banking services (OFT, 1999a). Although the additional costs incurred by poorer households are a concern, many low income households are content with their.
Homelessness and Financial Exclusion: A Literature Review
Alison Wallace and Deborah Quilgars
Centre for Housing Policy, University of York
October 2005
Acknowledgements The authors would like to thank Friends Provident and the London Housing Foundation for commissioning this review and Danielle Walker-Palmour and Kevin Ireland for their support with the review. Many thanks also go to all the agencies and companies that kindly responded to our requests for information. Finally, we are grateful to Lynne Lonsdale and Jane Allen for preparing the document.
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Contents Acknowledgements............................................................................................................ 2 Contents................................................................................................................................ 3 Introduction......................................................................................................................... 5 1. Financial Exclusion ................................................................................................ 8 Background ...................................................................................................................... 8 Who is at risk of financial exclusion? ......................................................................... 10 Experiences of financial exclusion .............................................................................. 11 Banking ....................................................................................................................... 12 Credit and personal loans ........................................................................................ 14 Savings ........................................................................................................................ 16 Micro-Finance ............................................................................................................ 17 Insurance..................................................................................................................... 17 Financial information and advice ........................................................................... 18 Homeless people and financial exclusion.................................................................. 19 Introduction................................................................................................................ 19 Cash economy ............................................................................................................ 19 Access to banking ...................................................................................................... 20 Credit and debt .......................................................................................................... 21 Financial literacy........................................................................................................ 23 Prioritising Finance ................................................................................................... 24 Conclusion ...................................................................................................................... 24 2. Interventions to promote financial inclusion ................................................. 26 Who is involved in promoting financial inclusion? ................................................. 27 Government agencies................................................................................................ 27 Private sector.............................................................................................................. 28 Third sector................................................................................................................. 29 How are financial inclusion projects delivered?....................................................... 30 Direct Provision ......................................................................................................... 30 Community partnership models............................................................................. 30 Limited partnership models .................................................................................... 31 Range of interventions.................................................................................................. 32 Banking ....................................................................................................................... 32 Savings ........................................................................................................................ 33 Credit........................................................................................................................... 33 Money advice ............................................................................................................. 34 Micro-Finance ............................................................................................................ 36 Financial inclusion projects for homeless people ..................................................... 37 Banking ....................................................................................................................... 38 Life skills training ...................................................................................................... 40 Conclusion ...................................................................................................................... 41 3
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Discussion.............................................................................................................. 43 Principles underlying service delivery....................................................................... 43 Responding to ‘need’ or ‘demand’?............................................................................ 44 Voluntary or compulsory services? ............................................................................ 45 Method of delivery........................................................................................................ 45 Timing of service delivery............................................................................................ 47 Identifying ‘what works’ .............................................................................................. 48 References .......................................................................................................................... 49 Appendix 1 Literature Review Methods...................................................................... 54 Appendix 2 Examples of Interventions........................................................................ 56
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Introduction This report presents the research evidence on the links between financial exclusion and homelessness. Friends Provident and the London Housing Foundation commissioned the Centre for Housing Policy at the University of York to conduct a review that would both examine the nature and impact of financial exclusion on homeless people, as well as the range of interventions that are presently used to address this financial exclusion and the extent of knowledge on ‘what works’ in this area.
This review is important and timely for a number of reasons. Firstly, successive homelessness research has demonstrated the consistently low levels of income and resources available to homeless people (Anderson et al, 1993; SEU, 1998). Homelessness is associated with both poverty and social exclusion (Pleace, 1998a). In particular, the ability to access and sustain employment, and therefore to earn a reasonable wage, is greatly limited by the lack of a stable address and home (Anderson and Quilgars, 1995; Randall and Brown, 1998; OSW, 2005). Financial hardship may be exacerbated by difficulties encountered in accessing benefits, poor physical and mental health, the risk of being a victim of crime and the need to support alcohol or drug dependencies. Some homeless people resort to begging to enable them to meet daily living expenses (Fitzpatrick and Kennedy, 2000; Jovett et al, 2001). Secondly, research has demonstrated that homeless people often experience severe difficulties with accessing services across not only benefits, but also health services, education and employment as well as housing related services. Similar issues of access are also likely to be experienced for financial services, given the lack of a stable address and income associated with homelessness, as well as what is known about poor access to financial services for socially excluded groups more generally (OFT, 1999a). Thirdly, financial problems, including loss of employment, inability to pay mortgage or rent and debt, may both be a direct or
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contributory cause of homelessness (Anderson et al, 1993), as well as one of a number of key reasons why attempts at resettlement may fail (Dane, 1998).
In addition, the review is timely given the increasing recognition of the implications of financial exclusion in people’s lives in Britain. The marginal status of mainstream financial products to many people on low incomes has been a policy concern since Labour took office in 1997, as high-interest credit or costly bill paying facilities, for example, are thought to compound problems associated with poverty and people’s ability to plan or overcome income fluctuations. Promoting financial inclusion is thought to provide a pathway out of poverty. Homeless organisations have been aware of the financial exclusion of their service users including budgeting and money skills in life skills training for several years (Jones et al, 2001), but a greater range of interventions are now beginning to be developed to address this issue. However, few studies or reviews have been published in this area to date.
The literature review reported here is based upon research and reports identified through a combination of electronic searching of academic databases, internet searches primarily using Google and Scolar Google, and also of key agency websites and contact with key staff from homelessness and financial exclusion agencies. The report is illustrative of the concepts, intervention types and issues within the UK literature and is not intended to be exhaustive. Further information regarding the methods used to source literature and knowledge of financial exclusion interventions is included in Appendix 1.
The findings of this literature review will inform a series of focus groups with homeless people , undertaken by Research As Evidence, regarding their experience of financial exclusion and a stakeholder consultation event that will serve to draw together the research evidence, user experience and agencies with an interest or experience of interventions to promote financial inclusion. A separate report will be
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published documenting user views.
The review identified a substantial literature regarding financial exclusion within the context of wider processes of social exclusion or asset-based welfare, however, found that the literature relating particularly to homeless people’s perceptions and experiences of financial exclusion was less well progressed. This review therefore explores the key features of the literature regarding promoting financial inclusion in low income households generally as well as that which examines homeless people's experiences more specifically, in order to place homelessness initiatives within the wider context and draw out any comparative issues or learning points for stakeholders in the field.
