Church Action on Poverty’s ‘Food, Fuel, Finance’ programme is looking for creative, grassroots ideas that can help people on low incomes to pay fair prices for everyday necessities.
Over recent months we’ve uncovered all kinds of exciting projects and ideas in communities across the UK. We’re now reflecting on them all and considering how we can best help to share the approaches more widely.
While we complete that process, we’d like to share with you some of the inspirational ideas we’ve been exploring, in a series of blogs. This post will look at projects which help people to pay fair prices for furniture and electrical goods.
(You can still read our previous posts about funeral poverty, food poverty and combined solutions.)
Financing purchases through credit unions and other ‘alternative’ loans provides one way of avoiding the extortionate charges of rent-to-own stores for furntiture and white goods. But credit union loans are usually open only to people who have an existing savings account, and so exclude those who cannot afford to save.
- Cooperatives UK and the Cooperative Councils Network are promoting ‘Essentials Cooperatives‘, part of the purpose of which is to open up access to credit unions to provide cheaper credit in the rent-to-own market. One example of this approach is the Oldham Essentials project, which was mentioned in our post about combined solutions.
- My Home Finance (MHF) is a project set up by the National Housing Federation and funded by social landlords, offering basic bank accounts and savings, as well as small sum loans, to people who cannot obtain vital credit from banks, building societies or credit unions (many of whom are tenants of social landlords). As of June 2014, MHF had made 15,000 loans across the country and saved its customers an estimated £2.5 million against the amount they would have had to pay to their usual credit providers.
- Smarterbuys is a service that offers essential household goods at discounted prices, saving as much as 70% of the retail price. It works by ‘group purchasing’ items direct from manufacturers and passing the savings on to customers. Each month, different items are available at reduced cost, including fridges, washing machines, beds, sofas and many other essential household items.
Smarterbuys thus aims to offer an alternative to weekly payment stores like BrightHouse that charge inflated prices and high interest rates on finance for household goods.
Payments to Smarterbuys can be made in cash, by debit card or, in many cases, with a low-interest loan from the local credit union. There are no added charges and delivery is free.
They run Smarterbuys Essentials, a not-for-profit service which allows local authorities and housing providers to order new, low-cost household essentials for residents who have been left vulnerable by benefit cuts and changes.
They also offer the online Smarterbuys Store as a franchise to social landlords with the support of Cooperatives UK. It provides access to responsible, affordable credit, while also encouraging customers to save by taking a small amount of their repayment and putting it in an account opened especially for them.
So by using a combination of collective purchasing and access to affordable credit, repaid through additional future saving and delivered through an online retail hub, Smarterbuys is able to offer both a practical alternative to the high-cost rent-to-own market, and a new solution for vulnerable residents who would otherwise be further penalised by benefit changes.
- The Cooperative Electrical offers a similar combination of collective purchasing, and affordable credit delivered through an online community retail hub. But where Smarterbuys markets itself primarily through social landlords, Cooperative Electrical markets itself through its own online store and through credit union websites.
Their link-up with credit unions means they can offer low-income customers access to competitively priced, up-to-date appliances, coupled with an affordable loan from their credit union.
The scheme is available through almost 100 credit unions with plans to extend availability to all credit unions in the UK mainland.
In this alternative to high-interest rent-to-buy stores, social landlords lease or buy furniture and white goods, and rent them out to tenants as part of their rent for the property – in other words, a furnished social tenancy.
- The Furniture Resource Centre (FRC) is the leader in this market and has full UK coverage. Leasing furniture packages from FRC means that social landlords can give tenants better-quality furniture, and generate extra revenue by offering furnished tenancies. Furniture packs are designed to be affordable within the housing benefit threshold. The furniture can be purchased outright at the end of the lease.
FRC also runs Bulky Bob’s, a furniture recycling service that sells good quality ‘pre-loved’ furniture at realistic prices to low-income shoppers and gives essential items to people in crisis situations free of charge.
Cut-price second-hand and refurbished furniture and white goods
- The Furniture Reuse Network supports over 300 re-use charities and aims to relieve poverty and reduce waste by promoting the re-use of essential household furniture and electrical appliances to help people in need.
FRN operates contracts and partnerships with various furniture and electrical retailers and original manufacturers, from well-known high-street names, to family or privately run local suppliers. They also work with facilities management companies, hotel chains, hospitality groups and others who are looking for alternative and cheaper disposal routes for unwanted but reusable household goods.
The FRN supplies the social housing sector with low-cost flooring, low-cost white goods, house clearances, void clearances, downsizing services in response to the `bedroom tax’, storage, starter packs, furnished tenancy packages, and other services.
They also offer a consultancy service to social housing providers looking to establish a social enterprise based upon a furniture reuse or charity shop business model.
Additionally, they can give social housing tenants workplace experience, qualifications and jobs in secure and supportive environments.
In the private rented sector
The majority of the projects working to tackle the Poverty Premium on furniture focus on social landlords and their tenants. But the private rented sector is paying an increasingly important role; 38 per cent of provate tenants are now in poverty after housing costs are paid. This growing group is largely untouched by all the social housing initiatives. While the majority of private tenancies are furnished, there are no schemes providing affordable furniture packs for private tenants.
In order to really tackle the Poverty Premium on furniture and appliances there is thereofre a need for products and services targeting the private rented sector.
- Generation Rent campaigns with private renters for professionally managed, secure, decent and affordable privately rented homes. They represent over nine million tenants on a national scale, and work on policy and research as well as local campaigns. They would be a likely partner for any work in this area.