access denied part 1

8/14/2019 Access Denied Part 1

1/38

1

ACCESS DENIED

Low-income access to credit

PART 1

Coinneach Shanks

(From the archives: circa 1998)


2/38

2

CHAPTER 1: Introduction............................................................................................. 3

1.0 Introduction.......................................................................................................... 3

1.1 Social justice........................................................................................................ 3

1.2 Rights, fairness and justice .................................................................................. 4

1.3 What is affordable? .......................................................................................... 5CHAPTER 2: History and development of the project. ..................................................... 6

2.0 Introduction.......................................................................................................... 6

2.1 The study approach.............................................................................................. 6

2.1 Outline structure of the study............................................................................... 8

3.0 Introduction........................................................................................................ 10

3.1 Credit Unions..................................................................................................... 10

3.2 Poverty ............................................................................................................... 11

3.3 The economic background................................................................................. 13

CHAPTER 4: The survey - Low income and lifestyle ...................................................... 15

4.0 Introduction and Focus ...................................................................................... 154.1 Characteristics of respondents ........................................................................... 16

4.2 Financial characteristics of survey respondents................................................. 17

4.3 Housing, satisfaction and mobility. ................................................................... 18

4.4 Consumption patterns: Household and personal transport ................................ 19

4.5 Health................................................................................................................. 19

4.6 Diet..................................................................................................................... 20

4.7 Education ........................................................................................................... 21

4.8 Clothing ............................................................................................................. 21

4.9 Leisure activities. ............................................................................................... 22

4.10 Critical observations .......................................................................................... 23

CHAPTER 5: Low income credit and finance .................................................................. 255.0 Introduction and Focus ...................................................................................... 25

5.1 Income and expenditure..................................................................................... 26

5.2 Knowledge of the system................................................................................... 28

5.3 Experience of the system ................................................................................... 28

5.4 The borrowing scenario: what, who and where? ............................................... 30

5.5 Who? Seeking advice from individuals and agencies........................................ 31

5.6 Policy. personal indebtedness and the state. ...................................................... 32

5.7 Opinion and world view .................................................................................... 34

5.8 The Credit Union ............................................................................................... 35

5.9 Local economic trading...................................................................................... 365.10 Critical observations .......................................................................................... 36


3/38

3

CHAPTER 1: INTRODUCTION

We are seeking, in short, a specification of a just distribution, justly arrived at ...

David Harvey. Social Justice and the City

1.0 Introduction

In the midst of the Celtic Tiger economy there continues to exist a hard and seemingly

constant core of low-income families who are at risk of indebtedness. This publication

examines the position of those who struggle for survival on benefit or low pay. As we draw

closer to the year 2000, polarisation between economic groups continues to intensify. The

widening gap between rich and poor represents a dynamic that distorts social relationships,

peripheralises whole communities and excludes a substantial section of the population

from the range of taken-for-granted opportunities. This publication addresses the financial

situation of those citizens - for whom access to affordable credit is denied.

So here we attempt to locate this sector and subject it to scrutiny. In this way we can

identify affordable credit options that would ameliorate the constant economic struggle that

effects those on low income. It is recognised that the Money Advice movement has raised

the profile of the problem and that the Consumer Credit Act has addressed the legalities of

loan sharking - the seemingly inevitable result of a large pool of potential clients living on

or below subsistence level. However, the last two years has not seen a decline in the

problem. An unpleasant picture emerges. Rent and utility arrears continue to rise and

corporations now take a tougher line on evictions. Housing estates appear increasingly

run-down and the inner city areas are marked by the fear of crime and increasing drug use.

Many citizens go from one FAS course to another in an attempt to penetrate the labour

market and resist isolation. In those rural areas warped by tourist-based economies, many

citizens are forced to borrow through the winter and pay back through the summer,

vacating their houses to make room for income-generating visitors.

1.1 Social justice

Within this troubled scenario, the study seeks to establish a social justice perspective.

Justice and fairness in relation to income are vexed questions; in relation to lending even

more so. Have citizens a fundamental right to credit? If they do, what shape should creditoptions take? If special low-income options are available, what system would guarantee

affordability? The study therefore attempts to gauge the opinions of individuals on low

income - both employed and unemployed - to establish what credit options would be both

practical and acceptable.

It is an a priori assumption for this study that new measures have to be sustainable. So this

study looks closely at lifestyle. This is not an attempt to establish what social and economic

arrangements represent subsistence or relative poverty. It is an attempt however to study

the manner in which poor people live. And it should locate positions with which the reader

can compare. Yet lived experience is seldom uniform. Many low-income families livewithin their means whilst others in a seemingly similar position are unable to contend with


4/38

4

difficulties. Money Advice and Budgeting Services workers observe this phenomenon

every day. Social explanations emerge and become fact. There is a commonly held view

that there is always a core of people unable to cope, who always default on loans. They

always slip back no matter how much assistance is available. This is usually expressed as a

percentage - 10% is a popular figure. The study will examine this question in an attempt to

identify truth and mythology, fact and fiction, appearance and reality.

1.2 Rights, fairness and justice

The right to low income credit throws up the question of what rights mean in

contemporary society. And the question of citizenship - a concept used constantly in the

literature of European programmes - is not without controversy. In a vigorous analysis of

citizenship and associated promises, Rees rightly connects the emergence of the concept of

citizenship as being very closely connected with those on welfare benefits, identifying the

concept of social citizenship which in turn he takes to be the access to and utilisation of arange of public services. He observes that political rights were a precursor to the

establishment of social citizenship which itself culminated in the achievement of social

rights. However he is keen to separate citizenship from rights. Citizenship is a shared status

whereas rights provide for promotion of individual and group interests. Rights provide the

key - and turning that key provides access to the building. Promoting access to affordable

credit for low-income people offers that key to emergency funds, which is taken for granted

by most citizens.

We must emphasise that this is not at all an act of benevolence or kindness. We seek social

justice for those on low income and hold that justice yields strict duties. We do not refer to

acts of kindness that are a matter of individual conscience and choice.1 Essentially, we

recoil from benevolence and stress that this should never provide the basis for the way the

state supports its citizens. Fundamentally, we regard low-income families as justly making

claims on the product of society, itself generated through social and economic co-operation

from which they should notbe excluded. For credit access however, we do acknowledge

the position of traditional banking. This sector might argue that lending to those who may

not be able to afford to repay at normal rates in essence diminishes the fruits of this co-

operation. If social justice can be seen as the outcome of a society bound by its ethics, we

may have to recognise that justice is compromised by sectional interests which have their

own distinct ethics and a different idea of what justice and fairness means.

The idea offairness throws up the problem in a stronger light. Is it possible to enforce

fairness in an unfair society? Is it possible to enforce justice in an unjust system? The very

idea of social justice is regarded by many as political - in some parts of the world, people

have paid with their lives through espousing it. And in a society whose cornerstone is

private property can we force any individual or agency to lend or to transfer its property to

another? These questions may not be resolved by this enquiry. But the issues are unlikely

to go away - and so the formulation of problem and solution must be measured against this

background. Neither do we accept the notion that research is value free. This project

focuses on those with low incomes and seeks to identify with their problems, empathise

with their position and to put forward solutions that will meet their needs. It is crucial that

1Plant, Raymond, 1974, Community and Ideology: An essay in applied ideology, RKP, London


5/38

5

we also establish the low-income populations capacity to respond to policy initiatives. In

this way we can avoid top-down measures that fail to hit the mark, or are otherwise

unsustainable.

Before examination of affordability and credit, it is useful to set out the Commission of

Social Justice2 hierarchy reported in The Justice Gap. We hope to test the information thathas been collated against those basic tenets and to suggest mechanisms that will ensure that

unjust inequalities are eliminated.