Section 1 of the report outlines the background to financial exclusion in the UK, and how the issues of exclusion and self-exclusion relate to homeless people. Section 2 reports on the range of interventions designed to overcome financial exclusion amongst disadvantaged communities and those that specifically target homeless people. Section 3 explores a range of issues that arise from the literature review that require both further debate and/or research.
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1. Financial Exclusion This chapter examines why financial exclusion has become a policy concern. It looks at the extent of the problem, the experiences of those who are considered to be financially excluded and in particular the range of problems experienced with financial services. It goes on to explore how these issues relate to homeless people.
Background There is a large and sophisticated financial services sector in the UK that has grown since the deregulation of the money markets in the late 1980s. Several factors have contributed to the expansion of the market for a range of financial products, such as growing affluence and disposable wealth in society, the spread of automatic transfers for wages, an increase of women in the labour market and an increasingly sophisticated customer segmentation technology (HM Treasury, 2004). Paradoxically, the market expansion has led to a residual group detached from this new market, because of a complex array of factors involving the tendency of the financial services industry to target more affluent consumers in a number of ways, as well as people's own self-exclusion. Therefore financial exclusion may be conceived as a gap between the needs and demands of certain groups of people and the products and delivery of mainstream services offered by financial institutions. Policy aims to minimise any unnecessary barriers, whether explicit or unintended, to people participating in accessing financial services (HM Treasury, 1999).
Tackling poverty and social exclusion became a major policy ambition of the New Labour government from 1997 onwards, with policy targets to reduce child poverty, make work pay and regenerate deprived neighbourhoods. Financial exclusion relates to the non-participation of people in services that include banking, insurance, credit or saving, services that most people in society take for granted. Widening access to financial services is now seen as an important vehicle providing
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a pathway out of poverty and exclusion for individuals as well as communities. Engagement with financial services can act as a personal safety net when faced with risk and unexpected or irregular expenditure when managing on a low income (Kempson and Whyley, 1999). Financial exclusion and the associated poverty can be geographically concentrated, and in turn whole communities can suffer from under-investment, therefore, policies to address financial exclusion are also seen as offering integrated solutions to overcoming social exclusion and as well as neighbourhood renewal (Marshall, 2004).
In addition to enable marginalised people to benefit from the convenience and often lower costs associated with operating their personal finances through an increasingly cashless financial system, promoting financial inclusion can also now be seen in the context of asset-based welfare policies from the US, which are attracting policy interest in the UK and Australia (Cober and Paxton, 2002, Collard et al, 2003; Stegman, 2003). The holding of savings or assets, immediately accessible or not, by low-income households is thought to enable people to provide their own personal safety-net, minimising the need for state welfare, Moreover, it is claimed that asset-holding provides opportunities and promotes engagement with the economy and society (Sheridan, 2002). Although Barnes (2002) argues that whilst encouraging saving and the acquisition of assets amongst the poor may be right, developing asset-based welfare may actually be a distraction from current welfare concerns. Examples of promoting asset-holding amongst poorer households include the Savings Gateway and Child Trust Funds. The drive towards the further expansion of homeownership and the exploration of equity stakes in social housing are other developments designed to increase the asset-holding of lower-income households.
Although the use of financial services is a pre-requisite for asset-based welfare, engagement with financial services in a more modest way is also important for
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people on low incomes. A number of influential reports were produced shortly after the election of New Labour, most notably the HM Treasury report (1999) of the Social Exclusion Unit's Policy Action Team 14 addressing Access to Financial Services and the Office of Fair Trading’s (1999) Vulnerable Consumers and Financial Services. These reports focus upon those people with limited access to financial services and considered their experiences, the products, service delivery and regulatory framework operating in the industry that may contribute to the problem.
The 2004 Spending Review outlined commitment to tackle three priority areas of access to banking, affordable credit and money advice (HM Treasury, 2004). Many of these projects remain at the pilot stage and few offer formal evaluations, but after examining the circumstances and experiences of people at the financial margins, this report considers the broad innovations in the delivery of what may be termed microfinance, the provision of personal financial services to those who otherwise would be excluded, alongside developments more closely aimed at the financial needs and desires of those who experience homelessness.
It is a policy ambition that poor people should have the same access to a range of mainstream financial products as the rest of society. It may be not be realistic to expect every individual or household to pursue services from financial institutions, but it is hoped is that there is a reduction in the pool of people that stand outside of these services (HM Treasury, 1999). A Financial Inclusion Task Force has now been established to monitor progress in increasing access to banking, affordable credit and money advice.
Who is at risk of financial exclusion? Kempson and Whyley (1999) estimate that there are 1.5 million low income households (7 per cent of all households) that make no use of financial service products and a further 4 million (19 per cent) that only have one or two products. The likelihood of being on the margins of financial services depends on who you 10
are and also where you live (Kempson and Whyley, 1999). Lone parents, the unemployed, black and minority ethnic groups, sick and disabled people are strongly represented amongst those considered financially excluded, as well as workless households, younger people, those in social housing, households in densely populated areas and those who left education early (Kempson and Whyley, 1999; Goodwin et al, 2000). The exclusion of women and ethnic groups was associated with their low-income rather than gender and ethnicity alone (Kempson and Whyley, 1999).
Using the Poverty and Social Exclusion Survey, Goodwin et al (2000) found that overall 35 per cent of households had no savings, 14 per cent were in debt, 7 per cent had no bank account, fifteen per cent had no insurance, ten per cent had borrowed more money to pay debts and 5 per cent had experienced their utilities being disconnected. Those not engaged with formal savings products were found to be those on low incomes, social classes IV or V, or were Black and minority ethnic groups. This analysis showed the overlap between financial exclusion and poverty as 88 per cent of those who were financially excluded, using one of these measures, were also materially and socially deprived. Palmer et al (2004) use the number of households without a bank account as a poverty indicator and have found the numbers have remained steady over the last five or six years, so any improvement is barely discernable. The lowest use of financial products are in deprived areas in Scotland, Northern England and London (Kempson and Whyley,1999).
Experiences of financial exclusion People become excluded for a variety of reasons relating to the focus of the financial services industry, the products available and self-exclusion based upon the perceptions and experiences of these marginal households. Collard et al (2001) explored the views of financially excluded people in Bristol regarding their financial priorities and found six key areas of concern: banking, loans/credit, savings, loans for the self-employed, Muslim loans and financial information and 11
education. Insurance is also regarded as an important financial product that provides a personal safety net for households when facing a range of risks, such as burglary, illness or even unemployment (Kempson et al, 2000).
