpriceshavegonedownyettheirelectricityandgasbills
haveremainedconsistentlyhigh.Sheisangryattheoilcompaniesandbelievesthattheyare
amongthoseresponsibleforcausingthecurrenteconomicturmoil.
Ithinkit’sthefatcats,thebankers,theoilcompanies,becauseattheendof
thedaytheyaretheonesputtingtheprices[up].Theycanseehowharditis
forpeopleandtheycanstillwalkawaywithabilliondollarbonus.[They
should]putthatmoneybackintothecompanyandraiseconfidence
instead…Ireallyblamethefatcats,whoever[you]maybe,Iblameyou!
11 ippr|Copingwithredundancy:thestoryofAnna’sfamily

Annaissimilarlyfrustratedwiththebanks.Sheisangrythatthelowerinterestrateshavenot
beenpassedontoconsumers.Shechallengedhermortgagecompanyaboutit,butwastold
thattheydonothavetopassontheinterestratecuttotheircustomers.Annasayssheis
infuriatedthatalthoughtheBankofEnglandrecognisesthehardshipsconsumersarefacing,
thecompaniesdonot.Shebelievesthemortgagecompaniesshouldbelegallyobligedto
lowerinterestratesandthatthecurrentsystemallowsthecompaniestoincreasetheirprofit
margin.
ThefamilycannotswitchtoadifferentmortgagebecauseofDavid’sredundancyandso
theyarestuckwiththecompanythatwillnotnegotiatealowerinterestratewiththem.They
aretrappedinaviciouscircleandfeelthatthecompaniesareprofitingfromtheirdifficulty.
Shebelievesthatthisisthereasonwhysomanypeoplearehavingtheirhousesrepossessed,
becausefamiliesinasimilarsituationtothemcannotaffordtheirmortgagerepayments.
Ifthereisaninterestratecut,itshouldbelawthatitispassedon,itshould
notbejustuptothebanks’discretion.I’mwithacompanyandkindofgot
stungwithmymortgagethere,butIcomeoutofmydealinMarchandIwas
hopingtogetabetterrate.We’renotgoingtogetamortgagebecausehe’s
notgotajobsowearegoingtohavetostickwiththecompanywe’rewith
whoarekillingus,theyarebreakingourbacks.
Annaoftendelayspayingbillssothefamilycancoverthecostsofmorepressingpayments.
shefeelsthatbecauseshemanagesthefinances,shesolelycarriestheburden.Shehasbeen
stungbybankchargesinthepastandisupearlyeverymorningcheckingtheirbankaccount
tomakesurethattheyarenotoverdrawn:
It’salwaysinyourmind,youalwayscheckyourbanktomakesureyou’renot
overdrawn…ittakesaweewhileforJobseeker’s[Allowance]tocome
[through]…andthenit’sforafortnight…obviouslyyoustillhavetoeat,
you’vestillgottopayyourgasandelectricity,you’vestillgotyourotherwee
thingstopay…andyourcataloguesandthingslikethatso,itisparanoia
withmenow…everymorningI’mup,I’mcheckingthebanktomakesureI’m
notoverdrawnbecausetheycharge£35.00…It’salotofmoney.
Annahascopedwiththeirnewsituationinanumberofways.Shehascutbackonwhatthe
familyspendsonsocialisingandshopping.Lastyear,shehadtodecreasetheirexpenditure
atChristmasandtoldtheextendedfamilythatshecouldnotaffordtobuypresentsforthem
all.Whenfoodshoppingshetriestomakehermoneygofurtherbybuyingthe
supermarkets’ownbrands.
Likemanyfamilies,Annafindsiteasiertosaveforspecificevents.InthepastAnnawasable
tosave£50everymonth,whichtheyusedtopayforholidays,Christmasandbirthdays.The
familyalsousedtobepartofaChristmassavingsclub,butthecompanywentbustafew
yearsagoandsincethenAnnahasgivenherfather£5aweektoputawayforChristmas.
ButAnnaandDavidarenotabletosaveanythingatthemoment.Annawouldliketosave
againinthefuture,toenablethefamilytogoonholidaysandhaveacushionforwhen
thingsgowrong,suchasacrucialappliancelikethefridgebreakingdown.Ideally,Anna
wouldlovetosave£100amonthasabuffer.Sheisveryworriedaboutthelong-termeffects
ofaccumulatingmoredebt.

