Context
Earlier evidence had demonstrated the extent of financial difficulties for those on lower incomes, with high levels of debt, stagnant wage growth and increased casualisation of employment. Financial inclusion for this group will depend on appropriate financial products being available.
The study
The study set out to build on the Financial Services Strategy in the UK. It aimed to identify priority low-income groups, issues that they face, and how policy and provision might be better designed to meet their needs. It involved a literature review, a field review of 38 projects working in the area in England and Scotland, four focus groups with 34 beneficiaries of projects, and 18 one-to-one interviews with social housing tenants.
Key findings
Priority groups
- Low-income households with children or members with long-term illness or disability face particularly high living costs and income constraints, leading to long-term problems with debt and lack of savings.
- Young people face high-risk lifecycle events such as leaving care or not being in education, employment or training (NEET).
- Social and privately renting housing tenants, with the latter receiving little current specific provision.
- Older, retired people.
- Asylum seekers, refugees and migrant workers.
- Specific BME groups, notably those over-represented in low-paid work and self-employment (e.g. Bangladeshis and Pakistanis).
Service delivery
- Strong partnership working is needed across a wide range of agencies. BIG Lottery’s (now National Lottery Community Fund) Improving Financial Confidence initiative did this for social housing tenants. Other groups would benefit from similar targeted provision but help for services to find ongoing funding would be needed.
- Challenges posed by Universal Credit make the need for provision more urgent.
- There is an urgent need for support for private tenants in London and the South East as rents are rising.
- Debt projects should offer crisis support as well as promoting financial skills.
- Training in digital skills and co-location of projects with other services is likely to be more effective.
- Engaging priority groups should take account of time and travel costs and constraints, lower digital skills (notably among older people), the dispiriting effects of mental health problems, lack of English language skills, and low confidence that financial health is achievable. Positive reasons to engage are helpful.
- Requiring people to undertake financial support sessions in order to gain access to other services may be useful in very hard to engage groups, otherwise messages that imply financial capability is lacking should be avoided.
- Effective case working across different support services is essential.
- Peer mentoring and group work can be useful but need good planning.
Better access to appropriate financial products and services
- The study found inadequate supply of affordable and appropriate services, although credit unions had offered a good entry point.
- Landlords, local authorities and utilities could be more flexible and allow customers to propose achievable payment schedules which reflect pressure points. A better partnership approach – involving FinTech and payment services providers, among others – could deliver financial benefits for all, not least by reducing debt collection costs and testing innovation.
- More structural problems need to be recognised and addressed. These include patterns of pension provision and casualisation of the labour market.
Evaluation
- There is a need for better evaluation. The MAS (now MaPS) What Works Fund is a good start.
- Projects would benefit from using consistent indicators (such as those of the Center for Financial Services Innovation) and measuring social return on investment. MaPS could facilitate this.
- Evaluation should consider process as well as outcomes, and disseminate learning.
Points to consider
Methodological limitations:
- The findings reported above arise more from analysis and interpretation of research rather than presentation of research findings; other conclusions may be made
- The study usefully identifies gaps.