Kempson and Whyley (1999) suggest that financial exclusion is a process for which there is no single explanation. People move in and out of financial exclusion as they withdraw from financial services to regain control over their finances after a drop in income or are forced out after getting into financial difficulties. The elderly, lone mothers who had their children at an early age, those who had never had a secure job, young people who were yet to engage with services, Pakistani and Bangladeshi groups for which language, religion or lack of knowledge were a barrier, were amongst those who had never used any financial products.
Banking The main reason given for people not to have a bank account was that they were not needed as they preferred to budget with cash (OFTa, 1999a). However, transactional facilities provided by a bank current account are thought important because they enable people to cash cheques, pay bills, issue cheques and receive automated bank transfers such as wages or benefits, which are either more expensive, or not possible, without a bank account (HM Treasury, 1999). Current accounts are not a profitable activity for the banks and low income customers are heavy users of the branch network which are a draw upon bank resources (HM Treasury, 2004). Current accounts are, however, gateway products that banks use as a conduit to other financial products such as insurance, personal loans, saving and investment packages and home mortgages, for example, and so widening access to accounts can also be seen as a commercial opportunity for financial service providers and provide access to other services for customers (OFT, 1999b). Branch closures of banks from poorer areas and a more general ‘flight to quality’ of financial institutions is said to contribute to financial exclusion (Lyshon and Thrift, 1997). However, Kempson and Whyley (1999) found few people are actually denied 12
access to banking services but neither do people make an unconstrained choice to opt out. Exclusion could be on the grounds of price, such as the high cost of credit or bank charges; condition, such as minimum savings thresholds or identity requirements; or marketing, where certain communities or households were not targeted for product marketing so they were unaware of many services. Kempson and Jones (2000) found that even in areas where there had been a withdrawal of banking services from some communities, 75 per cent of people were still within a half a mile from a bank, although this was lower in rural areas and Marshall (2004) notes how cashback facilities in supermarkets and stand alone ATMs in convenience stores overcome many of the geographical aspects of exclusion, although many of these new ATMs have high charges.
Using pre-payment meters or cash to pay utility bills attracts higher tariffs than if paid by direct debit (9 per cent higher for gas bills in 1998) which means poorer people are paying more for their services than others able to take advantage of banking services (OFT, 1999a). Although the additional costs incurred by poorer households are a concern, many low income households are content with their pre-payment meters and budget schemes payable through the Post Office or Pay-Point services in convenience stores, and would only change if they were convinced they remained in control (HM Treasury, 1999; Collard et al, 2003).
Collard et al (2003) found that although people held negative views of financial institutions and did not welcome overdraft facilities or identity and credit checks, people felt they needed a bank account. However, the fear of getting overdrawn and incurring high bank charges was a powerful disincentive for many on low or modest incomes to obtaining an account (OFT, 1999a). Overcoming mistrust and aversion towards financial service providers may be one of the biggest challenges to those wishing to promote financial inclusion (Collard et al, 2003). People on low-incomes would like bank services that enable them to retain control over their
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finances, be transparent about bank charges, and understand the needs of low income households; in fact some people like the old-fashioned passbooks for these very reasons (Kempson et al, 2000).
The identity checks required to establish a new account holders under the money laundering regulations can be problematic for some trying to open bank accounts. Many low income people, including homeless people, do not have the commonly requested driving license or passport, to prove their identities. Calls to revise the money laundering regulations have been made (Big Issue, 2000) but the government insist the regulations are not prescriptive about acceptable forms of identity and that banks are only required to take reasonable steps to establish the identity of new account holders. The Financial Services Authority (2005) examined service user views on identity checks and found that overall there was widespread support for identity checks and that minority groups, such as students, benefit recipients who were not owner-occupiers, thought it was easy to prove their identity and that younger people were more supportive of the move than older ones once the reasons were explained to them.
Bank accounts are seen as giving access to other financial products, such as bill payment discounts, insurance, pensions, credit and information, but are closed or refused due to unemployment or inadequate income or because of bad credit references (OFT, 1999b). Ethnic minority members see themselves as especially vulnerable to these factors due to their economic status within the community (ibid).
Credit and personal loans Access to credit has not always been seen as a major issue relating to financial exclusion as it may exacerbate the problems of low incomes if people get into debt (Kempson et al, 2000). The OFT (1999a) found that only 33 per cent of people had high street credit products and 29 per cent were actually opposed to borrowing 14
money. Nevertheless, it may not be something financially excluded households particularly desire, but it is often unavoidable to smooth out the peaks and troughs of personal finances (Kempson et al, 2000; HM Treasury, 1999). In addition, some low income households recognise that having a poor credit rating, in what has essentially become a credit society, is a concern as it not only facilitates access to additional funds but also other services (Collard et al, 2003). Low income households use credit, but do so with higher charges with higher repayments on loans or the widespread use of mail order, less favourable conditions and from companies with less scrupulous sales practices, such as extending and topping up loans (Kempson et al, 2000). Low income householders also use pawnbrokers although their use is not significant. Licensed money lenders retain the door to door collections liked by some people, but charge annual percentage rates (APR) of around 100 to 500 per cent on loans and may not serve groups perceived to be a bad risk, such as lone parents, hostel dwellers or long-term unemployed who may be then tempted to seek funds from illegal unlicensed moneylenders. It is unknown how prevalent the use of illegal money lending is, but Burrows (1999) estimates that there are about 100 illegal lenders in Glasgow with around 50,000 customers and found evidence of aggressive practices.
Another source of credit for many financially excluded households is the Social Fund operated by the Benefits Agency for those in receipt of Income Support. Loans are available on a cash-limited basis which recipients repay through direct deductions from their benefits. The government have muted the idea that additional funds will be made available to the Social Fund in 2006 together with a savings vehicle attached to the Savings Gateway made available for people to pay small sums from their benefits. The move towards credit scoring has kept interest rates down for low-risk borrowers but has left higher-risk borrowers to access more expensive credit services, as the banks and other high street sources target more wealthy customers.
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Collard and Kempson (2005) suggest the main credit needs among people on low incomes are: •
Access to small, unsecured, fixed term loans in cash;
•
Quick access to credit without lengthy or intrusive applications procedures;
•
Affordable weekly payments with no hidden or extra charges;
•
Automatic repayment arrangements, such as deduction from benefit or home visits by a collector;
•
Opportunities for making late payments or rescheduling loans without incurring charges when temporary financial problems occur.
