Government’s Rental Reform Bill provides the “ideal” opportunity to equalise the treatment of income protection for renters.
This is according to Richard Walsh, co-chairman of the Building Resilient Households Group, who was speaking at the launch event of a (BRHG) report which has found that almost a third of adults in the UK could not currently meet an unexpected bill of £850.
The BHRG is supported by the Chartered Insurance Institute Group.
Not coping financially
The report, which relies on data from the Office of National Statistics (ONS), describes this crisis in financial resilience as ‘a cause of misery, instability and unfulfilled potential for millions of our citizens’.
It quotes further statistics from the Financial Conduct Authority (FCA), showing the number of people lacking financial resilience has risen significantly in recent years, with the January 2023 figure demonstrating that almost 19 million people are not coping financially.
Household Financial Security Commission
In order to tackle the problem the report makes three key recommendations. These include the establishment of an independent Commission on Household Financial Security, following a model similar to that of the Pensions Commission.
It recommends that the body should consist of a small group of commissioners with experience and professional expertise relating to household finances, employer and employee perspectives, financial services and consumers.
Its responsibilities would include assessing the current and future state of household financial security in the UK, and recommending how improvements might be made.
This would involve broad consultation and the production of a final report within two years of the Commission’s formation.
But the report also put forward two further recommendations which could be acted upon immediately.
This includes a recommendation for renters in receipt of Universal Credit (UC) to receive benefit from any income protection policy they may have, as UC does not cover full rental payments in most cases. It is suggested this would reduce pressures on the state and local authorities and address the current inequitable treatment of renters when compared to mortgage holders.
The other recommendation was to make it a requirement for employee benefits such as sickness and maternity pay to be published in annual business reporting. This would provide greater transparency and drive good practice since employers have a responsibility to the wellbeing of their staff and they have the ability to support the resilience of their employees.
Ideal opportunity
Speaking at the launch event Walsh told guests that the Rental Reform Bill currently going through Parliament offers an “ideal opportunity” to draw this to the general attention of the government.
“The beauty of it is that it does not require primary legislation so it doesn’t require an amendment to the bill,” Walsh continued. “We’re hoping we can make some progress on that when it reaches the House of Lords stage.
“Where we are now is that people who are mortgage holders still get their income protection through their mortgage and that’s ignored by the state. Whereas if you’re a private renter, instead of it being deducted from the rent you pay, it’s deducted from the housing allowance. So it means the rest – the gap – is deducted from the benefits. And that is clearly wrong, so it’s inequitable.”
Lack of data on sick and maternity pay
Moving on to sick and maternity pay, Walsh described current data on this as “very patchy”.
“The data on this is poor and from different sources. If you look at companies of all types you see them trumpeting their green agenda, their sustainability agenda… and yet they don’t public their sick pay arrangements.
“We think that if they did then this could be the kind of thing that they would talk about in the same way they talk about sustainability and eco friendliness.”
But Walsh also pointed out that a further issue is that at present advisers often find it very difficult to find out a customer’s sick pay because the simply do not know.
“And if you go to the company, you can’t find out because they don’t publish it,” Walsh added.
“If this information was directly available, it would mean that advisers would be able to say, we can look this company up, this is their sick pay arrangements.
“So if you’re selling employee benefits for example, and this looks like the kind of company that might be interested in employee benefits, then you can get in there and give them advice.”
The other end of the spectrum
Though Walsh also pointed out that being able to find out which employers are not interested in providing sick pay on behalf of their employees is also useful to advisers.
“At best they just pay SSP [Statutory Sick Pay] or they’re the kind of company like in the care sector that uses umbrella companies to avoid giving people contracts,” Walsh said.
“If you’re dealing with that end of the spectrum, then you know as well – and then advisers can start to sell proper income protection products and work protection products to individuals who work with those companies.
“I think not only is this the right thing to do, not only would it be beneficial for companies and their image, shareholders would be interested in this too. But also it would improve the lives of many employees.”