The foundation of a free society is the equal worth of all citizens

Everyone is entitled, as a right of citizenship to be able to meet their basic needs

The right to self-respect and personal autonomy demands the widest possible spread of

opportunities.

Not all inequalities are unjust, but unjust inequalities should be reduced and where

possible eliminated

The information contained within this study demonstrates that we are falling far short of

transforming these principles into reality for those on low income in Ireland. As this

publication will clearly show, those on low income in Ireland are far from being able to

meet their basic needs. Indeed, the survey of low-income citizens will demonstrate that this

is a group whose self-respect is under constant attack. And it continues to be an irony that

many low-income citizens preserve their self worth through actively seeking social justice

for others. So in this publication we hope to advance some way towards the reduction of

the marginalisation of ordinary people by ensuring access to the range of financial services

that are generally taken for granted in this society. In this way, we hope to reduce the

continual tension of living on a financial knife-edge and thus widen scope and opportunity

for ordinary people.

1.3 What is affordable?

The concept of affordability is used throughout this study. It flows from the idea of social

justice referred to above and stands here as a non-relativist version of fairness. In a

situation where interest rates vary enormously this definition appears a little loose. It is

therefore one of the aims of this study to more rigorously define what we mean by

affordable. However, we know that the licensed moneylenders' rate is restricted to 39% flat

rate3. Banks vary both depending on the type of loan and the institution but do not offerwhat this publication regards as an affordable rate. The credit union offers substantially

lower rates with insurance protection included. Some EU states (like the UK) offer interest

free loans to citizens on certain benefit levels. For the purposes of the study a preliminary

definition may be adopted as that which a citizen on benefit or low income can adequately

afford to pay back within his/her income.

2

Commission of Social Justice The Justice Gap, 19943 Credit Companies affiliated to the Consumer Credit Association are restricted to 39% flat rate (to which

collection charges be added, however) .


6/38

6

CHAPTER 2: HISTORY AND DEVELOPMENT OF THE PROJECT.

Classless society, social justice - no one believes in them any more. We are in the age of

micro-narratives, the art of the fragment ...

Paul Virilio. The Face no 61

2.0 Introduction

When the Credit and Debt Policy group approached the problem of credit availability, this

represented a step away from the centrality of the Money Advice and Budgeting Service

(MABS) movement. MABS vary across the country but tend from necessity to be

dominated by a client-centred account. Those who have initiated education programmes

both in the communities and in schools, find themselves - as with all client based services -

faced with rapidly lengthening queue. This begins to form a caseload, in turn bringing a

tendency to concentrate only on those individuals who are in emergency situation. Again aswith advice-based organisations, policy and strategic development suffer. As queues

lengthen, cases are prioritised according to intensity. It then becomes more difficult to deal

with preventative areas. Looking beyond the immediate crises becomes a luxury that hard-

pressed counselling and advice staff can ill afford. So the Group was eager to examine how

this situation can be changed. How could the experience of money advice workers and

other practitioners be distilled and routed towards prevention - both to prevent the

lengthening of the queue and to create the conditions necessary for a general reduction in

low income indebtedness?

2.1 The study approachBuilding on findings of previous research the Group recognised that low-income access to

credit options was limited and that this represented a significant element in increasing

indebtedness. It has been shown for example (Shanks. Limerick4) that where there is no

slack in an individuals finances, that a single problem could pitch people into an

indebtedness process - ill health, pregnancy, confirmation, communion, funeral expenses,

etc. Here, manipulation of a range of credit options can become a way of life and a defining

element in that persons existence. This represented a fragment of the overall picture. The

study ended by moving from depth qualitative analysis into broader areas, developing

theories which had wider implications for those affected by marginalisation. The Credit

and Debt Policy Group had also advanced the proposition that the availability of a range ofaffordable credit options would ameliorate the position of many households and bridge a

gap that many find difficult to cross. It wished to see a fairer system of credit designed

specifically for disadvantaged social groups; a system where people were not excluded for

being unemployed or for being benefit dependent, for example. In this, the social justice

perspective referred to in the previous chapter influenced the group. It appeared unjust that

so many households were excluded from the banking system (the aptly termed

unbanked) merely because of low income, whilst others were constantly offered a range

of credit options that would help them spread costs of unexpected expenditure.

4Shanks, K. Living in Debt in Limerick. ibid.


7/38

7

There are two polar opposites. Those with a wage, bank account, and mortgage, are

continually pressured to borrow for a wide range of luxury goods. Why wait? is the

familiar message of the bank advertising. Even those with only a current account at least

have the luxury of going that little bit overdrawn. Often, the worst thing that can happen if

an account gets out of hand is that the bank will offer to convert the overdraft to a loan.

This results in a cheaper rate of interest compared to an overdraft. At the other end of thespectrum, low-income households - particularly those located in disadvantaged areas - have

no bank account and are forced to seek emergency funds from wherever possible. For

those households the only sources of borrowing are as follows.

The local credit union, where savings are necessary to mobilise borrowing

A range of legal and illegal moneylenders who ask fewer questions and deliver funds

immediately.

Family and friends who may tide expenses over from one week to the next.

Shopping catalogues, where higher prices mask interest free conditions.

The group therefore sought to take a multi-dimensional case study approach that would

look at a number of localities with differing characteristics and examine available credit

options for low-income household in those areas. A series of policy interviews would give

this context and an examination of European and international strategies would allow for

an assessment of both good practice and potential pitfalls. It was decided at a later stage to

supplement this with an interview survey that related to the case study areas. A

questionnaire was therefore developed which would address both household borrowing and

current lifestyle of interviewees. Lifestyle was a critical component in the construction of

the questionnaire in that it would allow for grounding of information. It would additionally

assist in determining important elements in the process that leads to indebtedness -

marginalisation and isolation. But the most important part of the questionnaire was an

attempt to gauge the acceptability of alternatives to current credit. Thus the household

survey emerges as the central part of the research project. It allows for the low-income

families to speak for themselves, to comment on their current lifestyle and to express

opinions on alternative credit options.

It should be noted that household data collection constituted a direct incursion into

sensitive areas of the lives of individuals. There were very few areas that the questionnaire

did not examine. Additionally the questionnaire itself constituted a deep financial probe

that demanded thoroughness and sensitivity from interviewers. Specific questions provided

a check on data consistency.

The final shape of the project is as follows:

A 100-interview survey of low-income families - 25 in each case study area.

Unstructured material from interviews was also subjected to a key issue analysis.

An examination of Money Advice and Credit Union experience in relation to low

income borrowing in each case study area.

An examination ofEuropean and relevant international experience

Key informant interviews at the policy level with league of Credit Union, Banks,

Department of Social welfare, Consumer affairs.


8/38

8

The interview survey should not however be seen as representative of the general position.

It specifically addresses low-income families in the case study areas. Here, we see the case

study as being indicative of the situation for that group - rather than representative of all

low-income groups across the country. It forms the basic skeleton on which most of the

information hangs and its strength lies in its connection to the multi-dimensionality of

the research. In this way we emerge from the study with a clear idea of what lack of creditaccess means for whole communities in Ireland. Thus it was envisaged that policy

recommendations would address a system where marginalisation was taking place. They

would attempt to engage with the dynamic of marginalisation and offer measures that

would reduce further economic drift of households into indebtedness.

2.1 Outline structure of the study

1. The study begins by looking at the position of those without bank accounts and who

have difficulty in making ends meet. It goes on to examine the range of credit options

currently for low income groups elsewhere. In particular it looks where the nation stateintervenes to offer low-income credit to citizens. The study pays particular attention to

those initiatives where social lending attempts to address the problems at the community

level by boosting local employment through provision of housing and other facilities.