The greatest potential for widening access to affordable credit lies in reducing the cost of commercial credit, increasing availability and sustainability of not-for profit lenders and extending access to the Social Fund (Collard and Kempson, 2005).
Savings The development of a savings and asset-building culture is promoted to provide personal safety-nets in a risky society, as savings can provide people with independence throughout their lives, security if things go wrong and comfort in old age (Collard et al, 2003). However, thirty five per cent of households do not have savings (Goodwin et al, 2000). Kempson et al (2000) suggest this is usually a result of self-exclusion, but that branch closures in deprived areas, minimum savings thresholds, and the lack of tax relief or higher interest rates which are available for higher income savers has contributed to the lack of use of savings products. Collard et al (2003) found that financially excluded people did have a desire to save, but only small amounts over a short time and often for a specific purpose. It was more common for people to save informally, using piggy banks, letting benefits bank up, saving stamps, overpaying pre-payment meters, children's money boxes, Christmas clubs or by giving money to a third party to look after.
Amongst ethnic minority consumers, savings was seen as a hedge against future 16
problems, to help towards the children’s future and for specific events such as weddings or to visit country of origin and mostly stored in conventional savings accounts (OFT, 1999b). More informal methods of savings also exist amongst Black and minority ethnic communities, including savings associations often involving family and friends (Kempson et al, 2000). Some ethnic groups may wish to see culturally specific financial products such as interest free savings vehicles to comply with Islam (Collard et al, 2001).
Micro-Finance There are two aspects to micro-finance for self-employment: access to finance to already existing businesses and access to start-up finance for enterprises for individuals or in communities (Collard et al, 2001). There is a concern that financial exclusion in these circumstances can stifle entrepreneurship, especially in disadvantaged areas (SITF, 2000). Black or minority ethnic self-employed people perceive they will be treated less favourably if they approach mainstream services due to a lack of understanding of their ethnicity or the dynamics of their particular business (Pilley, 2004). Pilley also reports how the Bank of England shares a similar concern that indirect discrimination may exist, but that business start-ups and enterprise were attractive profitable areas for banks to work to overcome exclusion.
Banks such as the Royal bank of Scotland are working with the Treasury to ensure enterprise and business is part of regeneration agendas in deprived areas (see www.enterpriseforall.info or www.theinnercity100.org ) and are investing in the Community Development Finance sector.
Insurance Private insurance has developed to protect people from a growing range of risks and yet is less prevalent in high risk areas due to the difficulty of sustaining the payment of premiums when on a low income, together with the higher costs of insurance in high crime areas (Kempson et al, 2000). In particular, Black and
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minority ethnic people believe they pay high premiums for home-contents insurance because they live in high crime areas and perceive they are seen as dishonest by insurance companies, although the main reasons for those not having home contents insurance were found to be insufficient income, no possessions of value or that it was not needed as the house was usually occupied (OFT, 1999b).
Financial information and advice There is a general consensus that financial literacy is poor in the UK and that consumers need better financial education and information (NACAB, 2001). Financial services have changed significantly over the last 25 years and financial literacy is therefore an essential requirement for the 21st century. Furthermore, the financially illiterate consumer finds it difficult to distinguish between the best products for their needs now or in the future. They fall victim to abusive practices and can respond in ways that make things worse. Financial illiteracy also means people are not confident and are unsure about how to access independent financial advice and are unable to take full advantage of the tax and benefit system to make work pay. NACAB suggest that the debate on financial literacy has concentrated on low incomes, poor educational attainment and the links to social exclusion, but note that it is not just about basic skills but new skills, to enable people to make informed and confident decisions in fast changing financial markets. In addition, Kempson et al (2000) also notes that financial literacy does not mean consumers choosing efficiently between company’s products, but about knowing what products exist at all and where to gain access to them.
The Treasury sees building financial capability as a key tool in overcoming financial exclusion (HM Treasury, 2004). Those in social groups D and E are also less likely to seek money advice but are potentially the groups who stand to benefit the greatest. Money advice is therefore important for people to manage debts and the transition from benefits into work as people lose access to the Social Fund and their collection agencies resume the process of recovering bad debts (HM Treasury, 1999). Poor 18
literacy is strongly associated with financial difficulties and in a recent study a substantial minority of participants who held a bank account were unable to understand a range of information that included distinguishing between basic retail offers, add us, the price of stamps or reading PIN numbers (Basic Skills Agency, 2003).
Homeless people and financial exclusion Introduction Workless single households remain in deepest poverty and have been left behind as tax credit initiatives have targeted older people and households with children, successfully lifting many of these people out of poverty (Palmer, 2004). Single homeless people, who are the focus of this report , are represented within this population. Low income and poverty have been identified as risk factors for homelessness and debt and financial crisis as triggers leading to loss of accommodation. The support needs of homeless people regarding poverty and debt were also identified as necessary under the Supporting people programme, which recommended the provision of money advice services and mediation with landlords over rent arrears (Randall and Brown, 2003).
Cash economy Many homeless people operated in a cash economy and research participants found this preferable to formal banking alternatives but were aware of problems with security or stigma and how not having a bank account may limit further opportunities, particularly relating to employment. Three-quarters of the vendors in the Big Issue (2000) study carried their earnings round with them, including the 88 per cent of these that slept rough. However, eighty-one per cent of vendors said they were happy with their arrangements, perhaps reflecting low levels of expectations and a lack of experience of any alternatives.
For homeless people, narratives around money often involved aggression. All Big
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Issue vendors involved in Collard et al's (1999) study had been mugged, some more than once. The Big Issue study (2000) asked the participants to act out their experiences of money. The role plays mainly revolved around episodes of violence, such as mugging or trying to get lent money back from friends. Money problems were seen as being between individuals with mainstream institutions or services not featuring at all. Through force of circumstance, mutual reliance replaced mainstream services, although they would lend money from friends and then struggle to repay each other. Security for themselves, or indeed their fear of being tempted to harm others, also surrounded the handling of money within hostels and if using ATMs (Khan and Jones, 2001). It is clear that for homeless people carrying cash carries greater risk, especially for those sleeping rough or in hostels where there is a greater risk of theft and even violence (Collard et al, 2003).
