Tackling Financial Exclusion: An Area-Based Approach

Tackling Financial Exclusion: An Area-Based Approach

Tackling Financial Exclusion: An Area-Based Approach

Tackling Financial Exclusion: An Area-Based Approach

Synopsis

There has been mounting concern recently about people who have limited access to financial services and are considered to be financially excluded. This report identifies and examines a range of potential solutions to meet the needs of people living on the margins of financial services. Moreover, it provides practical guidance for other local communities wanting to evolve plans for tackling financial exclusion.Unlike much of the previous research on financial exclusion, this report approaches the problem from the standpoint of people who are affected by financial exclusion themselves, and live in a community where many of their friends and neighbours are also excluded.In particular, the report:examines the difficulties and unmet needs for financial services expressed by local people in Barton Hill, Bristol - one of the 17 Pathfinder areas in the government's New Deal for Communities initiative;documents a range of possible solutions to the needs of those suffering financial exclusion;presents local people's assessments of the best ways to tackle the problems of financial exclusion in their own community. This report will be of interest to all those involved in community regeneration or access to financial services, including financial service providers, local authorities, voluntary sector organisations, academics and policy makers at both local and national levels.

Excerpt

There has been mounting concern recently about people who have limited access to financial services and are considered financially excluded. Reflecting this interest, there has been a large body of research into the nature and causes of financial exclusion (for an overview see Kempson et al, 2000) and a wide range of developments in financial service provision that are designed to overcome it.

This report approaches the problem from a totally different standpoint – that of the people who are affected by financial exclusion personally and live in a community where many of their friends and neighbours are also excluded. It reports and analyses the range of difficulties and unmet needs for financial services expressed by local people in Barton Hill, Bristol – one of the 17 Pathfinder areas in the New Deal for Communities initiative. It documents the range of possible solutions to their needs and presents local people’s assessments of the best ways to tackle the problems in their own community.

The extent and nature of financial
exclusion

Despite a steady increase both in the number of households using personal financial services and in the range of products they use, around 1.5 million households in Britain (7%) lack any financial products at all. a further 4.4 million (20%) are on the margins of financial services, with little more than a bank or building society account that is often practically unused (Kempson and Whyley, 1999).

The people most likely to be excluded from, or on the margins of financial services, are those living on low incomes, especially if they are not in paid work and living on income-related benefits. the longer the head of household has been out of paid work, the more likely they are to be financially excluded. Levels of exclusion are particularly high among social tenants, lone parents, unemployed people and people from most ethnic minorities. It is higher still in areas of deprivation.

Barton Hill has above average numbers of all these groups. Incomes are low compared with the national average. Over half of residents have an income of less than £8,000 a year; 25% of households claim Income Support and 41% receive Council Tax Benefit (national figures are 19% and 23% respectively). a large proportion of households rent their home from a social landlord – 47%, compared with around 23% nationally. Levels of lone parenthood and unemployment are also well above the national average.

Finally, around 9% of residents are from ethnic minority groups, compared with 7% nationally, and just over 5% in Bristol as a whole. in particular, the area has a sizeable Somali population, most of whom are refugees.

In an area of high deprivation such as Barton Hill, around four out of 10 of the population will be on the margins of personal financial services (Kempson and Whyley, 1999). But this is not just because of the economic circumstances of the local population. Statistical modelling has shown that households living in one of the 50 most deprived local authorities had double the odds of being excluded from financial services, compared with households in similar circumstances who lived in an area of low deprivation. in other words, it is not just who you are but also where . . .

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