The theme of Financial Inclusion must be an essential part of the political agenda of any party, whether it be Labour or Conservative. This is the message which transpired during the two receptions hosted by Prospect and the Financial Inclusion Commission in partnership with Mastercard to encourage conversations about what action is necessary in order to develop effective strategies aimed at delivering economic growth for all tiers of society.
Combating these challenges with effective policies becomes even more urgent in the face of Brexit. As Chris Pond, Vice-Chair for the Financial Inclusion Commission, informed his audience, “research has showed that increasing number of people are expecting to be unemployed as a result of the decision last year in terms of our membership of the European Union.” Furthermore, this type of anxiety is enhanced when considering that many of them do not necessarily have a cushion to land on in case of hardship. In the words of Yvonne Fovargue MP, Shadow Minister for Communities and Local Government: “people are financially excluded because they are poor. What they lack, is an income sufficient to allow them to access mainstream financial services, that many of us here will take for granted. . . [and] being financially excluded, makes people poorer still.” Thus, Fovargue described a vicious cycle by which people are unable to resolve issues of financial crisis because the only solutions that are readily available are those which indebt them even further in the long run such as pay-day and guarantor lenders.
This sentiment was shared by Peter Dowd MP, Shadow Chief Secretary to the Treasury, who summarized: “today there are too many people excluded from the foundation of our modern economy . . . [financial inclusion] is simply not on offer to so many people across the country.” As noted by the Chair of the Financial Inclusion Commission, Sherard Cowper-Coles, this reality was unfortunate since, “as the Prime Minister has said, we are one of the richest countries on earth, and we are one of the most financially sophisticated, and I think it beholds us all that. . . we have connected every community and every person in this land [to the financial system].”
Ideas on how to promote financial inclusion varied among the speakers. For instance, Pond denounced the recent decision of the Home Office for banks to check the immigration status for their customers. This, he said, “is going to have a significant affect in reducing the number of people still further who are willing to come forward to take out account because of the fears of what that do in terms of what will go on,” thus perpetuating exclusion. Although he acknowledged the appointment of two official positions of Minister for Financial inclusion was a victory, he remarked that “labels are not going to achieve very much. . . and it is becoming urgent that we see action to make sure that the government takes leadership on this.”
Fovargue took an equally stern, albeit different, angle to that championed by Pond and blames the perpetuation of poverty onto a system which causes “those with the least in our society [to] pay the highest prices.” In particular, she focuses on the need “to go further” by “[cutting] pay day lending” and “[looking] at is the cost of credit for the subprime providers” in order to make people “better off” without having to increase the incomes of the poorest, a thing which “may not be feasible in this political climate.” Furthermore, Fovargue concluded her speech by advocating for an expansion of services available to the financially excluded: “I do not believe that people should have to pay someone to get advice on debt, it is counter intuitive.” Dowd also underlined the importance having sustainable channels through which people could find support: “10 years on from the global financial crisis, more people than ever find themselves in insecure, unstable work, not able to pay rent, and bills, and many are £200 away from a real problem.” For this reason, “we must make it so the people who are relying on pay day lenders to help with their debt are the exception rather than the rule.”
On the other hand, when speaking at the Conservative Party Conference reception, Guy Opperman MP, Parliamentary Under Secretary of State for Pensions and Financial Inclusion focused on the successes for which we have cause to celebrate, and looked with a more positive eye at the possible solutions which may be implemented in the future. He also recognized the significance of his new parliamentary brief: “I am lucky enough to be the country’s first Financial Inclusion Minister, it is a great privilege, and I am acutely conscious of both the benefits of being given this job [… and] the burden of it” since the accompanying expectations are quite significant.
Opperman also drew on his experience of setting up the Tynedale Community Bank (TCB) in his constituency. The bank provided for its community by trying “to stop people from going to pay day lenders.” He also noted the government’s successful implementation of auto-enrollment which allowed 8.5 million people to sign up for a pension.
In a similarly positive note, Cowper-Coles celebrated the fact that the UK was “the first country in Western Europe and probably the world, to have a minister for financial inclusion” and that “all three political parties [subscribed] to this agenda.” He added that a recent project that “launched an Inclusion Commission enquiry in this country regarding access to household insurance” in order to bring some real change to the fact that “too many families in this country who are one broken refrigerator away from financial disaster.” Cowper-Coles recognized that, although the work was not yet done, we were moving in the right direction and that Britain was again “in a rather modest and surprising way, leading the world.”
You can also read a companion piece by Jennifer Duncan, ‘Inclusive growth without financial inclusion is impossible’
With the support of Mastercard, and in partnership with the Financial Inclusion commission, Prospect hosted this year’s Financial Inclusion Receptions at the 2017 Conservative and Labour Party Conferences.