Concernsforthefamily’sfuture
David’sredundancyhashadadevastatingimpactonthewholefamily’swellbeing.Anna
feelsthatthechildrenaresufferingmorethantheadultsbecauseitiseasierforherand
Davidtogowithout.Theolderchildrenhavereachedthestagewhentheywanttogoout
andhavealittlemoreindependence,buttheycannotaffordto.Annafindsitespeciallyhard
atweekendswhenhersonwantstogoiceskatingwithhisfriendsandshecannotaffordto
givehimthe£15heneeds.Herdaughterisnotyetatthestagewhereshewantstogoout
12 ippr|Copingwithredundancy:thestoryofAnna’sfamily

withherfriends,butwhensheasksforluxuries,Annafeelsbadthatshecannotgivethemto
her.
Annahatesthechildrenfeelingtheburden,especiallyaroundChristmastime.Herson
changedhischoiceofChristmaspresentbecauseheknewhisparentscouldnotaffordto
buyitforhim.
Mykidsarenotspoiltbyanymatterofmeans…Allyearlonghe’sbeen
saying‘I’dlovealaptopforChristmas’andnowhe’ssaying‘I’mnotwantinga
laptopanymore’…Hedoesboxing–‘CanIjustgetsomeboxingclothesand
atracksuit?’Andyouknowhe’sthinking:‘Theycan’taffordthat’,andIthink
that’swhenitkillsme,because,sorry...they’reworried,youknow,evenyour
kidsareworriedhowyouaregoingtogetby.[Annastartstocry]

Moredebt?
Althoughinsurancepaymentsarekeepingthefamily’sheadabovewater,theirmortgageis
consumingalargeproportionoftheirincome,whilethefamily’sbenefitsarenotadequately
cushioningthemfromtheriseinthecostofliving.Thefamilyareindangerofgettinginto
moredebttomakeendsmeetastheyareincreasinglyreliantoncreditcardstomakeupfor
thelossoftheirincome.ThehardestpartforAnnaisfeelingthatherchildrenaremissingout
ontheirchildhoodandthattheyareunabletotakepartinthesameactivitiesastheir
friends.Lookingahead,sheisconcernedthatherdaughterwillwanttogotouniversityand
shewon’tbeabletoaffordtosendher.Annaisworriedaboutherchildren’sfutures.
13 ippr|Payingapremiumforpoverty:thestoryofSophie’sfamily

Payingapremiumforpoverty:thestoryofSophie’sfamily
Low-incomefamiliesspendalargerproportionoftheirhouseholdbudgetsthanhigher-
incomehouseholdsonitemssuchasfood,fuelandpublictransport,allofwhichhave
increasedinpriceinrecenttimes.Inaddition,manylow-incomefamiliespaya‘poverty
premium’formanyessentialandnon-essentialgoodsandservicessuchasutilitybillsand
financialproducts.ThiscasestudyfromNottinghamconsiderstheimpactofthe‘poverty
premium’onlow-incomefamilies.