The experience of financial exclusion, of being outside of the mainstream, also left homeless people feeling totally excluded from normal life, with a loss of self-esteem and self-value (Khan and Jones, 2001). Examples of feeling outside of the 'norm' included not having a cashcard and paying for goods in shops with one pound coins (Big Issue, 2000). In addition, carrying cash meant that they were tempted to spend more than they would otherwise.
An inability to access banking services was highlighted as a barrier to employment by Demos (Lownsborough et al, 2004) and there were examples of some people having lost jobs as employers would not pay wages without a bank account (Khan and Jones, 2001).
Access to banking Given the problems associated with the cash economy for homeless people their access to banking facilities is most important, but remains fraught. The Big Issue study (2000) found only 29 per cent of vendors had bank accounts of any kind and 80 per cent of these were opened prior to their episode of homelessness. Twenty-six 20
per cent (ninety vendors) had tried to open a bank account on 139 occasions but only 17 were successful, compared to 75 per cent of the general population. Problems related to credit ratings and identity requirements reflecting general concerns with not just the availability of basic bank accounts but the access to them. Further detail regarding homeless people and banking initiatives are provided in Chapter 2, where homeless people’s views on products and delivery are discussed. It is also worth noting that all studies were conducted prior to the advent of Benefits Direct and it is therefore not known how the impetus to open accounts this created has affected both homeless people’s attitudes and experiences towards formal banking.
Credit and debt The issues of credit and debt were important to homeless people. A lack of affordable credit or informal ways of borrowing small amounts of money and problematic debt management incurred prior to, or as a consequence of, homelessness, could sometimes compound other problems in their lives, possibly inhibiting routes out of homelessness.
The Big Issue (2000) study asked questions about other financial services such as credit and money advice. Asked what the vendors would do to raise £100 only 9 per cent thought of approaching a bank. Most suggested they would sell more magazines or use the services of the Social Fund or friends and family, although worryingly four female vendors also suggested they would get the money through prostitution. The study makes the point that these people may already engage with this activity but commented that it is an indictment of circumstances if that appears the most attractive route to raise, what is for a lot of people, a relatively small sum of money. Only a third of vendors would approach a bank to cash a cheque, another third would approach private cheque cashing agency who charge commission as well as a flat rate fee, whilst a significant proportion 20 per cent said they wouldn't know what to do. 21
Begging was seen as a second to last resort, other than prostitution, for homeless people in need of additional cash but was not seen as problematic (Khan and Jones, 2001). Fitzpatrick (2000) examines this issue in Glasgow and found that homeless people turned to this source of additional funds to survive the streets in buying food, hostels and toiletries rather than accumulate wealth, and to support substance misuse.
Centrepoint (2005) explored problem debt amongst homeless young people and found 82 per cent had some debts of an average of £1000 each, although one person had £14,000. They report that 27 per cent of young people are indebted, paying over 25 per cent of their income in repayments, compared to 7 per cent of the general population. Thirteen per cent had credit card debts, 7 per cent bank loans, 37 per cent owed money to family or friends and 12 per cent owed money to mail order catalogues. Some loans and storecards were expensive with up to 29 per cent APR, and were also used to access cash. Eighteen per cent lived on £30 a week after debt repayments were taken into account. Seventeen per cent had been harassed to make repayments, 8 per cent had bailiffs attend, even when in a hostel. Low income was the main cause of debt as people had used overdrafts to tide them over delays in benefit administration or when they became unemployed.
Khan and Jones (2001) found that homeless people did not trust the banks and would more frequently use expensive forms of credit, such as mail-order and local stores offering very high credit rates. The most common form of response to debt was to ignore it as it was difficult to disentangle this from other problems evident. Money they did receive was used on alcohol, drugs and fines in the criminal justice system and for those involved in their focus group, resolutions to debts involved going to jail for short periods. Young people were not always well equipped to negotiate with debt collection agencies and were inclined to ‘bin the letters’ which
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they saw as a kind of terror (Centrepoint, 2005). The consequences for this indebtedness was stress and depression and a sense that their debts were a barrier to security, stability and support in the future. In particular, County Court Judgements (CCJs) last 6 years preventing young people obtaining student loans and therefore acting as a barrier to access to education.
Financial literacy Whilst there is evidence of poor financial literacy amongst the general population, the problems appear particularly acute amongst homeless people. Literacy and numeracy skills are a prerequisite in considering developing financial literacy (Betal, 2004). St Mungo's report that 5 per cent of adults in 2003 had literacy levels below the age of 11, whereas within their hostels 12 per cent of residents had low levels of literacy and 7 per cent had poor numeracy skills. Young people in particular appear to be in a vulnerable position, being ill equipped to deal with the financial opportunities and challenges available to them.
The FSA (undated) looked at young adults who were not in employment, education or employment (NEET) - a population represented amongst single homeless people - and found they were particularly lacking in financial capabilities, but as they were young with busy lives it is difficult to maintain their interest in the subject of personal finance. The study found they lacked knowledge and understanding of how to open a bank account, were confused about tax and national insurance, were unclear about credit interest rates, did not know how to explore and compare different deals on mobiles or credit, did not know how to access emergency funds and lacked knowledge and experience of paying household bills. Centrepoint’s (2005) study also provides examples of the problems young homeless people had with navigating financial services. The young people lacked literacy, numeracy or financial literacy skills, and were susceptible to promotional literature, meaning many regretted taking on credit commitments when they were younger before they had the maturity to assess the risks. Twenty per cent had received marketing 23
relating to credit whilst in hostels, yet many did not understand APR and their credit limits were raised without asking.
Homeless adults also experienced difficulties and lacked awareness of personal finances. Big Issue vendors were unaware of where to go for money or debt advice despite several public or private agencies local to them and 14 per cent of study participants misunderstood banking by suggesting they would pay their cheque into a friends account and ask them for the money, which can no longer be done since crossed cheques are now standard (Big Issue, 2000).
Prioritising finance Although there are clearly issues regarding homelessness and financial exclusion, how these fit in with other concerns is unclear. Khan and Jones (2001) held focus groups with both homeless people and professionals who worked with them and suggest that the priorities for this client group were benefits, health and accommodation and that managing financial issues could not be dealt with in isolation from these other pressing problems. Long term financial planning was absent in the lives of homeless people as they thought only a day or a fortnight ahead at most when they received fortnightly benefits. Homeless professionals did not perceive financial advice and information as a priority amongst their clients, but suggested they did seek out practical money advice from people such as social workers, hostel workers, DSS, chapel/church or friends, as they would not approach financial services professionals.