Additionally it examines those cases where social investment encourages small business

development in an attempt to keep money circulating in the local economy.

2. We continue by outlining the key findings of the interview survey, firstly by examining

the way in which low income people live. This chapter looks at the way in which low

income and indebtedness restricts mobility, prevents home improvement. It looks at the

difficulties in areas where universal benefits exist - the areas of health and education.

Finally it looks at leisure opportunities and restrictions on personal development and

socialising.

3. The second part of survey information deals with household income and expenditure,

attempting to see where shortfall lies. It looks at credit commitments and traces disposable

income (if any). It locates those with bank accounts or those who held such accounts and

attempts to establish the experience of banked and unbanked low income residents in our

case study areas. It also tries to place a figure on the income that families feel they need to

survive. This section attempts to ascertain what credit arrangements would be either useful

or acceptable to households. It looks at attitudes to money, unemployment and poverty,

measuring against commonly held points of view and tries to assess what reasons mightprevent citizens from using their local Credit Union.

4. We go on to look at the case study areas themselves. These localities are examined on

their own terms. Interviews with Money Advice and with local Credit Unions provide a

Money Advice and Credit Union point-of-view of the current situation, local difficulties

and perspectives. We have used not only policy reports that focus on particular areas, but

press coverage of policy statements and on the areas themselves. It is intended that this

should give the reader a flavour of the area. In certain cases it would reveal the process of

stigmatisation with which communities live. The case study areas are as follows:


9/38

9

Letterfrack (NW Connemara): Rural village cluster

Moyross (Limerick) Urban provincial- peripheral estate

The Lough/Togher (Cork) Urban inner city

Inner-north Dublin (Markets area) Urban inner city

Outer Dublin - Ballymun - Urban peripheral estate

5. An analysis of case study information compares and contrasts operational practice of

money advice and credit unions. It attempts to locate best practice in social lending in

terms of access, availability. environment, etc

6. This chapter looks at social lending in Ireland and Europe, focusing primarily on credit

unions and credit banks. In an exploration of the origins and principles of social lending,

the study locates problems and pitfalls of low-income loan provision. Ireland, Netherlands,

Germany and France are featured in this chapter. Additionally, this section looks atcommunity development credit unions in the United States that offer an alternative to

traditional credit union operation.

7. Here, the study goes on to examine key examples of international practice in alternative

banking. It outlines the experience and outcomes of successful initiatives that cut against

the grain of mainstream economics and features US, Spanish and Irish examples.

8. The study tracks the experience of the social fund of the UK and examines the

underlying principles, which undermined the effectiveness of its operations. It ends by

assessing the implications of introducing welfare loans in Ireland.

9. The study looks at policy perspectives in four key agencies with impact on credit

systems in Ireland.

Dept of Social Welfare

League of Credit Unions

Dept of Consumer Affairs

Irish Banks Information Service

10. The final chapter consolidates the material to offer a rounded account of the overall

position. This chapter will deal closely with the sustainability of suggested alternatives forlow-income credit. It concludes with perspectives, policy options and recommendations

concerning credit availability. It will suggest various means of redressing the balance for

marginalised families by suggesting different arrangement for obtaining and repaying

borrowed sums of money. It will closely examine the centrality of the Credit Union system

and identify possibilities for Credit Union development designed not only to assist low-

income families but also improve the communities in which they live. Finally, it will

attempt to engage with the concept of community value as distinct from money and capital.


10/38

10

CHAPTER 3: BACKGROUND TO THE STUDY

The background reveals the true being and state of being of the man or thing..

Juan Ramn Jimnez.

3.0 Introduction

The scope of this chapter is wide, in an attempt to bring several distinct areas together as a

totality. Thus here we aim to be holistic in approach. Just as it is unlikely that a single

measure will remedy a complex system, there is little point in examining credit without

considering economic background, predisposition to credit as a prime dynamic within

western capitalist economies and cultural factors such as inter-generational unemployment.

It could now be said that citizens are coerced into maintaining high levels of credit; further,

that the economic system depends on this kind of money circulation. For some activities it

is now fairly difficult to operate without a credit card. Developments in this area may

ultimately disenfranchise whole sections of communities, not only excluding those outsidethe system but also rendering them extremely visible through their lack. Thus the gap

between the have and the have-nots may in the end be represented by (non) possession of

plastic card. We may be forced to acknowledge that processes beyond the control of the

individuals represented in these pages, produce unemployment and poverty.

Marginalisation and social exclusion are the inevitable consequence of these processes for

those engaged in the difficult task of eking out a daily existence for themselves and their

families.

It is also an a priori of this study that the poor are forced to seek credit from a wide range

of sources. Lack of capital forces low-income citizens to seek out and use credit as a way

of life. In so doing they have to rely - not on the banks from which they are generally

excluded - but on family and friends, local shops and moneylenders. Additionally they are

forced to rely on special associations such as the Credit Union which itself represents a

type of cash pooling. It is also recognises that those complex mechanisms of managing

credit emerge and that these are based on expediency and immediacy rather than long-term

sustainability.

3.1 Credit Unions

Credit Unions take centre stage in this chapter and others. Quite simply, for manycommunities the Credit Union represents the only institution where saving and borrowing

can occur in a bank-like manner. Yet as this study shows, the Credit Union is at the same

time much more and much less than a bank. The Credit Union is an institution that will

use a set of social criteria in agreeing a loan. Its local offices provide community

information and services. At the same time, it does not and may not offer the full range of

banking services available from a traditional bank. It has been described as the poor

peoples bank and although there is an element of truth here, it fails to adequately describe

the nature of the Credit Union movement.

The Credit Union aims to be non-exclusive. Anyone may join as long as they fulfilqualifications based on locality or industry (The Common Bond). There are therefore many


11/38

11

well-off members of the Credit Union. To that extent the Credit Union socialises savings,

making them available to a wide range of income groups. We could perhaps regard it as a

"redistributor" of credit opportunities. Nevertheless the Credit Union has proved

unsuccessful in combating the criticism that it fails to adequately invest in social projects.

As we will see from our analysis of community development investment elsewhere, Credit

Unions can and do promote socially valuable, ethical investment which has a real effect onlocalities.

3.2 Poverty

The study demands some orientation to poverty itself. It is a concept that continues to

create controversy, particularly in terms of welfare benefit levels and the debate seems

endless. Setting of poverty lines may be a necessary part of defining the problem. Yet our

main concern here is not to over-extend that debate but to make it manageable. We note the

tendency to identify poverty with places - estates, localities even cities and countries.Where the local state resorts to allocating individuals to certain estates on the basis of

social characteristics (say criminality), this can find its own distorted reality in the

emergence of so-called sink or dump estates. At state level, this can be a determining

factor in red-lining, the process by which people living in certain localities are denied

resources available to others; refusal of credit facilities in particular. The Credit Union

being locality or industry-based attempts to avoid this problem. Yet there is an indication

that increasing delinquent accounts have exerted pressure on Credit Unions to such an

extent that they regard certain areas with suspicion.

The concepts of marginalisation or social exclusion may offer more useful tools. Yet it is

likely that these suffer the same reduction. This is the reason for selection of a range of

case studies based on characteristics of several places. The idea of social exclusion is said

to be more dynamic yet the response is still directed at areas of social disadvantage5.

However it does allow us to focus on individuals, families and their circumstances where

place is an important element within a complex array of factors. So here we look at low-

income households in differing localities and communities. This is an approach that

recognises that those receiving low wages may be at a disadvantage compared to those on

benefit. This poverty trap has been well documented elsewhere - the wage rise that

excludes the individual from some benefits coupled with a move to a different tax

threshold can mean a family is worse-off. This provides a disincentive to many to actively

seek employment. Those who opt to maintain on benefit are often regarded as scroungers, acharacterisation which fails to acknowledge the logic of income maximisation for a

household. This characterisation remains however and certainly a proportion of

interviewees in this study was not immune from this particular take on society.

