financial inclusion karen rowlingson professor of social policy november 5 th 2015
TRANSCRIPT
Financial Inclusion
Karen Rowlingson
Professor of Social Policy
November 5th 2015
Financial Inclusion: Talk Outline
Defining financial inclusion
Broader context of labour market and austerity
Access to bank accounts, saving for short and long term, credit and debt
Causes and consequences of financial exclusion
What can be done?
Defining financial inclusion
Most definitions focus on access to appropriate and affordable financial products
Some focus more on the ends rather than the means; and thereby highlight broader picture
Academics debate whether financial inclusion is a progressive response to financialistion or seeks to advance it
Unemployment fell in 2014 and is nearly down to pre-crash levels
Underemployment dropped very slightly in 2014 but remains high, LFS
Levels of real pay (adjusted by CPI)
Means-tested, out-of-work benefits (IS/PC) as a percentage of Minimum Income Standards
Number of people given 3-days emergency food and support by the Trussell Trust
How are households managing?
Numbers (millions) without bank accounts
Savings
The proportion of households with different kinds of savings accounts fell from 68 to 58% from 2008/10 to 2010/12
The amount held in these accounts has increased
Amounts held in ISAs has increased from £7k to £9k, UK shares from £17k to £20k
Private pensions
Credit
Fewer people are using unsecured credit (60% in 2014, down from 63% in 2012 and 2013) and mortgage lending fell 2013-2014
Payday lending increased from 2006-2012 but has now declined after reforms/cap
More people are using credit unions
Support from local welfare assistance has reduced
Problem debt
10% of those with unsecured credit found it a ‘heavy burden’ in 2014 (13% in 2013)
Mortgage repossessions fell from 33,00 in 2009 to 11,000 in 2014
Evictions from rented properties (especially social landlords) has increased to 42,000 in 2014 (from 28,000 in 2009)
Causes of financial exclusion
Low and insecure incomes
Policy and practice of• Mainstream banks
• High-cost financial services providers
• Regulator
• Local authorities, utility providers
Consequences of financial exclusion
The poor pay more• Pre-payment meter fuel costs 10% more
• Equivalent loans can cost 50%-150% more
Poverty and debt cycle
Impact on physical and mental health
What can be done?
Tackle the root causes
Further reform of mainstream banking and alternative providers
Action from local authorities, housing associations, money advice agencies
Improve incentives and support for savers
See Financial Inclusion Commission report