Disabled people more likely to use doorstep loans as financial crisis deepens
- Three times more likely to draw on doorstep loans. (1)
- Half (49%) of disabled people use credit cards or loans to pay for everyday items including clothing and food.
- A fifth (19%) have been unable to make the minimum payment on their credit card in the past year.
Disabled people are more likely to be turning in desperation to high-cost loans and sometimes illegal lenders to pay bills and make ends meet, according to a new report by the disability charity Scope.
The findings, published as part of a set of pamphlets called: Disabled people and Financial Well-being, show that one in ten disabled people have used doorstep loans, compared to just 3% of the general population.
Fifteen percent of disabled people – over double the rate for the public (7%) - use loans to make ends meet.
Of those disabled people who feel they are in a bad financial situation, half (50%) say this is because they find it difficult to pay the bills.
Rising costs of living with disability
Nearly one in five (16%) say they cannot keep up with rising costs of living.
Scope’s chief executive describes the situation as “critical”.
The report sets the scene by explaining that living costs are spiralling for everyone, but life is even more expensive if you are disabled (3), and at the same time disabled people are more likely to be paid less (4).
Disabled people try to manage their money just like everyone else. But the survey shows that disabled people face a host of barriers, and an uneven financial playing field.
Disabled people are less likely to have a current account (2) and just under one in ten (8%) disabled people have been turned down for insurance, with 22% believing their impairment drives up their premiums. This leaves disabled people vulnerable to financial shocks, and as this report reveals more likely to use high-risk credit.
Impact of welfare reforms
For the charity Scope this why it’s absolutely crucial that the Government understands the impact its welfare reforms are having on disabled people’s lives. Scope is also calling for the Government to promote financial inclusion. For example:
- Ensure the interests of disabled people are properly considered in the expansion of Credit Unions
- Reinstate schemes like the Savings Gateway Encourage to encourage savings amongst disabled people
Richard Hawkes, chief executive of the disability charity Scope, said:
“Disabled people face an utterly uneven financial playing field.
"If you’re disabled, preparing a cooked meal or going to work comes with big extra costs. At the same, you’re more likely to be on a lower income or out of work.
“One year on from the Paralympics it is a scandal that disabled people are turning to high-risk, high-cost credit and loans just to make ends meet.
“The situation is critical. Disabled people are struggling to pay the bills and are turning to high risk credit.
“So far the Government's response has been to slash £28 billion from their financial support.
"Financial support is the difference between being able to live independently and pay for essentials, and being trapped in your own home racking up debt.
"Some disabled people will always need financial support. It doesn’t make them scroungers or skivers. It simply means they can do the things everyone else does.
“This comes down to what type of society we want to live. In 2013, if we want disabled people to live independently and pay the bills we cannot take billions of pounds of support away, particularly while disabled people are financially vulnerable, and less able to build up their own financial safety net.
“The Government can no longer ignore the big picture of its welfare reforms. It must start focusing on policies that build disabled people’s financial resilience, so that they do not have to turn to risky credit and face slipping into debt.”
Susan Donnelly, 54, from London has been diagnosed with a number of conditions, including severe osteoporosis, emphysema, asthma and a digestive condition which means she cannot eat solid foods.
She in in debt to the tune of £7,000 and is struggling to pay back the interest.
She was getting incontinence pads as part of her local social care support but that was cut. She can’t afford the £10 a week they cost, and she has no alternative but to go without.
Susan Donnelly said:
“I feel really let down by the government. When you get your social security letter it tells you on there the amount of money the Government says you need to live on. But by the time you take out all my bills, I have nothing to live on.
“I can’t afford to put my heating on. I don’t use my oven any more. I’m scared to run up any bills. By 7pm, I’m huddled up in bed with my dog. I have a halogen heater in there which goes on at night - I can’t afford to heat the whole house.
“I have £400 worth of rent arrears and the landlord is threatening bailiffs.
“Now I have to pay a council tax bill of £12.48 per month. How am I meant to pay these bills? Realistically, I can’t afford my incontinence pads as well as the council tax.”
Background on welfare
At the moment disabled people are set to by affected by as many as six different changes, resulting in a total loss in financial support of £28.3 billion by 2018.
For instance, 600, 0000 will lose out on disability benefits as the Disability Living Allowance becomes the Personal Independence Payment, with other cuts including an introduction of a cap on benefits and the ‘bedroom tax’ compounding the problem.
At the last spending review the Government revealed plans for a cap on Annually Managed Expenditure, which according Scope implies a severing of the link between need and financial support – a move that would compound the financial difficulties facing disabled people by could creating a real-terms cut that would suddenly pull the plug on support for disabled people when they really need it.
For more information contact Warren Kirwan in the Scope press office on 020 7619 7200 or email firstname.lastname@example.org
Notes to the editor:
Unless otherwise referenced, all statistics come from Ipsos MORI (2013) Disabled people and financial wellbeing.
Ipsos MORI’s Social Research Institute on behalf of Scope, sought to explore the issues surrounding financial inclusion for disabled people. The primary research comprised a representative survey of 1,009 disabled adults aged 16+ which was carried out between 27 July and 10 August 2012 across Great Britain using a combination of the Ipsos Online Panel and three waves of Ipsos’ weekly face-to-face omnibus survey, Capibus. This was complemented by secondary data analysis, which was conducted on the following large national surveys, with selected variables analysed by disabled and non-disabled respondents: Life Opportunities Survey; Understanding Society; Family Resources Survey; Wealth and Assets Survey; ONS Opinions and Lifestyle Survey; and Citizenship Survey.
(1) One in ten (10%) disabled people surveyed had a cash loan from someone who came to their home compared to 3% of non-disabled people. Source: Wealth and Assets Survey, analysed in Ipsos MORI (2013) Disabled People and Financial Wellbeing.
(2) 87% of disabled people versus 94% of non-disabled people have a current account. Source: Wealth and Assets Survey, analysed in Ipsos MORI (2013) Disabled People and Financial Wellbeing
(3) Research has estimated that disabled people spend on average £800–1,550 per month on disability related costs. Source: Demos (2010) Counting the Costs.
(4) 16% of disabled people are earning less than 60% of the median hourly income, compared to 13% of non-disabled people. Source: Equality and Human Rights Commission (2010) How Fair is Britain (pdf download)
Many disabled people live below the poverty line and the Government’s reforms mean many more are at risk.
- 23% of households with a disabled member live below the poverty line, compared with 18% of households in the UK generally. (4) Four in ten (320,000) disabled children live in poverty. (5)
- One in ten disabled people (12%) are unable to keep their home adequately warm. (6)
In total, 3.7 million disabled people are set to lose £28.3 billion from cuts to disability benefits by 2018 http://www.guardian.co.uk/society/2013/mar/27/welfare-cuts-disabled-people
(5) Sen A (2009) The Idea of Justice, London: Allen Lane
(6) The Children’s Society (2011) Four in every 10 disabled children living in poverty, http://www.childrenssociety.org.uk/sites/default/files/tcs/4_in_10_reportfinal.pdf
(7) Life Opportunities Survey, analysed in Ipsos MORI (2013)