The National Anti Poverty Strategy (NAPS)6

describes disadvantage as affecting every area

of Ireland. It mentions in particular the concentration of poverty in decaying inner city

5 Combating social exclusion in Ireland: A midway report. 1990-94. The concept of disadvantaged

communities again resolves poverty as a place. To a certain extent this ignores the combination of local,

national and global factors that give rise to poverty or disadvantage. Exclusion here tends to be resolved asnational policy in education or employment.6

Combat Poverty Agency, National Anti Poverty Strategy, 1997.


12/38

12

areas, large public housing estates on the periphery of cities and towns and in

underdeveloped rural areas. In these areas, people suffer cumulative disadvantage. The

NAPS defines poverty in the following manner:

People are living in poverty if their income and resources (material, cultural and

social) are so inadequate as to preclude them from having a standard of livingthat is regarded as acceptable by Irish society generally.

The continuing existence of poverty is a matter of widening concern. In an address to the

Simon Communitys 20th national conference7, the Governor of Mountjoy Prison made an

unexpected contribution that focussed on the causes of crime. Citing the work of Paul

OMahoney8, John Lonergan claims that fundamental inequities in the distribution of

economic resources create the majority of the prison population. More than half of

Mountjoy Prisons population originates in pockets of 6 postal districts in Dublin, an

astonishing figure given that Mountjoy serves as a committal prison for 19 counties other

than Dublin. A total of 80% of the prison population left school before the age of 16 and

nearly nine tenths were unemployed immediately prior to committal. In an appeal for stateintervention to eliminate disadvantaged localities and to address the needs of those on low

income, Lonergan describes the poor as the last, the least and the lost as far as the Irish

economy is concerned.9

In asking for a long-term strategy to reduce the gap between the

rich and the poor, he touches on many issues at the heart of this study.

Hugh Frazer has drawn attention to these factors in a paper for the National and Economic

Development Forum10

, whilst focussing on income. Believing that the existing system for

calculating welfare benefit levels has proved inadequate, he examines current income

maintenance.

There is an urgent need to intensify actions to combat poverty and to develop amore comprehensive, integrated and sustained anti poverty programme to

address this fundamental challenge to Irish society. However, in spite of arange of improvements in recent years, current income maintenance strategiesare not making a sufficient contribution.

Frazers point coincides with the thrust of this study. Whilst current strategies can assist in

alleviating hardship, they do not lift people out of poverty. Often they act to do just the

opposite by trapping people into inadequate lifestyles. They provide an inadequate income

on condition they do nothing. At the same time social and economic change makes doing

nothing quite difficult. Indeed, the possibility of doing anything is restricted - education,

looking for a job or moving to another area is denied by inadequate income. Theincreasing speed of speed of technological change also means that in relative terms, the

poor become further isolated. The old judgemental view that the poor should not even

think about owning a television set has changed11

. But now increasing ownership and use

7Lonergan, J., Poverty and Crime in Irish Society. Simon Newsletter, November, 1997

8OMahoney P., Mountjoy Prisoners: a Sociological and Criminological profile, 1997

9 Mr Lonergan states: It is ironic that we in Ireland like to talk about what caring people we are, what

generous people we are. I cannot find as much compassion as would lick a stamp.10 Frazer, H., Poverty and income maintenance strategies: An introductory paper for the National Economic

and Social Forum11

Although diminished, the notion that luxuries should not be countenanced continues to have credence.Anecdotal evidence gathered in this study suggests that some grant-giving committees continue to hold to this

view.


13/38

13

of personal computers is further marginalising those who are in no position to buy them. At

the same time, technological requirements for employment lead to further exclusion. Lack

of skill training restricts those on low income to a shrinking pool of employment

opportunities - ensuring that the poor remain poor. Psychological considerations must also

be considered. By doing nothing, nothing can result and the social stress of this position

renders whole communities atomised and impotent. The Minister of Social Welfare12 hasstated that although the primary responsibility of the department is the provision of cash

payments to those in need in an effective manner, that the system must evolve in such a

way as to facilitate full participation by recipients in economic and social life. The results

of this study suggest that evolution is a distant prospect indeed.

This leads us to consider the manner of programme implementation. Raising the income of

the poor does not necessarily provide a solution unless it is delivered in such a way that

communities can capture and hold any resulting advantage. This study therefore aims to

present a multi dimensional picture of low-income communities in the hope of producing a

multi dimensional solution. We otherwise run the risk of suggesting that widening creditoptions for low-income citizens can change rather than merely alleviate their situation. In

the chapters that follow, the study attempts to determine the context of money advice and

credit unions against the background of social and economic change in low-income

localities. It goes on to examine options in the knowledge that changes in income and tax

thresholds will not alone suffice to redress social imbalances. To reverse the degeneration

of many low-income communities requires a fundamentally different and inclusive

approach; one which also demands a consideration of the economic potential of such areas.

3.3 The economic backgroundIt is instructive to briefly examine the current state of the economy since naturally this has

an impact on monies available for lending. Money and credit growth have been a matter of

concern to the Central Bank13

for some time. The bank feels that the pattern of credit

growth has been largely demand driven, without funding constraint and that this is likely to

continue for the foreseeable future. Despite the banks view that willingness to incur debt

may be governed by ability to meet payments, it does note that overall indebtedness is

increasing in relation to income. Although the bad debt experience of Irish credit

institutions has recently been favourable, a fall-off in economic growth would make for

deterioration in credit quality and tightening of credit standards. The necessity of price

stability as a European requirement will bring tighter monetary conditions that could inturn limit the ability of government and lending institutions to respond to low-income

citizens.

Unemployment too, presents a problematic area. Although the rate of unemployment has

been dropping, net inward migration has been slowing the rate of decrease. And although

unemployment is expected to drop, prospects of an immediate reduction seem likely to be

curtailed. However a recent Labour Force Survey shows that employment itself has risen

by 46,000 or 3.7%. The services sector has been the main engine of employment growth -

12 Minister of social welfare, Poverty and Income Maintenance. Position paper for NESE, 17th January 1997.13Central Bank of Ireland Earrach. Spring. 1997


14/38

14

representing a growth in female employment and full time jobs. Conversely, predominantly

female part-time employment has dropped - a problem area for the low-income lone

parents represented in the study. Additionally and importantly, the Central Bank states that

there has been little change in numbers of Long Term Unemployed (LTU) - a social group

that is heavily represented here.

The persistence of long-term unemployment at a time of record employmentgrowth, underlines the degree of structural problems that still exist in the labourmarket. Claimants on the live register fell to an all time low in Jan 1997. TheUnemployment Rate is likely to fall by 11.5%. Labour Force Survey

Nevertheless, consumer spending grew strongly in 1996 representing a significant growth

in disposable income and retail spending is continuing to rise. Perhaps paradoxically

considering this study, as money supply grew in 1996, there was a general increase in

monies held in current accounts and deposit balances. Small savings contributed 59

million to the Irish Pound in the last quarter of 1996, whilst saving certificates grew by 33

million. Bonds grew by 49 million. Given the thrust of this study it is perhaps surprisingthat for the whole of last year, small savings contributed 322 million - an increase of 25

million over the previous year. However, it is clear that this sum may depend on part on

the high proportion of the population saving through Credit Union membership


15/38

15

CHAPTER 4: THE SURVEY - LOW INCOME AND LIFESTYLE

Life is little more than a loan shark. It exacts a very high rate of interest for the few

pleasures it concedes.

