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 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, welfare benefits, or those people who do not have a bank account; it can affect different kinds of 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 The emotional impacts of financial pressures may also cause people to become withdrawn from social relationships, leading to loneliness. Both loneliness and isolation can increase the risk of physical, and mental health issues such as, cardiovascular disease or depression. Evidence suggests that those who are less socially connected tend to neglect their health, not attend screening appointments, and are less likely to complete courses of treatment. 

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]. 

The wide-ranging impact of financial exclusion means that there are links to a number of other JSNA topic areas. 

• Financial_Inclusion_Report_2020-21.pdf (publishing.service.gov.uk) 
• UK Strategy for Financial Wellbeing | The Money and Pensions Service 
• Financial Inclusion Commission – Making financial inclusion a top political priority in the UK 

Whilst financial inclusion 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 the 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 are often available online. 

People with protected characteristics can experience a relatively greater impact regarding the effects of financial inclusion [Source: Parliamentary evidence]. 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 60 members working together to tackle issues over range of matters – from welfare benefit matters through to mental health and suicide.  FIP members help provide strong communications about financial inclusion matters, for instance, by sharing and retweeting articles on social media. 

A current focus for Lincolnshire FIP is an action plan to coordinate a range of services to assist residents during the recovery from significant financial impacts of the Covid-19 pandemic. 

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 organisation such as Citizens Advice; the number of Notts and Lincs 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 the emerging long-term financial impacts of Covid-19 unfold. Ongoing welfare reforms will continue to impact on people suffering financial exclusion and this must be taken account of. As services move toward digital delivery, reduced budgets and changing welfare arrangements are likely to create new barriers to inclusion for some.  Whilst providing incentives and routes into employment, the rollout of Universal Credit is likely to create a greater need for advice on benefits, digital inclusion, and financial capability. 

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:  

• Crisis support. General support is available but there is further need for crisis support. 
• 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 PHSE curriculum. Especially for children leaving care which represents an inequality.  There is a need for money management and budgeting teaching in schools. 
• Further recognition that gambling and other addictions are as socially and financially draining as drug and alcohol addictions. 
• 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 need between digital inclusion and financial inclusion. 

Lincolnshire has an established, motivated and proactive FIP in place, which can only further grow and prosper. The partnership has a good understanding of issues across Lincolnshire and are gaining greater recognition. For example, FIP are being asked to contribute to the Suicide Prevention & Steering Group, and to the Housing Health and Care Delivery Group. 

Key actions in relation to Financial Inclusion, are: 

• Further development and delivery of FIP Covid-19 Recovery Action Plan; 
• Co-ordination and delivery of more joined-up, seamless, debt/benefits advice 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 particular groups, followed by plans to tackle identified issues; 
• Consideration of a financial inclusion conference to raise awareness, ensure co-ordinated actions leading to deliverable outcomes. 

• Debt and Money Policy Research (Citizens Advice)
• Inclusive Economies and Healthy Futures; Supporting Place-Based Action to Reduce Health Inequalities (LGA 2021)
• Tackling Financial Inclusion: A country that works for everyone? (House of Lords Liason Committee 2021)
• The state we’re in: money and mental health in a time of crisis (Money and Mental Health Policy Institute) 
• UK Digital Consumer Index (Lloyds Bank 2022)
• Welfare Policy Research, Surveys and Consultation Responses (Citizens Advice)