First, we talked about financial inclusion, then the recession came. Then, we talked about financial capability, then welfare reform came. Now, we talk about… surviving, mainly.
It’s Financial Capability Week from 13th November and the Money Advice Service would like us all to get people to hashtag talkmoney.
On one hand, it’s as good a starting point as any. There’s loads going on to help people manage their money, if we could just draw attention to it and encourage more consumers to participate. For our part, we’ll be launching Quids in! magazine’s latest research programme – our 2018 financial resilience survey of social tenants. On the other hand, there’s going to be a bunch of people scratching their heads and asking ‘Talk money? Why, who’s listening?’
Quids in! was conceived in 2007 at the Bristol Financial Inclusion Taskforce. As the name suggests, we wanted more people to engage with the finance services that best suited their needs. ‘How,’ moaned debt advice agencies, the credit union, housing providers, the city council, landlords and others, ‘can we hope to compete with high interest lenders targeting the most impoverished estates?‘ They focused on getting free to use ATMs onto the estates, which was brilliant, but I came up with a magazine to go through the letterbox of all the homes on the all the estates targeted by legal and illegal loan sharks. Quids in! was born at the end of 2008.
It’s interesting that half the solution to financial exclusion, at the consumer end, is financial capability. If people knew more about how make best use of their money, they’d include themselves more. Better informed, they’d argue the toss when the clerk at the ‘help’ desk tells them ‘No, you can’t have a basic bank account‘. Being capable helps Quids in! readers demand access but it’s down to the banks, lenders and city institutions to grant actual inclusion.
But even financial capability suggests everyone has an income that they can manage on, before they can manage it. Benefit caps, the bedroom tax and other cutbacks in welfare cast serious doubt on whether Financial Capability Week will offer much to the ‘struggling segment’ as defined by MAS and the UK Financial Capability Strategy. Maybe that’s why their funding for What Works projects last time round focused on the ‘squeezed segment’, or ‘hard working families’ who are ‘just about managing’ as Theresa May calls them.
If I had any say in the matter, the theme for FinCap Week would not be #talkmoney, it would be #screamuniversalcredit. In itself, Universal Credit is not designed to further impoverish claimants and I do believe it will make many better off, as they take tentative steps into work. It’s just UC just complicates everything to do with managing money for claimants.
Universal Credit tests claimants’ financial capability to destruction. What are FinCap’s key themes? Avoiding debt, making savings, budgeting, accessing services, spending wisely and maximising income.
Even if the government u-turns and reduces the initial waiting time to one month, (barring the all-too-frequent delays and mis-starts), debt is almost inevitable and it’s too late to start a savings plan. Receiving a month’s benefits in one go, including the rent, having already fallen into debt, is going to challenge millions living hand to mouth already, no matter how many budget planners they’ve run through in theory. To manage rent by standing order, and to receive UC in the first place, is by and large going to require a bank account and as I said above that’s not all down to the individual – oh, and 40 per cent of Quids in! readers tell us they don’t use a bank account. Spending on anything except essentials is all but impossible and a visit to a foodbank for handouts is a far more likely scenario than shopping around for deals and savings. By this time, talking to UC claimants about finding a few hours work to make ends meet is just a non-starter.
Don’t get me wrong, once people have navigated the pitfalls and somehow survived the transition to UC, I think it will work better than the legacy system it replaces. And I’m also right behind the campaign to make our community more financially capable – it’s what we do. It’s just that the people I meet every day are already more than willing to #talkmoney, it’s just that I don’t think anyone who can make a difference is listening.