Luigi Pirandello. The Pleasure of Honesty

4.0 Introduction and Focus

Whereas previous studies have concentrated on those with severe indebtedness problems,

we now broaden the focus to a larger group - whose members might or might not be in

employment. Our guideline here was low income, whether benefit or low wage determined.

Unemployment however remains a vital factor. AsLiving in Debt in Limerick14

revealed,

those suffering from debt problems tend to suffer increasing isolation. As indebted people

burrow into their home, they build a wall against a hostile outside world. Unemployment

intensifies this process - or at least provides the conditions necessary for people to hide in aself-imposed darkness. This is why recent EU anti-unemployment measures have directed

their attention to problems described as upstream of unemployment. It recognises that

pre-existing conditions will prevent people from finding and sustaining employment. So

the aim of this study is compatible with an upstream provision approach - examining an

extended range of affordable credit options that offers those on low income some room for

manoeuvre. For example, obtaining work can mean incurring extra short-run expenses for

which there is no economic provision in the household. Thus the stress of living

continually without economic slack can actively militate against ever seeking

employment. We are also forced to recognise an issue that has important implications for

the conduct of the study. The problem of exclusion, isolation or marginalisation impacts on

any survey of those living on low income, in that possible respondents are hidden. We

could not merely sample those referred to a Money Advice and Budgeting Service for

example.

In fact, we wanted to avoid an exclusive use of money advice services for several reasons.

Working within advice services tends to present a distorting lens through which people are

viewed as clients or cases. For those who work exclusively with such a group it is easy

to begin to think that those referred reflect the whole picture. In any case, those presenting

at Money Advice and Budgeting Services constitute those who either through self-

recognition or identification by an agency are in crisis. Extending this social work analogy,

we wanted also to look at those at risk. However, crisis at least levers people into visibilitywhilst those at risk are more difficult to pinpoint. This made the task of selecting

interviewees more difficult than is normally the case. In this study we set out to build a

profile of those who might be in need of credit, bridging social groups distinguished by

employment or unemployment. Without the luxury of using advice agency referrals, a

suitable structure of interviewees therefore took longer to establish.

The first part of the survey questionnaire dealt with life style. We wanted to establish a

more rounded picture of living with low income. Did it for example, bind people into a life

of restriction, of hand-me-downs and bargain basements - of generally the second best? In

seeking for social justice we wanted to identify missing elements that are otherwise

14Shanks, K. Living in Debt in Limerick. PAUL Partnership, Limerick


16/38

16

expected or in place for most families. This is not merely a case of comparing two points

on a scale. It is recognition that those on low income have a predetermined expectation of

what general consumption patterns are being followed. Thus they are not merely excluded,

but live continually with the feeling of exclusion. So we were anxious firstly about

stuckness - the state of restriction, which limits movement in residence, employment, or

education. People who continually borrow without the income to repay on time, sink intocareer debt. Their life is determined by coping or managing rather than by transformation.

They eke out an existence of making-do. Constant financial pressure leads to incapacity to

develop or to consider new options.

Hence this chapter deals with housing, consumer durables, health and diet and leisure

activities. We want to paint a picture of a group - a picture with which we can all identify

and compare. The following chapter will go on to identify income and expenditure and the

capacity to use new credit new options. It will attempt to ground that within an emerging

worldview - the worldview of the person on low income. In doing this we wish again to

address a myth that continues to prevail: the myth of the feckless scrounger who has nointention of working, who waits hand outstretched for the next benefit about whom nothing

can ever be done. We will however present the opposite. The low-income person who

might be indebted or at least live with that prospect, but wants nothing more than to get

straight and to be part of the mainstream society she knows or thinks exists.

4.1 Characteristics of respondents

A major task of the survey was to achieve a blend between individual responses and family

information, believing that it is the family unit that is affected by low income rather than a

single family member. Consequently we would have preferred to interview most people in

their homes but logistics led us to interview most respondents in community facilities. The

Limerick study15

also led us to believe that in general, women take the lead in household

finances. So it was to be expected that the number of female respondents would outnumber

male contributors. In this study, women comprise nearly four fifths of informants at 78% of

the total interviewed.

The survey achieved a broad age spread. Those under 25years of age constituted 14% of

respondents whilst 40% of respondents were between 26 and 35 years old. There were 29%

between 36 and 45 years. There were 12% between 46 and 55 years. There were 17% who

were 56 or over, guaranteeing us information on those who were reaching or were ofretirement age. We also wanted to ensure a range of those with different domestic

arrangements. In fact, a total of 30% of the group were married, nearly two fifths of

respondents were single and more than one fifth were separated. Regardless of marital

status, nearly half of all respondents (43%) were living as lone parent families. More than

two thirds of respondents had child care responsibility of some sort - either directly or as

part of family and extended family relationships. Large families however were not in

evidence. Only one third had four or more children and 15% of respondents had no

children.

15Shanks, K. Living in Debt in Limerick. PAUL Partnership, Limerick


17/38

17

Only 10 % of our respondents were employed full time. A further 10% were employed

part-time. Employment status presented us with the choice of separating FAS and

Community Employment schemes from permanent or semi-permanent employment. This

is not so simple as it first appears. Despite their limited duration, participants quite rightly

regard these schemes as employment and any extra money they receive as wages. As one

such respondent pointed out:

Loans are only possible to get if you have a job ... I have work on a scheme butI am going to be jobless at the end of the year.

For many citizens, regular participation in FAS and Community Enterprise schemes is a

vital part of economic survival. So the total of 42% of respondents who were working on

employment schemes is quite striking. There was some regional variation, however. Three

quarters of Inner Dublin North respondents were participating in such schemes compared

to one quarter in Connemara. Evidence had suggested that this might be more typical of

Connemara. However the date of interview may have influenced results in that FAS

schemes had not yet started when Connemara respondents were interviewed. As oneinterviewer commented. People up here are just hanging on waiting for FAS courses to

start.

4.2 Financial characteristics of survey respondents.

Since the aim of the study was to locate a range of families typical of low-income groups it

was interesting that more than two thirds (70%) of respondents were members of the Credit

Union. Ireland is distinguished in that it has the second highest per capita membership in

the world16

so this high membership figure remains surprising. A view exists that CreditUnion membership is distrusted in certain quarters for reasons that will later be explored.

Yet here we have a picture where the Credit Union is the low-income bank - only one third

of our respondents had a bank account in the traditional sector. A range of basic attitudes

also existed concerning credit. Whilst more than two thirds of respondents had existing

credit at the time of interview (with commitments of between 11 and 40 per week),

nearly one third said that they did not agree with credit - on principle. This core of

respondents took great pride in not getting into debt.

I dont consider myself very good with money but I make sure things are paid.And my parents were exactly the same.

However a total of 40% felt that whether they agreed with it or not, they didnt have much

choice but to use credit of some kind. Experience of general borrowing was therefore

considerable and utilisation of money lending facilities - whether legal or illegal - was

common. More than one third of all respondents had borrowed from a moneylender at

some time and more than a quarter had current credit facilities with a local trader.

16The Dominican Republic has proportionally the largest membership in the world. It is however

compulsory for all citizens.


18/38

18

4.3 Housing, satisfaction and mobility.

The typical respondent was living in a standard family house. More than two thirds of

respondents (68%) were living in a house with around one quarter in a flat or maisonette.

Nearly two thirds of respondents were living in houses with 5 rooms or more. A few lived

in mobile homes or temporary accommodation - all of these in Connemara. One third of

respondents were owner-occupiers with more than half (54%) in Corporation-rented

accommodation. A further 11% were living in privately rented accommodation. Given the

spatial characteristics of our case study areas it was expected that flat-dwellers would be

restricted to the Dublin case studies. More than half of Dublin respondents lived in flats.