Thefamily’sstory
Sophieis46,shelivesinNottinghamwithherhusbandandtheirthreechildren,hersonwho
is13andtwodaughtersaged11and7.Sophiehasnotworkedsinceherfirstchildwas
born.
Sophie’shusbandhasjuststartedanewjobasasecurityofficer,havingpreviouslyworkedas
asheetmetalworker.Hewasunhappyinhislastjob;thefactorywouldannounce
redundancieseveryyeararoundChristmaswhichleftthefamilywithlittlesecurity.Sophie
hopesthathisnewjobwillofferthefamilymorestabilityandithasgiventhemthe
confidencetobuytheirhouse.Thisisasignificantfinancialandemotionalundertakingas14
yearsagotheirhomewasrepossessed.
Iwasjustabouttogivebirthtomyson…myduedatewastherepossession
datewhenIhadtogotocourt.
Sophie,herhusbandandtheirnewbabyhadtomoveintocouncilaccommodationfollowing
therepossession.Therewasnotmuchsupportavailablethen,butSophiethinksthatthere
arebettersystemsinplacenowtopreventpeoplefromlosingtheirhomes.However,the
thoughtthatthefamilycouldgothroughitagainisconstantlyinthebackofhermind.

Jugglingfinances
Sophieisinchargeofthehouseholdfinancesandmanagesherbudgetonaweeklybasis.
Sheworksoutamonthlybudgetbasedontheirincomeandknownexpenditure.Thelastfew
monthshavebeendifficult.Thefamily’sincomehasremainedfairlysteady.Herhusband’s
wageshavegoneupwhichhascausedtheirtaxcreditstodecreasebutSophie’sspending
hasalsoincreased,largelyastheresultoffoodandfuelpricesincreasing.Sophieisspending
morewhensheputspetrolinthecarandherfoodshoppingbillhasincreased.Similarto
otherfamilies,sheisshoppingdifferently,tryingtotakeadvantageofspecialoffers.
However,Sophiecannotdomuchmoreintermsofchanginghershoppinghabits,asshe
alreadyoptsforthecheaperbrands.
[I’m]havingtothinkofshoppingsomewhereelse,Ican’taffordtogotothat
placeanymore,or[toput]ontheheating…I’mshoppingmorewisely.
Sophieisconstantlyjugglingthefamily’smoney.Recently,shehastakenextracaretoensure
theyhaveenoughintheirbankaccountforwhendirectdebitscomeout.Ifthereisnot
enoughmoneytopaythebills,shecancelsherdirectdebitsandwaitsuntilherhusbandgets
paid,thentelephonestomakethepayment.Shedoesnotlikedoingthis,butitistheonly
waysheisabletokeepontopofalltheirpaymentsandavoidgettingchargedbythebank.
OnFridaytherewasn’tenoughmoneyto[pay]acertainbill[so]Icancelled
mydirectdebit.Itshouldhavegoneoutonthe30thbutIknowmyhusband
getspaidonthe10th…I’llgoandpaymanuallyandjustsendthemmy
apologies.They’reprobablygettingfedupofmebynow.
Aswithmanyotherfamilies,Christmas,birthdaysandsummerholidaysputanadditional
strainonthehouseholdbudget.Whenbuyingbirthdaypresentsforthechildren,Sophietries
tolimittheamountshespendsoneachchildtoaround£50each,astheywillusuallywant
14 ippr|Payingapremiumforpoverty:thestoryofSophie’sfamily