Interestingly, Khan and Jones (2001) also report that obtaining employment appeared to be a significant driver for homeless people to seek financial services, rather than securing housing.
Conclusion Financial exclusion is a product of the mismatch between financial service products
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and the needs of low income households, causing difficulties with managing money without recourse to facilities of credit, bill paying and advice, for example, which the majority population regularly access. It has consequences in compounding problems of poverty and social exclusion for individuals and whole areas where problems can be concentrated. For homeless people the problems are exacerbated by heightened feelings of being outside of accepted practice and mistrust of financial service providers, combined with a recognition that operating solely in cash can be insecure, stigmatising and can act as a barrier to moving on.
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2. Interventions to promote financial inclusion This section begins by considering the range of agencies involved in financial inclusion initiatives, the type of arrangements used to implement the scheme and the range of interventions available generically before moving on to consider interventions specifically for homeless people. Figure 2.1 illustrates the scope of interventions for addressing financial inclusion.
Figure 2.1: Scope of interventions in field of financial inclusion PARTNERSHIP PROVIDERS
RANGE OF INTERVENTIONS
POPULATION
Access to Financial Services Universal
Banking
Savings
Credit
Insurance
Money Advice
MicroEnterprise
Govt Dept. & Agencies
Financial Capability Community
Life Skills
Formal Education
Training Front line staff
DELIVERY VEHICLES Targeted
Direct provision Private
Community
State
Community partnership models
Private sector
Third sector Limited partnership models
Most interventions are organised as geographically specific community or limited partnership models, notwithstanding the universal and direct provision of Basic Bank Accounts which are widely available, if not always accessible, to anyone anywhere. In contrast, financial inclusion provision for homeless people is targeted and likely to be based upon direct provision, by private sector players such as individual banks, community providers such as credit unions or state actors such as the Benefits Agency, or a limited partnership model between a number of various providers. This does not however mean that general financial inclusion services are 26
available everywhere, as for example, housing associations working with DfES under the Community Finance Learning Initiative found a lack of money advice or financial inclusion services available in many areas (Brown, 2004). So whilst there may be scope for homeless agencies to explore the development of local community based services, this may not always be possible. Homeless provision appears more likely to focus upon (financial) life skills training, with some support for accessing bank accounts and Social Fund loans.
Who is involved in promoting financial inclusion? A wide range of players are involved in the organization and delivery of financial inclusion projects, some individually and some in tandem with other single or multiple agencies.
Government agencies Several government departments are active in cross-cutting initiatives promoting financial inclusion activities, but with few exceptions the delivery of these initiatives lies outside of central or even local government, although local authorities may be willing partners in wider projects. In the main the government role has been, through it's relevant agencies, to galvanise support for the expansion of access to financial services from the private financial services industry together with charitable and voluntary organisations. Jones and Barnes (2005) note that financial exclusion is an expression of market failure but in accordance with other strands of government policy it is the private sector together with the third (voluntary) sector that are charged with the delivery of financial inclusion projects in partnership. This may be beneficial as research evidence suggests that mainstream providers are not trusted and community intermediaries can be effective at reaching low income households as they understand their circumstances (Collard et al, 2003). Nevertheless the government is beginning to co-ordinate the myriad of schemes and projects working in this field and has pledged £120 million support for a Financial Inclusion Fund in the latest Spending
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Review to support and pump-prime initiatives. It is the Treasury that has taken a lead on the work, and has prioritised the provision of affordable credit, incentives to encourage savings amongst low-income households and the expansion of face-to-face money advice services for those who experience indebtedness (HM Treasury, 2004). The Treasury has been working with the banking industry in the development of Basic Bank Accounts and the Universal Banking Services, in partnership with the Post Office who have produced a basic card account for receipt of benefits or pensions only. The Department of Work and Pensions (DWP) is now paying benefit to the majority of recipients bank accounts directly. The DWP have also committed extra funds to the Social Fund and reduced the repayments. The Department for Education and Skills (DfES) is also working with the Financial Services Authority and the Basic Skills Agency to raise the standards of financial literacy so that adults are capable of making informed and appropriate choices regarding financial products and planning. The Treasury and Bank of England recognise that financial exclusion inhibits enterprise in disadvantaged areas as access to start up or development capital is limited. Tax relief is now available on community enterprise investment and an umbrella organization for Community Development Finance Institutions (CDFIs) has been established to provide capital and support to enable individuals or organisations to develop and create wealth in disadvantaged communities or under-served markets. (www.cdfa.org.uk). It is also the Treasury who have piloted the Savings Gateway accounts, in conjunction with Halifax Bank of Scotland (HBoS) Bank and DfES led Community Finance Learning Initiatives, whereby a matched savings scheme is provided alongside money advice and financial education (Brown, 2004).
Private sector The banking industry is involved in many initiatives to address financial exclusion, often under the remit of Corporate Social Responsibility (CSR). Whilst they have worked with the government in the development of Basic Bank Account products, there are tensions between the financial inclusion agenda and the greater 28
competitiveness in the industry that means the banks chase the same wealthier more profitable customers (BBA, 2000). The Savings Gateway evaluation showed that there were few opportunities for the bank involved to sell related products, a primary source of profits for high-street banks (Kempson et al, 2005). Nevertheless, many high-street banks are working in partnership with voluntary and community organisations in the local provision of financial services and education, providing staff time, either through secondments or on a volunteer basis to community projects; and by providing funds to support projects or even premises (Treasury, 2004).
Building societies, operating as mutual organizations but within the private sector, are also involved in financial inclusion projects, working with housing associations on savings and loans schemes or working with Shelter with regard to mortgage arrears advice. With their provision of popular pass book accounts and geographically orientated branch services, building societies are said to be well placed to support marginal users of financial services, but Dayson (2004) warns that they must do more to communicate their activities and demonstrate the difference mutuality can make.
