Call for some people to be exempt from paying council tax

The Local Government Association (LGA) has called for young people brought up in foster and children’s homes to be exempt from paying council tax when they leave care to stop them falling into financial hardship.

The financial struggles faced by care leavers

According to a survey by the National Leaving Care Benchmarking, 83% of youngsters from foster and children’s homes go on to struggle to afford the essentials once they become financially independent.

And the statistics surrounding care leavers and homelessness paint an even bleaker picture.

Figures from the National Youth Advocacy Service (NYAS) show:

• 33% of care leavers become homeless in the first two years after leaving a children’s home or foster care
• 25% of all single homeless people have been in care

And, as shocking as these statistics are, they don’t even reflect the full extent of the problem. This is because many young care leavers are among the hidden homeless – sofa surfing, sleeping in squats and staying in abusive relationships because they have nowhere else to go.

Inspired to help

Growing up, Amanda Bennett witnessed her best friend being bounced around between various foster homes.

As an adult, this experience inspired Amanda to volunteer as an independent visitor with NYAS.

The role involves spending an hour a month for a minimum of two years with a young person living in foster care or a children’s home.

Whereas social workers and foster homes may change, an independent visitor acts as a consistent presence in a young person’s life - someone without an agenda who’s chosen to be there rather than turning up because it’s their job or there’s a family expectation to be involved.

Amanda takes the young person she’s been matched with to the cinema, pottery painting, ice staking, out for meals, bowling and to the park.

Life can be hard for children in care but what about when they turn 18 and have to leave their foster placement or children’s home?

Why managing money is tough for care leavers

Amanda explained that managing money can be tough when you leave care for a variety of reasons:

• Financially independent at a young age – Youngsters brought up in care are left to fend for themselves from the age of 18. Some youngsters leave care even earlier than this due to turbulent foster placements etc. In comparison, a typical young people who hasn’t lived in care stays in the family home until the age of 24.
• Lack of support – Care leavers don’t usually have the same level of support as other people their age. This means they have fewer people to turn to for help with money problems.
• Digital exclusion – Catch 22 – a network of charities calling for better care-leaving services – point to examples of care leavers being forced to choose between paying for food and Wi-Fi access. It warns digital poverty is affecting youngsters’ chances of getting work or continuing their education.
• Mental illness – According to Catch 22, nearly half of children in care suffer with psychiatric disorders compared to one in ten children generally. The link between poor mental health and debt is well documented – with some mental health conditions making it harder to earn and manage money, and money worries having a devastating effect on mental wellbeing.
• Low rate of universal credit for under 25s – Despite having to manage household bills from the age of 18, care leavers who are aged under 25 have to manage on lower universal credit support than those aged 25 and above - £292.11 a month, compared to £368.74 a month.

Luck of the draw

Amanda pointed out a lack of financial education exacerbates these problems.

She said:

“Managing your money [and] budgeting isn’t taught in schools. It should be but it’s not… So you’re very much reliant on what you learn at home and what you pick up through life. And if you’ve grown up in foster care and you’ve moved from placement to placement [or]… you’ve grown up in children’s homes, it’s luck of the draw whether you get those lessons.”

I didn’t understand

When we asked Amanda about the kind of financial problems she’d encountered among care leavers, she explained:

“The general conversation you get is ‘I didn’t know what I was signing up for. I didn’t understand when I got all these offers through for credit cards and loans and payday loans and things like that. I had absolutely no idea. I didn’t understand the terms and conditions. I didn’t understand what I was signing up for. When they told me they’d lend me 200 quid but I had to pay back 400 quid, I didn’t realise that that was not a good deal. I just thought it was a good way of getting 200 quid and I didn’t think about the consequences because I didn’t understand’.”

I didn’t know you had to pay for water

Amanda recalled one particular conversation she had with a care leaver about bills:

“One person I spoke to was like ‘I didn’t know you had to pay for your water’…because you don’t, especially if you’ve grown up in a children’s home. You’re not growing up in a family where you see the bills coming in… You don’t have experience of that. You don’t go shopping with your parents and see how much a basketful of shopping costs. You don’t have those same experiences that you have when you grow up in a more stable family environment.”

How being exempt from council tax would help

Many councils already have measures in place that mean care leavers don’t start paying council tax until they’re 25. But LGA says a government-funded exemption would make sure this is consistently available across the country, removing the “postcode lottery” for care leavers.

LGA is also calling for a national exemption for:

• prescriptions
• NHS dental treatment
• optician costs

Louise Gittins, chair of LGA, said:

“Avoiding financial hardship is vital for care leavers to make the successful transition from care to independence.”

Other support that would help

Here at Money Wellness, we’re calling for better financial education in schools so that all children, regardless of their homelife, are taught how to budget and manage their money.

Ian Somerset, chief executive at Money Wellness, said:

“The number of care leavers ending up sleeping on the streets is an absolute scandal. Clearly, the current system isn’t working.

“It’s vital that we start teaching schoolkids how to manage money. These are skills that can have a profound effect on a person’s quality of life and, for care leavers in particular, they could be a game changer.”