tohaveabirthdaypartyaswell.Inthesummerholidays,Sophietriestofindwaysof
entertainingthechildrenonalowbudget.
Butthepressuresdonotonlycomeseasonally.Buyingschooluniformsforthreechildrenis
anothermajorexpense.Sophiecanbuytheuniformforheryoungestchildfromthecheaper
storesbutfortheoldertwo,theschoolexpectsthemtohaveaspecificuniform.Theyhave
beenluckythisyearasherdaughtercouldweartheuniformhersonhadgrownoutofbut
normally,findingthemoneyfornewuniformisachallenge.
Whenhouseholditemsbreakdownthefamilyfinditreallydifficulttofindthemoneyto
replacethem.OverChristmaslastyearthefreezerbrokeandherhusbandhadtowork
overtimeovertheholidayperiodtopayforanewone.Insituationslikethat,thefamilyhave
todelaysomebillsandjuggleotherpayments.
Thestruggletoreplacehouseholdapplianceswasacommonthemeamongotherfamiliesin
ourresearch.Mosthadtoborrowmoneyfromafamilymemberorpurchasetheitem
throughacatalogueoncredit,whichisoftenmoreexpensivethanthehighstreetandcan
comewithhighratesofinterest.
Sophie’sfamilydonothaveanysavings.Inthepastwhentheyhavesavedithasbeenfor
specificreasonssuchasbirthdaysandChristmas.Butsomethingalwayscomesupthat
preventsSophiefromputtingmoneyawaysuchasthingsneedingfixingaroundthehouse
orthechildrenneedingsomething.
ThelasttimeSophiewasabletosavealargeamountofmoneywaswhensheandher
husbandsavedfortheirwedding17yearsago.Sophiefeelsthattheyhaveneverbeenable
tosavebecauseoftheirlimitedearningsanddemandingoutgoings.

Thepovertypremium
Sophieandherfamilyrelyonexpensiveformsofcreditandareheavilyindebt,whichthey
arestrugglingtorepay.Theyareatthemaximumontheircreditcard,onwhichtheyowe
around£4,000.Theyareinarrearswiththeircataloguecompanyandarepayingbackloans
fromtwoseparatedoorsteplenders.
Outoftheirweeklyincomeof£507,thefamilyarecurrentlypayingbackanaverageof£201
inunsecureddebtrepayments,anenormous40percentoftheirincome.Thisisalmosttwice
asmuchaswhattheyarepayingfortheirmortgage.Intotal,therefore,61percentoftheir
incomeisspentrepayingbothsecuredandunsecureddebts.Thispressuremeansthatthey
oftenmisspayments,whichexposesthemtoadditionalbankcharges.

Sophie's average weekly expenditure from a weekly income of £507

120% Bank charges
(£23)
100% Water (£20)

Insurance (£25)
80%
Council tax (£25)
60%
Christmas
shopping (£55)
40% Food (£66)

20% Mortgage (£106)

Debt repayment
0% (£201)
15 ippr|Payingapremiumforpoverty:thestoryofSophie’sfamily

Thefamilydonothaveaccesstobankloansandfrequentlyturntodoorsteplenderswhen
theyneedtoborrowmoney.Sophiedescribesthemasher‘backbone’.Shelikesthe
convenienceofthedoorsteplenders;theyusuallycangiveheraloanveryquicklyandcome
toherhometocollectrepayments.Whenshedoesnothavethe£10sheowesthen,they
usuallyacceptasmallerpayment.ThemostSophiecanborrowfromeachdoorsteplenderis
around£300,whichmeanssheusuallyhasloanswithmorethanoneprovider.Sheisaware
thatshepaysahighrateofinterest,andwouldprefertoborrowfromthebankatalower
ratebutatthemomentthatoptionisnotavailabletoher.
Nothavingaccesstocheaperformsofcreditwascommonamongmanyfamiliesthroughout
thisresearch,whousedcreditcards,door-steplendersandcataloguesbecausethebank
wouldnotlendtothem.Thesefamilieswereawarethattheywerepayingbackmore,but
oftenhadnoalternative.
Iknowyoupaythreetimesasmuchtopayitbackbutifyou’vegotaproblem
theynormallyhelpyouout.
Sophiehasuseddoorsteplendersforsixyears.Thiskeepsthefamilyinaconstantcycleof
debt,assheconsolidatesheroldloanswhenshetakesoutnewones.
SophiewenttoCitizen’sAdviceforhelpwithhercataloguedebtasthesituationhad
becomeoutofcontrol.Thefamilywaslatewiththeirrepaymentsandthecatalogue
companyaddedextrachargesontopoftheinteresttheywerealreadypaying.Tomake
mattersworse,thefamilydidnothaveenoughmoneyinthebanktomaketheseextra
paymentsandsotheyreceivedadditionalbankcharges.
We’vehadalotofbankchargestheselastfewmonthssoI’mtryingtosort
thatout,tryingtomakesurethere’smoneyin[the]banksothere’sno
charges.It’s…extramoneygoingoutwhereitshouldbecominginthehouse,
beingforus,notthebanks.
Withthishugeamountoffinancialpressureonthefamily,Sophiewouldliketoseeksome
helpabouttheirfinances,butisunsurewhoshecanturnto.Thisisparticularlyimportantas
theyaregoingtohavetochangemortgagecompaniesnextyearandsheisconcernedthat
shewon’thavetheinformationneededtomakeaninformeddecision:
Itfillsmewithdreadbecausewe’vegottomoveontoanothermortgagenext
yearandthat’ssomethingwhereIdon’tknowwheretostart.Iknownobody
isgoingtojumpandhelpyou,butI’dlikesomebodytosay,‘Yeswe’llhelp
youwithadvice’or,‘we’llgiveyouadvice’.
Sophiehaspickedupsomefinancialtipsinformally.AfterseeingMartinLewisontelevision,
Sophiediscoveredthatshewaspayingaround20to30percentmoreforhergasand
electricitythanthosepayingtheirbillsmonthlyorquarterly.Asaresult,sheswitchedfrom
usingpre-paymentmeterstopayingquarterlyfortheirgasandelectricitybill.Sophiehopes
thatthiswillreducetheamounttheyarespendingonutilities.

