Financial Inclusion

“Financial inclusion is the means by which people can make their money work well for them, enabling them to maximise opportunities, move into employment, become more self-reliant, and enhance physical and mental wellbeing. Financial inclusion contributes to greater social mobility and levelling up, a more effective welfare system and greater national resilience from economic shock” (Source: Financial Inclusion Commission). Financial capability, i.e., the awareness and skills necessary to participate in the financial system, is a key element which underpins inclusion. Financial resilience is the ability to withstand financial shocks such as a drop in income or an unanticipated expense.

Financial exclusion marginalises people and acts as a barrier in their lives. It reinforces social exclusion and exacerbates poverty. Financial exclusion is not just about unemployment, and being on welfare benefits; it can affect different people at any point in their lives. People may be vulnerable to financial exclusion when they experience divorce or separation, bereavement, illness, or other life changes that impact on their budgets, or capacity to cope, financially. Financial exclusion constitutes a set of overlapping barriers, particularly for some vulnerable groups, and might be one of several interrelated issues that a person is facing.

Without the financial resources to attend activities, or to pay for transport, individuals may become isolated, particularly in rural areas where connectivity is more challenging. The emotional impacts of financial pressures may also cause people to become withdrawn. Financial inclusion can increase the risk of physical and mental health issues such as anxiety, cardiovascular disease, hypertension and depression.

The links between social inequalities and health inequalities are well reported (Source: Fair Society; Healthy Lives: The Marmot Review 2010) and the impact of welfare advice on better health outcomes noted (Source: Advice Services Alliance). Digital exclusion is also exacerbated by financial exclusion, with people not having access to fast broadband, decent Wi-Fi, and the latest technologies to interact with online services and social media.

• Financial Inclusion Report 2020-21 (HM Treasury and Department for Work and Pensions) 
• UK Strategy for Financial Wellbeing (The Money and Pensions Service) 
• Making financial inclusion a top political priority in the UK (Financial Inclusion Service) 
• Child Poverty Strategy 2025 (DWP and Cabinet Office) 

Whilst financial exclusion is an issue throughout Lincolnshire, there are a number of specific areas/wards where deprivation is a particular issue – for example, coastal East Lindsey, and Lincoln (Source: ONS).  Deprivation by association can create financial exclusion – sometimes, ‘being poor can be more expensive’ (Source: Tribune); for example, in the cost of obtaining credit, and associated interest charges. 

Digital exclusion in Lincolnshire is an issue for certain areas (Source: TED). This can mean residents paying more for services. For example, if a person cannot access the internet to order an online food delivery, they may incur extra costs for travel. Cheaper prices for certain goods or services are often available online. 

People with protected characteristics can experience a relatively greater impact regarding the effects of financial inclusion (Source: Financial Inclusion Commission). To counteract this, further work is necessary to identify these groups in Lincolnshire, and tailor a response accordingly. 

Lincolnshire has an established and progressive Financial Inclusion Partnership (FIP) regularly bringing together a range of organisations to raise awareness of matters relating to financial inclusion, enacting mitigating actions in issue areas.  The FIP has over 100 members working together to tackle issues over a wide range of issues.  FIP helps provide strong communications about financial inclusion matters, for instance, by sharing articles on social media and developing a range of resources on Connect to Support Lincolnshire under the Money Talk Lincs brand. 

The Lincolnshire FIP is led by a Steering Group that holds regular network meetings and an annual stakeholder conference. The focus since the Covid-19 pandemic and cost of living challenge has been mainly on food poverty, the roll-out of Universal Credit and its impacts, and winter warmth. Many households have been supported through seven rounds of the Household Support Fund (HSF) over the past five years. The current focus is on developing the new Crisis and Resilience Fund (CRF) to commence during 2026, and includes crisis support, housing payments, financial resilience services, and community coordination. 

Individual organisations collect community and stakeholder views. The FIP could co-ordinate a collective feedback enterprise to enable greater insight.

Data regarding unmet need are limited. Some things are known: The number of people in Lincolnshire obtaining income maximisation support and debt advice (including levels of debt) from organisations such as Citizens Advice; the number of Credit Union members and savings and loans. However, this level of data collection does not illustrate the level of unmet need, nor identify people who do not reach services that could support financial inclusion.

Undoubtedly, further needs and gaps will arise. As services move toward digital delivery, reduced budgets and changing welfare arrangements are likely to create new barriers to inclusion for some.

Knowledge of groups at risk of financial exclusion supports targeting of services. Focussed engagement with partners could be carried out to gather detailed local evidence of unmet need.  A further challenge in meeting need is, even where services are available (e.g. budgeting advice), people do not always recognise their need for support, or it may not appear they wish to address it.

Areas of potential unmet need in Lincolnshire, are:  

• Jobs with higher wages in the county. 
• Training opportunities in Lincolnshire for skilled roles. 
• Greater access to affordable credit. 
• Education about affordable financial services. 
• Financial capability for young people in the Personal, Social, Health and Economic (PHSE) curriculum. Especially for care experienced young people, which represents an inequality.  There is a need for money management and budgeting teaching in schools and potentially through the Holiday Activities and Food (HAF) programme. 
• Further recognition that gambling and other addictions are as socially and financially draining as drug and alcohol addictions, and smoking. 
• Understand the relationship between educational attainment, earnings, and financial inclusion.  
• Better information and signposting for debtors to encourage self-care. 
• Digital e-learning, advice and guidance – recognising the link between digital inclusion and financial inclusion.

Lincolnshire has an established, motivated and proactive FIP in place to build on. The partnership has a good understanding of how financial exclusion impacts wider issues across Lincolnshire. For example, the FIP has been asked to map existing financial resilience services to identify gaps in provision and oversee the community coordination aspect of the Crisis and Resilience Fund (CRF). The FIP Steering Group needs to be adequately resourced to do this.

Key actions in relation to financial inclusion, are: 

• Development of the Crisis and Resilience Fund (CRF) to include: 
  • Crisis payments 
  • Housing Payments 
  • Resilience services (Co-ordination and delivery of more joined-up, seamless, debt/benefits advice services in Lincolnshire). 
• Promotion of financial inclusion related matters with relevant stakeholders and residents. 
• Seeking wider community and stakeholder views on financial inclusion matters.  
• Collection of data on how financial exclusion affects groups, followed by plans to tackle identified issues. 
• Consideration of the financial inclusion conference developing, to increase community engagement to raise awareness and ensure co-ordinated actions lead to deliverable outcomes.