Third sector Housing associations have also become active in the field. Insurance with Rent schemes were recommended in PAT14 (Treasury, 1999) and this is an area associations have operated successfully in the past and is again being promoted to bring affordable insurance to their tenants, through block policies, who may otherwise be discouraged because of high-premiums due to living in high crime areas. The Association of British Insurers (ABI) has issued guidance to local authorities on best practice for Insurance With Rent schemes. In addition housing associations have successfully acted as intermediaries for community organisations and financial services providers, through the Savings Gateway and Community Finance Learning Initiatives, but also more narrow partnerships where they have 29
acted as conduits for a bank’s products. Housing associations have the financial clout to work with providers to produce popular products designed specifically for their tenants, conduct outreach work with tenants and are therefore well placed to fill significant gaps in local service provision in disadvantaged areas (Newcombe, 2000; Brown, 2004).
Lastly, charitable, voluntary or community organisations heavily populate this field, such as the Citizens Advice Bureau who have a long history of work amongst low income households providing money advice services.
How are financial inclusion projects delivered? There are various delivery vehicles apparent amongst financial inclusion initiatives: direct provision by private, public or voluntary community sector; community finance partnership models; and more ad-hoc or limited partnership models.
Direct provision The Social Fund, accessible only to certain benefit recipients is the only service or product provided wholly and directly by the state. However, financial education is being promoted and supported by local authorities in schools (England and Chatterjee, 2005). More typically directly provided services are by the banks themselves, in that Basic Bank Accounts can be obtained, in theory, without intermediaries; or more likely by a range of voluntary or community organisations, most notably the Citizens' Advice Bureau where money and debt advice can be obtained free of charge or in traditional community-based credit unions, for example.
Community partnership models Some changes in the working practices of credit unions has occurred so that they can expand, professionalise and be more competitive (ABCUL, undated). They are now regulated by the Financial Services Authority (FSA) to protect customers and have seen a growth in both customers and assets. Dayson et al (1999) suggest that
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credit unions are too small and are in too few areas to play an effective role in combating disadvantage, and their role may have been over-stated in anti-poverty strategies. The Association of British Credit Unions Ltd (ABCUL) suggest however that the restrictions on lending without first saving and their coverage are more a result of how the movement developed in the UK, and that moves to make them more professional can help sustain the service, operating as it does on low margins and serving an inherently risky membership profile.
The New Policy Institute recommends the advancement of hybrid organizations capturing the qualities of many partners to tackle exclusion (Rossiter, 1997). Community Finance Solutions proposed new community based partnership models involving the organisations outlined above, broadly termed community development finance initiatives (CDFIs) and has been instrumental in facilitating their progress in some areas. These are not-for-profit partnership organisations supported by banks, housing associations and specialist local agencies such as money advice or credit unions and are accountable to community stakeholders and individual residents (Dayson et al, 1999). These new organizations, or older agencies, such as existing credit unions reconstituted alongside banks, charities or housing associations in these new ways, act as a gateway or intermediaries connecting potential clients with service providers usually in geographically specific areas. Community Banking partnership models bring credit unions and Community Reinvestment Trusts (partnerships providing micro-credit for enterprise in disadvantaged areas) together to form new charitable trusts enabling the partners to reach new markets, promote educational and advisory services (Lloyds TSB, undated).
Limited partnership models Other models of delivery may be more modest but involve narrower partnership arrangements between one provider and one organization or set of clients. One bank may have individual arrangements with one organization and their clients to 31
provide Basic Bank Accounts or money advice, for example. Many of the interventions relating to homeless people are based on such arrangements.
Range of interventions Financial inclusion projects may provide a single product or service such as a bank account or personal money advice, or may choose to offer a package of services including a range of products alongside money or debt advice and financial education. This section outlines the types of initiatives relating to the most common areas of financial services.
Banking The advent of Basic Bank Accounts has brought a product offering simple transactional facilities within reach of many formerly financially excluded people. They are offered by most high street banks and are accessible via the Post Office network, and provide an account that can receive automated payments, such as wages or benefits, usually provide a debit card for 24 hour cash withdrawals, bill paying facilities and no overdraft. A third of the customers who now have their benefits paid direct to bank accounts had set up an account specifically to receive their benefits and only eight per cent of these experienced any difficulty in opening the account (Adams et al, 2005). Basic Post Office Card Accounts (POCA) are also available offering direct payments of benefits and withdrawals at the Post Office network, but more difficulties were experienced amongst the quarter of survey respondents who opted to receive their benefits in this way. Benefit customers reported satisfaction with the new arrangements and 80 per cent of those surveyed found the Benefit Direct more convenient than order books or giro-cheques, finding being able to withdraw smaller amounts at a time beneficial and thought it was a more secure way of obtaining benefits. There is a target to convert 85 per cent of benefit recipients to Benefit Direct by the end of 2005 (up to May 2004, 67 per cent were paid by this method) (Adams et al, 2004). However, problems still exist with banks not promoting Basic Bank Accounts with any enthusiasm and although cash
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withdrawals are now widely available in many areas, branch closures have meant that banks were not always accessible to actually open the accounts (Brown, 2004).
Savings The Savings Gateway is a Treasury initiative that uses matched funding to encourage those on low incomes to save. It is modelled on the Individual Development Accounts in the USA (Sheridan, 1991), where deposits up to a certain limit are matched by public funds as an incentive to save. Halifax Bank (HBoS) provided the Savings Gateway accounts either directly, or through a mixture of housing associations and community groups, and runs alongside the Community Finance and Learning Initiative programme to bring together financial literacy, micro-enterprise and adult learning. The initial phase indicated that people were able to save small amounts, although there were instances where people could not afford to make their payment, but a second phase is currently being piloted to determine customer views on size of incentives, length of savings before funds are matched and the most effective delivery vehicles (Kempson et al, 2005).
Those housing associations working on the Savings Gateway simultaneously with the Savings Community Finance Learning Initiative found it easier to engage clients when they had a tangible pioneering product to offer them (Brown, 2004). Other housing associations provided innovative products directly to tenants finding this also assisted with engagement in other financial inclusion work.
Credit Gaps in provision of affordable credit were very evident from the CFLI pilots as it was found that prime lenders would not touch those with impaired credit or low income levels, leaving people easy prey for the sub-prime credit market (Brown, 2004). Credit unions were not found to be universally available and, where they did exist, their use was inhibited by the requirement to save with them prior to accessing loans. Some housing associations operate Savings and Loans schemes
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with individual providers such as People for Action in Birmingham with the Woolwich. In addition, a consortium of housing associations in London have developed a service called CHANGE acting as intermediaries across a range of services including credit and micro-enterprise funding to their tenants.