Only one third felt that their housing was fine for their requirements. A total of 11% felt

they were overcrowded and a quarter said they would like something else When asked if

their current housing was improvable, nearly two fifths (19%) said they like to have more

space and nearly half of all respondents (46%) said that they would consider taking a

borrowing to improve - i.e. to extend their living accommodation. It would be fair to

observe that most respondents felt a bit cramped. There appeared to be a generaldissatisfaction with housing standards. Those in Ballymun, for example, commented on

design problems that raised their living costs. Where back boilers were situated in a room

other than the main living area, this required maintaining two coal fires on a daily basis.

Most respondents were happy with their area - i.e. the locality in which they lived - with

two thirds saying they were either satisfied or fairly satisfied. More than a fifth were

unhappy with 11% saying they just didnt like the area and a further 11% saying they

hated it. We wanted to ground that information so we sought reasons for liking or

disliking localities. Asked about the worst thing in their area, crime and drugs comprised

the largest single category at 30% of total respondents. Other people however comprised

a large category with 18% referring to gangs or those neighbours whom they considered

rough. One tenth of respondents could find nothing bad to say about their area. When

asked to name what was best about the locality, around one quarter referred to the quiet

nature of their area or environment and a further fifth liked their location. This was not

always Connemara but often outer suburbs. Here, proximity and access to the countryside

played a part.

When asked if they would like to move however, there is a clear split in respondent

opinion. Nearly half (43%) would like to move away - mostly to a different locality in the

same town but often to a quite different environment..

I would like to move away to somewhere by the sea - away from the flats and the built-inareas. It would be a lot healthier..

Others would prefer to be near family and several wanted to move abroad, feeling that

opportunities were limited and that some other countries presented wider options.

I would like to emigrate to a different country to give the children a better start. The wouldbe better opportunity and a better environment.

We posed the question more specifically - i.e. what would you do if you had to move - or

were in a position where moving was a necessity? This could be something as crucial astaking a new job in a different city, for example. But nearly half of respondents (45%) were


19/38

19

quite adamant - they felt they hadnt a hope of being able to move or that they just couldnt

afford it. As a female respondent commented.

I cant afford moving at the minute. Id like a mortgage but anyway ... The Credit Union dontgive mortgages..

Only one quarter (23%) said that they would try to borrow to facilitate a move. This is a

clear indication of the restrictions of living on a low income. There are no savings available

to smooth the path of a necessary change and the very limited scope for credit could

militate against social improvement. Again in Ballymun, a young heroin addict wished to

move away from a social network based on drug culture but was forced to remain because

of rent arrears. She was stuck. Her limited creditworthiness limited her options and ensured

that her problems would continue.

4.4 Consumption patterns: Household and personal transport

It was expected that interviewees as a group would have low car ownership and apart from

Connemara this turned out to be the case. However, nearly one third of informants (32%)

had bought a car or motorbike at some stage. Only a third of those respondents had paid

cash. A further third (9% of all respondents) borrowed from the Credit Union. Loans from

bank or building society or those arranged through the trade outlet accounted for most of

the remainder. As always, family and friends were represented with 5% of respondents

borrowing informally. More than half of all respondents had borrowed to purchase a

television, the majority arranging this through retail establishments, usually the ESB. This

was similar concerning washing machines with 28% of respondents arranging credit

through retail outlets. Credit Union use for such borrowing was present but low running at

4% to 5% of respondents. This is in all likelihood due to the ease of making repaymentsthrough the regular ESB billing system. The ESB is held to have a positive or at least

flexible attitude to this kind of low-income borrowing. There was an additional scattering

of borrowing for larger items like new kitchens or new windows - usually financed through

the Credit Union, but in low numbers (5% of all respondents). Nearly two thirds of

respondents said that they needed things - things that they felt they could not, or should not

be without in the house. Although this was on occasions something as substantial as central

heating, it was more often small items like a bedside lamp.

4.5 HealthThere were health difficulties in more than half of respondents households. These were

problems typical of low income and indebted households. Respiratory problems were

present in 18% of households and anxiety or depression in 10%. A further 6% had skin

problems like eczema. A total of 40% were going to the doctors or hospital on a regular

basis and a further 20% on an occasional basis. More than one third of respondents were

taking medication, one third of which were antidepressants. The majority of respondents

however (78%) had a medical card and many interviewees took the opportunity to

comment that it was the most valuable benefit they possessed. Those having to pay for

medication (20%) were meeting with financial pressure, although only one respondent said

that it stopped them going to the doctor. A total of 14 % of all respondents specificallymentioned an adverse effect on household budgeting due to medical costs. Only one person


20/38

20

had VHI membership that he found a severe financial strain. One third of respondents had

at some time been forced to borrow money for medication, nearly all from family,

neighbours or friends. But when respondents were asked if they would borrow for

medication in the future, more than two thirds said that they would if it was necessary.

Similarly, family and friends dominated the category of possible creditors. However, more

than half of all respondents mentioned the Credit Union as a possible source of finance.

4.6 Diet

Diet was considered to be of crucial importance for this part of the project. Several money

advisers had mentioned attempts to overcome indebtedness problems through cutting back

- at the same time compromising the family diet. So the survey examined the eating

patterns for each of the 100 respondents families. The vast majority (81%) felt they had a

healthy diet. A total of 18% felt that they did not because the food was too expensive or

that they did not have the time or the skills for the complex cooking that low budgets

demanded.

Most respondents indicated that they ate meat or poultry nearly every day - excluding meat

products like sausages and burgers. The latter were consumed daily by only 4% of

respondents. Nearly two thirds were eating vegetables every day. However more than a

fifth never ate salad and 10% never had fruit. Several key informants expressed the view

that many low-income people unnecessarily consumed take-away food - which they

deemed to be both an unnecessary expense and a potentially unhealthy alternative. Slightly

over half did consume convenience food once or twice during the week. But even given

the need for those carrying out the cooking in the house to have a break, 40% of

respondents neverbought this kind of food. Although the patterns of food consumption did

not give cause for alarm, respondents felt generally that if they could, they would have

change the way they ate. Nearly two thirds (61%) of all respondents would introduce

variation in their diet if they could afford to spend more.

Previous research indicates that those on low income borrowed towards the end of the

week, paying back to relatives and friends at the beginning of the next17

. This survey tends

to substantiate this. More than half had at some time borrowed to buy food from family,

friends or neighbours - although 10% used tick at the local shop. There was a general

spread of Credit Union, Provident cheque and money lending borrowing for food. Most

indicative however is the number of respondents who envisaged they might at some time

need to borrow. Three quarters of respondents who had never borrowed for food said thatthey would if it became necessary. People did not however appear to be restricted to local

shops as heavily as has been envisaged. Certainly most would take advantage of cheaper

prices in large supermarkets if it were possible. Those who did use local shops exclusively

felt that this was fine or OK for what it was, although it was more generally more

expensive. Local shops are more likely to offer credit, whether they will defer payments

from week to week or offer to place items on a slate. We must remember that apart from

Connemara and Moyross, Limerick, most case study areas offered reasonable access to

supermarket chains. This will be examined a little further in the case studies themselves.

17We are referring to fiscal weeks here. Pay-day is generally Thursday or Friday..


