“Childcare is always a question jobseekers ask about – I get asked why it can cost more per hour to keep two children in a nursery than a parent will earn in a job themselves.”
Karina is Service Coordinator for an employment support agency in the West of England. She has personal experience of the financial hardship unemployed people face when considering their job options. She sees part of her role as guiding jobseekers through the money maze while also trying to help them clear the numerous hurdles they face in their run up to employment. 16 per cent of jobseekers Karina’s company works with say the cost of travel or new work clothes is standing in the way of them finding employment. 10 per cent have children to consider and one fifth (19%) are too worried about the effect on benefits to move on to employment.
Many advice and support services could be better prepared for the financial challenges faced by jobseekers, even once they’re successful in finding a job. Going into work is a big emotional change but it’s also a leap of faith money-wise. For many long-term unemployed people, it will be a long time before they actually feel better off. How can we help them manage this transition?
PREPARING FOR THE WORST
Finding work is a key life change milestone for unemployed people. It is not, however, highlighted in the UK Financial Capability Strategy as a key life event, although transitioning to Universal Credit (UC) is. This may not be coincidence. The challenges for jobseekers moving onto UC are in many ways similar to those faced by claimants finding work – applying online, moving to a monthly payment in arrears, for example. This is, of course, by design.
“For one person”, Karina explains, “going onto UC was the worst time of his life but once it came to going into work, he’d already gone through all the trauma, so it wasn’t as bad as it is for people who are on the old style benefits.” Karina’s project is in a pathway area for UC and she’s been supporting claimants with it for two years. Her jobseekers’ experience has fed into the Tenants Guide to Universal Credit published by the Social Publishing Project. The biggest issue is budgeting for a monthly payment in arrears: “It is easier to budget on a really low income week to week rather than monthly. You have to have a huge amount of self-discipline. It is hard and if you blow a month’s cash, you have to wait another month. People aren’t able to feed themselves, let alone cover the costs to find work or start a job.”
WHERE’S THE BENEFIT?
The welfare system has undergone massive change, supposedly to simplify some of it, but this caused mass confusion. Jobseekers receive conflicting advice and on account of the wholesale nature of change, many are falling between stools, moving off one benefit and finding they don’t qualify for another. Emily works for a Children’s Centre in the Midlands:
“We had a mother of two who found 15 hours work each week. She was supported by a mainstream employment support agency as well as ourselves and had been advised to apply for tax credits. The woman was previously on Employment and Support Allowance (ESA) and was entitled to work and claim for a period of time, provided she declared her earnings. She would never have known, and seemingly the other agency didn’t realise, but her application triggered cancellation of her ESA claim. It later turned out she didn’t qualify for tax credits either. Now she feels trapped because if she leaves her job, she’ll be deemed intentionally unemployed, and she cannot claim ESA again because she has started working.”
Karina adds: “The Job Centre encourages jobseekers to go self-employed and we had one who had just been moved onto UC. It’s not ready for people in this situation but there’s no way back. It assumes that people just going into business will be earning minimum wage full-time, which is totally unrealistic. He applied for tax credits, which was totally stressful, and then he received threatening messages from HMRC about how he’d be fined for any mistakes in his returns and prosecuted if they were seen as deliberate. He dropped the whole idea of working for himself.”
A new page on www.quidsinmagazine.com now carries the Top Ten Money Tips for jobseekers moving into employment. Support agencies can use them to ensure local people have ready access to information to help them navigate their financial worries:
- Most details you need are online but if it’s too complex or you’re not so good with IT, find somewhere with help on hand or a friend who you can work it through with. Try to check when the web page was updated, so you know things haven’t changed since
- Find a friend. It could be someone you know, a volunteer with a local group or an adviser somewhere. They will give you confidence and a sounding board to discuss what you need and if you want to challenge a decision against you, they might speak on your behalf
- Know your rights. When it comes to benefits or employment law, you need independent advice in plain English. Again, this could be online but it could be a local welfare rights, Citizens Advice or community law office. Finding that information and printing it from a website means you can back up what you’re saying at formal meetings
- Get a rainy day fund behind you as soon as possible. When taking on a new job (or moving to Universal Credit), there will be some financial upheaval and you want to avoid being in debt by the time you receive your first payment. If you can without falling into debt, and if you are going to lose out financially going into work for a while, try living on that budget and set aside whatever’s left over. Do this if a change to your benefits is coming too
- Use the Money Advice Service budgeting tool for people going into work for the first time. Plan for keeping money safe if you have rent to pay or other commitments
- Make sure you have a bank account that can accept payments the way your new boss is going to pay you, for example, through electronic payments. Ideally, your account will allow you to set up direct debit payments for rent and bills but be clear about charges you may incur if you go into the red (overdrawn). Maybe set up a second ‘bills account’, transfer into enough to cover your outgoings and direct debits going from there, and live off what remains in your main account. Companies often charge less if you pay by direct debit
- To avoid nasty surprises, understand how tax will affect you. PAYE (Pay As You Earn tax) will be deducted unless you earn less than £10,600 a year (£10,800 from April 2016). If it is not deducted, you may have to declare income and pay at the end of the year. Information appears on your payslip, The Money Advice Service has a guide to understanding payslips
- If you have children, find advice on what help you could well be entitled to here. Ask around and do some research online to see what different childcare services charge locally. They can differ a lot, so shop around. Single parents can find advice here
- If you are claiming out of work benefits, ask your Job Centre if they provide financial support for work clothes, tools or travel costs when starting a new job. This could be a short-term loan to be paid back or a grant. Rules on this change over time and vary from place to place, so ask the question. These costs may also be covered by local trust funds that are not always well advertised, so ask at a local support agency as they may know if there are any. Check if you might qualify for a grant from elsewhere with Turn2us
- Get a second opinion. Many jobseekers have received inaccurate or out-of-date information about their benefit entitlements. Check it out with another adviser or on a welfare rights advice website like turn2us.org
IMPLICATIONS FOR SUPPORT AGENCIES
For advice and support agencies accurate and up-to-the-minute information is essential or can signpost users to it. For all their faults, if an adviser with a financial institution recommended action not in the best interest of their customers, they would fall foul of regulation but it seems this protection is not offered to claimants. At the very least, agencies offering financial advice should have to hand the local answers to the Quids in! advice for jobseekers finding work.
“I’ve seen many jobseekers in debt through catalogues, for example,” Karina says. “It can be overwhelming. I’ve advised people to let creditors, and even their landlords know, that their circumstances are changing and that they won’t have an income for a few weeks but the people they speak to are not sympathetic, even if it’s a job they’re going into. I’m not sure if it’s the best advice as it’s another stress during a period of change.”
“The worse thing is all the unknowns. It is an emotional time anyway, preparing to go into a new job, and worrying about all the ‘what ifs’ is just not going to make things any easier. We need to be able to help manage people’s expectations and point them to the help they might need as soon as anything happens. Then they can go forward with confidence.”