Sana
The numbers behind the stories
Sana* lives in the North West by herself in a 2 bed flat rented from the council. She came to us for help with her debts this summer.
Her employment ended last year and she’s been looking for work since but hasn’t been successful with applications. Sana has several health conditions which make it more difficult for her to find and hold down work.
Her only income has been from Universal Credit (UC), but this isn’t enough for her to get by.
In the red
Sana’s daily living costs are pushing her into a negative budget, with more money going out on essentials each month than she has coming in.
She’s cut back everywhere she can. But still can’t cover her essentials with the money she’s getting from UC. This means she’s in significant arrears with her rent, council tax, energy and water.
Sana tops up her prepayment meter at the beginning of the month so she’ll have enough electricity and energy for cooking and light, but this then leaves her with very little money left over for food and other essentials. She’s had to rely on foodbanks to eat.
“I’ll go without food so I can keep my energy supply and feed my cat”
Each month Sana is in a negative budget — she’s gaining more and more arrears and her debt is building.
Welfare policies pushing her into the red
To make matters worse, everywhere she turns there’s a policy which is blocking her from being able to get her finances back on track.
Sana has around £28 deducted from her UC each month to repay a budgeting advance she received. This is a loan the Department of Work and Pensions (DWP) gives to help people with unexpected costs which can’t be covered by their UC, like a washing machine breaking down. But having to repay this is contributing to pushing Sana into a negative budget.
If we look at other people like Sana who are in a negative budget and have deductions from their UC, we can see that they’re getting further into debt each month just by surviving.
Sana has a spare room in her property meaning she gets the ‘bedroom tax’. This means that, despite being unable to afford essentials, Sana loses £49.50 of her UC each month — adding to her negative budget and debt.
It would be incredibly difficult for Sana to change her accommodation so that she wasn’t subjected to the bedroom tax and received her full UC housing element.
She could try moving to a smaller council property but this could take a long time. Demand for council housing far exceeds supply; waiting list for council properties in her areas are currently over 10,000 households.
Sana’s only short term option could be to move into the private rented sector, but that could leave her even worse off. Rents are typically higher in the Private Rented Sector so it’s likely that there’d be an even greater shortfall between her rent and her housing element of UC.
This is because the Local Housing Allowance (LHA) — which determines how much housing support Sana will receive to pay a private landlord — hasn’t kept pace with actual rents. This is if Sana was able to secure private rented accommodation in the first place — high demand makes this tricky for anyone, let alone someone in Sana’s position with UC as her only income and a significant amount of debt, making passing affordability checks difficult.
Sana is completely stuck — she’s penalised for living in the property but there’s no immediate solution available.
On top of being penalised by the bedroom tax policy, Sana has now been told that she has a sanction for missing an appointment with her job coach and not immediately providing a reason why. She completely forgot she had one booked and missed it — something which we all do, but especially in Sana’s situation. There’s a lot of stressful elements to juggle associated with being in poverty.
This could be a huge financial hit for Sana — if it took her 7 days to inform the DWP about why she’d missed an appointment and attend another one — the sanction would be £175. This is taken from her UC, her only income.
In cases like Sana’s where there’s nothing left to cut back on and she’s already struggling to make ends meet, the DWP will issue a hardship payment. This is a loan of up to 60% of the value of the sanction and is issued when it is recognised that a sanction will cause severe financial hardship.
Even if Sana gets a hardship payment (of £105), her next UC payment could still be short another £70. On top of this she’ll have an additional debt of £105.
Sana will have to repay the loan and now has these repayments hanging over her also. This could be as much as £92 per month.
It’s clear how the sanction and loan have made things more difficult for Sana financially, let alone the impact which increasing her debt will then have on her mental health and wellbeing. She already has issues with her mental health conditions and her financial situation is causing a lot of worry, adding to her stress.
The impact of this goes far beyond purely financial. We know the strong links between debt and experiencing mental health issues, and therefore, the impacts on ability to work, relationships and friendships.
Sana is going to apply for a Discretionary Housing Payment to help her but this isn’t guaranteed and is a short-term sticking plaster rather than a long term solution.
Sana’s story shows how complicated the benefit system is to navigate. It’s a very patchwork system of support with money being taken away, some being given back as a loan, and then some having to be paid back
Policies like the bedroom tax, freezing LHA, benefit deductions and sanctions make it even harder for people to climb out of the red and get back on their feet. They keep people trapped in a spiral of debt and poverty it’s increasingly hard to get out of.
*Names have been changed
