Evidence type: Evaluation i
Information about the programme design and rationale
Evidence about Financial Capability outcomes for programme participants
Evidence that the Financial Capability outcomes were caused by the programme
Evidence about programme implementation, feasibility, and piloting
Evidence about relative costs and benefits of the programme
The Department of Work and Pensions (DWP) Growth Fund was a UK government programme which aimed to improve access to affordable credit by increasing lending by third sector organisations, including credit unions and community development finance institutions. The Fund aimed to benefit low-income and financially-excluded families living in deprived areas who might otherwise turn to high cost credit such as pay day loans. 329,888 loans were made between July 2006 and October 2010.
The Fund offered three kinds of funding:
The evaluation ran from December 2009 to August 2010, exploring programme impact on borrowers and lenders, its administration, costs and benefits. It used qualitative and quantitative methods:
Who did the Growth Fund attract?
The profile of applicants reflected the Fund’s target. Most applicants reported running out of money occasionally. 40% had recently been unable to pay a bill due to lack of money.
Applicants were typically women aged 25-44. Most had dependent children. Two thirds of those with children were lone parents. A few owned their own home, but most rented from a housing association or local authority. Nearly 80% were not in work. Most received benefit payments or tax credits.
Why were some applicants unsuccessful?
Applicants were rejected if they failed to provide identification, lacked sufficient income to repay, had poor credit history or outstanding debt, failed to justify the purpose of the loan or lied during their application.
How were unsuccessful applicants dealt with?
How did successful applicants feel about the scheme?
Almost all would reapply to the same lender and would recommend them to others.
Impact on borrowers:
Impact on third sector lenders:
Methodology: The evaluation adequately assessed the impact and operations of the Growth Fund. More information about some aspects, such as surveys and participant data, could have provided additional depth.
Relevance: This study offers a comprehensive assessment of the costs and benefits of providing low cost loans to people on low incomes. It highlights that the cost of Growth Fund loans exceeded interest rate income – indicating that third sector lenders should be subsidised or charge higher interest rates.
Transferability: The Fund targeted a particular group - low-income and financially-excluded families in deprived areas. We cannot be confident that a similar programme would achieve similar results, especially if it had different eligibility requirements.
Applicability: The evaluation is a useful reference for third sector lenders. It could inform future government schemes to promote affordable
Sharon Collard, Personal Finance Research Centre, University of Bristol Chris Hale and Laurie Day, Ecorys