21/38

21

4.7 Education

Evidence had suggested that education costs presented enormous problems for those on

low income. Difficulties in providing for book acquisition (despite availability of small

grants) and for the everyday expenses of material provision for craft classes, school trips

and functions - even school photographs - can cause anxiety to the low income family

whose budget is stretched to the limit. Of those with children at school, 82% had difficulty

meeting education expenses. Books and stationary for school children constituted the

greatest difficulty, followed closely by school uniform expenses. A total of 72% had been

asked by their children for school expenses that they could not give them. More than three

quarters in this category had had to give up something to finance school expenses, mainly

social activities. It is important to note that more than half (53%) financed school expenses

by not paying other bills or not buying food and clothing. More than one third gave up any

leisure activity they might have. As we will see from the section on leisure - there was not

much leeway to be gained from this strategy.

There are too many school expenses. Five pound for a book! It shouldnt beallowed. Then the kids want all the in things (and cant have them). The kidsget fed up and then I get fed up.

It was inability to meet education expenses for children that caused the most anxiety. More

than a third of those with school age children felt anger, annoyance or frustration. However

the largest category here represents a passive response induced by an inability to resolve

the problem. Nearly half felt feelings of guilt, inadequacy or embarrassment. It makes me

feel small., was a common reaction. The most poignant response came from three mothers

who said Well. We just have to accept it, dont we? It is therefore unsurprising that

nearly half of this group had borrowed to meet school expenses at some time,predominantly from family or friends. Of those who had not borrowed, 82% would borrow

if necessary - including use of moneylenders. ... I would never let my kids think I was

short of money! stated a female respondent.

4.8 Clothing

The old adage that the poor pay twice is no more evident than in relation to clothing. Here,

spending a little more for clothes or shoes is more likely to guarantee a more durable item

that has a longer life span. Those who cannot afford the appropriate quality are restricted to

poorer quality clothes that wear out quickly and have to be replaced. Asked to say where

they shopped for clothes, most respondents were using budget chain stores and found it

generally adequate. Nearly one fifth stuck to charity or second hand shops. Few were able

to say that they shopped anywhere and mentioned looking around the range of High

Street shops. Only 7% were accessing this wider range. More than 10% of respondents said

that they would prefer more choice and a similar number criticised the quality of the

clothing they could afford to purchase. A striking 54% - more than half of all respondents -

felt that their clothing for winter and summer was inadequate. In particular adult coats and

jackets constituted the most difficulty, followed closely by shoes and boots. A total of 17%

of all respondents felt that they had inadequate provision in all categories generally. A

respondent observes


22/38

22

I cant afford clothes, Frankly, I am only able to buy clothes by not paying the bills forweeks and weeks.

Its a bleak picture of restriction and lack of choice. It is also indicative of a factor that has

enormous visibility. If people are in any way measured by what they wear, this must be one

of most obvious determinants of a persons worth. Conversely, can one feel at ones best ina presentation to the world dressed in budget clothing that rapidly deteriorates? It is

important to recognise the implications for the self worth of citizens - and by extension,

the damage to presentation of self in a world in which consumption patterns and

appearance are ever more important.

4.9 Leisure activities.

This section is perhaps the most revealing in terms of the isolation or restriction of low-

income families. In the six months before interview, 58 % had neverbeen to the cinema,

theatre, dance or disco. More than two thirds had never been to a sporting event or leisure

centre and nearly three quarters had never been to a social event. Importantly, more than

one third of all respondents (37%) said that they seldom or never visited the pub. Again we

have to take into account a moral argument that says people should forsake alcohol

consumption in favour of priority spending. But we also have to recognise that the pub is a

key cultural location in leisure activity. It is not merely drinking that takes place in pubs -

but socialising, discussion and collective consumption of music and live sporting events. It

is also a focus for younger adults meeting - often in groups - as a precursor to male-female

relationships. This lack in peoples lives is singularly exclusive and should be addressed

seriously.

The fraught question of leisure remains. Whilst respondents legitimise borrowing forchildren it is far from easy to admit borrowing for anything that might be conceived of as

being for fun. However, a small proportion had indeed borrowed for leisure - a little over

one quarter of all respondents - but they had borrowed almost exclusively from family and

friends. A further 14% would consider doing so. Again, although borrowing for leisure

suggests lack of priority we must unless we acknowledge the feelings of those who want

to have a normal existence and concede the loss of opportunity that restriction on social

and leisure activities necessarily involves. When nearly half (48%) of respondents seldom

or neverhave a social evening with friends, what space is there for the social exploration

of information, news, and politics? This serious limitation also serves to isolate the family

in a self-contained world. Here, television not only places the family at the mercy of

constant consumer messages but becomes the sole arbiter of information unleavened by

broader discussion. The quantity and quality of information exchange deteriorates in an

insidious process that deprives citizens of everyday participation in democratic life.

Finally, the need for a break is generally acknowledged to provide for stress reduction. Yet

almost half of respondents (44%) never have a holiday for the simple reason that they

cannot afford to go. Of those that had gone on holiday, around half had financed it through

savings. A third had financed their holiday through borrowing or a combination of saving

and borrowing. A total of 18% of this group had received their holiday as a gift from a

relation or friend.


23/38

23

The last time I was on holiday was 15 years ago when I had a job. It was afortnight in Ballybunion. I think its really too expensive to borrow for holidays

which arent really essential.

Yet most people consider holidays essential enough and their lack represents another factor

in isolation. Those who never go anywhere else are restricted to their own cabbage patchagain restricting first hand appreciation ofdifference. I refer to the research carried out in

Limerick. There, an indebted respondent stated that he had taken a taxi to a Dublin

hospital. Quite simply, there are those whose practical experience of travelling is quite

limited and for whom a simple journey can appear complex and frightening. At the risk of

a truism we could observe that never going on holiday means always staying at home!

4.10 Critical observations

Those on low income eke out an existence of restriction with limited opportunities - and an

even more limited capacity to take them if offered. Moving around - housing mobility - is

the first to suffer. If those on benefit can become house owners - perhaps through Right to

Buy Corporation mortgages - they are seldom able to participate in the sell up and move

option open to others. Their concept of moving rarely embodies the trading up option

associated with middle-income groups. A desired change was often articulated as a change

to another (not dissimilar) housing estate. It may be that numbers of respondents wishing to

move to a locality close to relations are signifying an appeal to the conditions of a previous

(and in retrospect, better or more secure) family life.

Dependent children featured in the vast majority of cases studied (82%). In 40% of cases

the responsibility for children was (actively) shared - not always between partners but

typically between mothers, daughter and sisters. Additionally, the survey found that morethan two thirds of respondents had childcare responsibilities

18of some kind - again not

always in the respondents own home. Other studies had suggested that children were

likely to be a central issue to the study. Results confirm that this remains the case. This

survey reflects a mode of life where altruistic self-denial for the sake of the children is not

merely characteristic, but paramount. This may explain why education and food represent

areas of non-compromise for Irish families. Children appear less likely to suffer from

individual deprivation through spending curtailment and more as consequence of the

knock-on spending and general debt accumulation that hits the overall sustainability of

family finance. Food bills are likely to be the largest item of family spending and to some

extent the cost is predictable. But hidden education costs - the cost of maintaining a childs

everyday existence in the social arena of the school - is spasmodic. A sudden cost such as a

school trip or special event can be sprung on a family at any time. An inability to comply

with childrens requests then produces disappointment for the child and anger, frustration

and guilt for its parents.

Isolation is the inevitable result of a lack of disposable income. Low-income citizens are

more likely to be stuck indoors, limiting their social activities to the celebrative aspects

of life. It is one of the reasons why excess spending takes place during communion,

confirmation and Christmas. For those on low income these moments seem unavoidable -

and as such, they represent an opportunity to relax for an instant. People give themselves

18This includes child care responsibilities discharged outside the home


24/38

24

permission to borrow for these single occasions. We know the cumulative consequence can

pitch people into the indebtedness process, particularly where there are large families. Yet

to restrict this would be invading that single moment where one is obliged to buy a new

dress or suit. An examination of holiday patterns for respondents sharpens the picture even

more. Many respondents laugh wryly when asked about holidays. They rack their brains to

remember - or question exactly what the interviewer means by a holiday. This is a worldwhere a weekend visit to relations is often the only vacation respondents can remember and

a cheap flight to London for a family members communion remains a conversation piece

for some considerable time.