Feelingsuffocated
TheChristmasperiodisparticularlydifficultforSophieandherfamily.Shetriestobudgetfor
eachofthechildren,butcan’tbringherselftotellthechildrentheyhavealimitonwhat
theycanhave:
Atthemomentit’sbeenhardbecauseobviouslyChristmasiscomingIwillsay
inmyheadyou’vegot£150each,butIwillsaytothem‘writeyourlistandif
Santacanaffordthathe’llgetitforyou.’
SophiefindsitespeciallydifficultafterChristmaswhenshehastotrytocutbacktomakeup
forherspendingovertheChristmasperiod.Thefamilyhavetogowithoutanynewclothes
andtoysandtheycannotgofordaytripsormealsouttogether.
16 ippr|Payingapremiumforpoverty:thestoryofSophie’sfamily

Sophiesaysthechildrenhavenotnoticedthatthingsaredifficultaroundthehouseandthey
stillaskformoneyforschooldinners.Sophiefindsitdifficulttorefusethem,sodepending
onhowmuchmoneyshehasinherpursethatday,thechildrenwillgetschoolmeals.Ifshe
doesnothaveenoughshewillmakethemsandwiches.
Sophieisfeelingveryinsecureasaresultofthecurrenteconomiccrisis.Shecannotbearto
watchtelevisionasitleavesherfeelingfrightenedforthefutureforherandherfamily:
IfIwatchtoomuchitmakesmefeelverysuffocated.Itmakesmefeelworried
forthefutureofusasahouseandthefamily...We’vebeen[repossessed]…
we’vebeenthereonceandIdon’twanttogothereeveragain…Notwith
threechildrennow.
Thefamilyhadbeensavingforaholiday,butwerenotabletoputenoughmoneyawayforit
andsohavepostponedituntilnextyear,whentheyhopetheywillbemorefinanciallystable
andabletosavethemoneytheyneed.Thisisagreatdisappointmentasthefamilyhavenot
beenonaholidayforyears.

Lookingahead
Sophieisconsideringgoingbacktoworkasawaytoincreasethefamily’sincomebutisnot
surewhatoptionsmaybeavailable.Sheusedtoworkasacateringassistant,butwouldlike
toretrainsoshecanfindajobthatwillbeflexiblearoundherchildcareneeds.Hopefulthat
theirsituationwillimprove,allSophiewantsistobeabletoprovideherchildrenwithawarm
andlovinghome.