It is hardly surprising that low-income respondents mention anti-depressants or exhibit

respiratory problems. Not only are low-income citizens suffering from a continually

stressful financial squeeze, but they also have a very little chance of complaining - off

loading their legitimate complaints. With no one to gripe to, the family - usually the mother

- must bear the brunt and suffer the mental health difficulties that this implies. The picture

that is emerging is of a part of the population, which struggles to survive and seldom hasthe opportunity to get much enjoyment out of life. In consequence, expectations appear

low. However, as demonstrated in previous studies, the isolation, which can accompany

low income and indebtedness, may in some cases be ameliorated by voluntary work.

Studies elsewhere have commented that this reduces isolation in a similar manner as FAS

or CE courses. In this study a total of 37 % of respondents stated that they carried out

voluntary work of some kind - a high incidence despite the cultural predisposition to

organise within communities19

. Additionally, in 10% of cases there were others in the

household carrying out voluntary activities.

The following chapter will look specifically at financial considerations; at earnings,

benefits and current credit commitments to determine more exactly the economic shape ofthis group. It will then go on to look at what respondents think about their position about

others and seek their opinion on changes or innovation in the credit system.

19Tallaght study. WRC (EFILWC) - voluntary groups the highest in seven-country study.


25/38

25

CHAPTER 5: LOW INCOME CREDIT AND FINANCE

Money is power, freedom, a cushion, the root of all evil, the sum of all blessings

Carl Sandburg

5.0 Introduction and Focus

This chapter deals with the survey of low-income families and here we look in detail at

income and expenditure, at banking behaviour and borrowing requirements. Moreover, we

examine the acceptability of new forms of credit. Additionally a significant section is

devoted to dealing with questions that examined certain conceptions and misconceptions

about employment, how credit is viewed, borrowing and the nature of the Credit Unions. In

this way we hoped to confront the convenient myths that affect all of us. People who get

into debt have only themselves to blame..

The purpose of the survey was to determine the experiences and views of those on low

income rather than those who had become over-indebted. This obliged us to offer all

respondents the courtesy of determining whether they agreed or disagreed with credit - in

principle. It brought a quandary however - since our questions were mostly about credit and

borrowing. So we could only continually demand of respondents who disagreed with credit

What if things go wrong? In so doing we had a natural concern that we would alarm

those participating in the survey. We were, after all, asking respondents to envisage the

ramifications of unpleasant events - disability, death of a spouse and so on - and were

concerned that this would create anxiety. However, in asking respondents to deal with the

future we also knew that we were alerting them to possibilities in a way that would force an

examination of finances. We decided that directness was the most honest manner in which

to proceed.

Questions on income are pitched at the family level rather than at individuals. In some

cases this proved quite a complex task. Where relatives lived together as a family and

where young people were house-sharing with collective consumption patterns, information

was partially complete. As with debt counselling, it takes some time to establish the

income and expenditure of individuals. Information therefore falls within the limit of that

which is possible in a one-hour interview that covered substantial ground. We also have to

expect that individuals will not be completely frank. It is a commonly held principle in

money advice that often, people will hold a little information back. This can be for strategicreasons, so that some income is not included in the calculations that will determine

repayment commitments. So the figures that follow must be treated with a little caution - in

that respondents may be cutting themselves a bit of slack. Questions on required income

also demand a cautious approach. This is in essence a problem of questionnaire surveys,

where respondents do not wish to appear extreme. Their answers may be a negotiation

between what they really think and what they think the interviewer thinks. We expected

for example that people would estimate that they needed a third beyond their actual income

- a moderate response. The wide range of responses exceeded our expectations.

Nevertheless, it is difficult for individuals to make abstract judgements. The same applies

to questions about possible and different future arrangements for credit.


26/38

26

5.1 Income and expenditure

Here we examine household income rather than the individuals income. Given the remit

of the study, it is unsurprising that over three quarters (78%) of all respondents had some or

all income derived from benefit. Two thirds were receiving income of under 200 per week

and nearly half of respondents (45%) had income of less than 150 a week. A solid group

of 55% of respondents received benefit of between 60 to 180 per week. Nearly three

quarters of respondents felt that their income did not give them enough on which to live.

More than a quarter (28%) of respondents felt they needed between 30 - 60% more than

their present income. A further 28% felt that they needed between 60-150% more income.

A total of 10% said that they need an additional 100-150%. These were much higher

figures than we expected and as such could be interpreted as general a sign of

dissatisfaction with both wage and benefit levels.

Expenditure varies given family size and we therefore decided to take a slightly different

approach and focused on the balance and pattern of income and expenditure. Were peoplecontinually spending more than their income as the Limerick study revealed? So we

looked at each cases income and subtracted outgoings. Only a small number (3) of people

had an exact balance where they spent the same sum as they received. We might assume

that those people made an effort to ensure that their figures tallied. Nearly half of

respondents (45%) however, were spending more than their income. A total of 18% of all

respondents represented cases where expenditure exceeded income by more than 20 per

week. And some 8 respondents were exceeding their income by 60 weekly. We observe

therefore that within our survey there exist many respondents who are running into deep

financial water. Recalculating the figures at the monthly level will give salaried groups a

chance to compare with their own family finances. We are looking at a minimum of 100

per month financial slippage for nearly a fifth of respondents - respondents who have little

prospect of netting additional income.

The following constitutes selected data from expenditure questions since illustrative tables

will flesh out the overall picture. Respondents were asked about all household outgoings

but here we concentrate on the key items of food, rent, fuel and entertainment. The figures

for food expenditure reveal that this is the single largest item for most households. Almost

half of respondents (49%) were paying between 50 and 100 for weekly food shopping.

The second highest costs were housing-related and here we are not distinguishing between

rent and mortgage, concentrating on the weekly outgoing. This is partly because

respondents do not always make this distinction themselves. It may be attributed to thedecision to buybeing a pragmatic economic choice rather than the committed sequential

house buying of middle range income groups. The vast majority of respondents (87%)

were paying less than 30 per week for housing and nearly half were paying 10 or less.

Fuel bills were a comparatively high proportion weekly expenditure. More than half of

respondents (60%) were paying more than 10 per week. By far the largest group were

paying between 10 and 20 per week on fuel.

A quarter stated that they never spent money on clothes. We have to recognise however

that clothes' expenditure is generally episodic. That is, there are few of us who make

clothing purchases evenly over any single period. It is one of the areas of emergency that

has been highlighted in previous research, particularly where childrens shoes are


27/38

27

concerned and can be responsible for significant money lending debts. More than a quarter

of respondents estimated that they were likely to spend over 10 per week on clothes,

whilst exactly half estimated less than 10. The single largest group mentioned very small

sums up to 5. It suggests a picture of unbudgeted emergency spending on a need to

replace basis rather than any kind of clothes shopping based on choice. There is little

pleasure in this picture.

I buy clothes only when I really need them. When I do that I have to make sure I haveenough staple food in the house for that week to keep me going.

The vexed question of entertainment was raised in the previous chapter. Entertainment here

would naturally include any money expenditure associated with alcoholic drinks but

exclude tobacco-related spending. Exactly a fifth of respondents said they spent nothing on

entertainment. Over one third - the largest single group - spent between 5 and 10 per

week. Although there were some whose spending could be seen as high - there were three

respondents spending more than 5

access denied part 1

Documents