Financial Inclusion Newcastle (FIN) is an umbrella organization providing money advice, special loans, micro business support, financial awareness and marketing and organizational support to the four local credit unions in the West End of the city (Dodds, 2003). Some of the credit unions reported additional members and felt more professional, but it was unclear to what extent the members were accessing the new products through the credit unions although many had sought money advice.
Services Against Financial Exclusion (SAFE) is a project based in East London and is a consortium of community intermediaries such as local housing associations, charitable support from Toynbee Hall and financial services providers providing a range of services including affordable credit and micro-enterprise finance.
Money advice Building financial capability through education, information and advice is a priority for the government, who are working with many groups through the National Strategy on Financial Capability.
Collard et al (2003) found that people welcome basic training in money management skills explained in lay terms, especially for young people or when people are setting up home. The research also highlighted the importance of financial advice being delivered by the right provider. This was crucial to the take-up of services as people on a low-income often do not trust financial service providers or the government, and ideally would like financial information and advice provided by community based organisations with well trained staff who 34
understand their needs and circumstances. Providing advice there and then, rather than signposting clients to other services, was also valued by research participants as it takes courage to make the first approach for advice and it was felt this experience should therefore be positive. Study participants looked at the CFLI Bootstrap Enterprises in Hackney, the Money Advice and Budgeting Service (MABS) in Ireland and the Money Advice Plus scheme (part of the Birmingham Settlement) and found favour with all, were attracted to the immediacy of the MABS service and overall welcomed the CFLI approach.
Peer delivery of financial advice has been advocated to overcome mistrust of financial service providers, but has had limited success. ‘Finance Friends’ was a service set up by Mercian HA in the West Midlands where tenants were trained to give advice to other tenants. However, there was no demand and time constraints meant the service was stopped (Brown, 2004). Finance buddies are largely untested and may still remain viable if operated within existing financial literacy courses (Jones and Barnes, 2005), although in the Savings Gateway pilots these courses were all difficult to run with little interest or time available from clients (Brown, 2004). Although Jones and Barnes found social networks to be very important for the dissemination of information amongst disadvantaged communities, peer-delivery could possibly attract concerns about confidentiality or stigma.
Financial outreach work was more successfully offered by specialist housing association staff via one-to-one advice sessions with clients recruited via colleagues or in the community. Sessions included financial advice, personal money advice and workers could help complete forms and sign up clients to new financial products offered through the host organization (Brown, 2004). Door-knocking was not found to be successful.
The Citizen’s Advice Bureau (CAB) is well known in most communities as a trusted
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and independent provider of many schemes offering money advice and financial literacy training (NACAB, 2001). It is funded to provide face-to-face money advice services, alone or in association with different area-based health or regeneration funds and local partners or financial service providers. For example, local CAB are involved with providing financial training to young people who would be homeless with Bedford Pilgrims HA and in Farnborough run talks to low income families in association with a social housing provider and the National Society for Preventing Cruelty to Children (NSPCC).
The CAB and Impact Housing Association are both involved in training frontline workers dealing with young people or social housing tenants, respectively, with regard to financial literacy and money advice. The CAB is working with the FSA on the Front-Line Capability project so that front-line workers dealing with 16-25 year olds can support their clients to develop the skills, knowledge and confidence to manage their money effectively (NACABb, 2005).
Micro-Finance Many Community Finance Development Initiatives (CDFIs) operate offering credit and business support in disadvantaged communities and use risk capital to fund loans and grants to business and social enterprise. Other forms of support for enterprise can be credit unions, where people share a ‘common bond’ either through geography or other association such as employment; Community Reinvestment Trusts (CRTs) that also lend for personal as well as enterprise needs and savings and loans schemes through housing associations (Dayson, 2003).
StreetCred is a micro-finance scheme for Black and minority ethnic women in Tower Hamlets giving credit and business advice, inspired by the Grameen Bank in Bangladesh, cited for community development in developing countries and used as a useful model for enterprise amongst the financially excluded in the UK (Pilley, 2004). There are 100 women of 20 nationalities involved and 50 loans had been 36
made with the default rate less than 3 per cent. This system provides credit for those wishing to start their own businesses or self-employment with decisions regarding loans made by the group members themselves.
The housing associations involved with the Savings Gateway and Community Finance Learning Initiatives found it difficult to engage potential clients and that the provision of micro-finance was scarce (Brown, 2004). In the areas where services such as Street UK existed they were well known and no intermediaries were needed to introduce clients. Also some micro-enterprises in the pilot areas were of dubious standing, working cash-in-hand and were wary of attempts to formalise work.
The Big Issue has joined up with Shore Bank and The Royal Bank of Scotland to channel investment, via the Big Invest (www.biginvest.co.uk) into communities by lending to social enterprises or other (CDFIs) to overcome under-investment in some people or areas. It works to encourage business-like responses to social problems.
Financial inclusion projects for homeless people Schemes targeted specifically at homeless people appear less prevalent than community based financial inclusion projects. However, there are also many schemes targeted at those not in employment, education or training (NEET), probation service users or care-leavers who may also be represented amongst single homeless people. Whilst homeless people may be transient or part of a more settled community, geographically based community financial services may be available to them, but exclusion may persist due to a lack of permanent address or other factors may render them inaccessible. This section illustrates the type of innovations in attempts to overcome financial exclusion for homeless people and their perceptions and experiences of the services. The projects focus upon bank account facilities or financial literacy and education provided as part of life-skills training. They are nearly always limited partnerships between third sector homeless agencies and 37
private sector financial service providers.
Banking Barclays Bank is working with the Passage Day Centre in London and facilitates Basic Bank accounts to its homeless residents by using an intermediary between the branch and potential customers amongst service users.
Grand Central Savings is a basic account for Big Issue vendors in Glasgow, run jointly by Big Issue Scotland and the Bank of Scotland (Collard et al, 2003). It has a dedicated client branch within the Big Issue premises, staffed, operated and managed by Big Issue staff including former vendors. At the time of Collard and colleagues’ research it had 610 clients, and the numbers were rising, who had benefits, pensions and wages transferred automatically to their Big Issue/Bank of Scotland First Basic Accounts. The project was able to manage the identity checks required under money laundering regulations. In Manchester, the Big Issue worked with the Co-operative Bank using their Cashminder accounts (Collard et al, 2003). Bank staff were trained to undertake outreach work at Big Issue offices in the region. In Leeds, the credit union worked with the Big Issue in the North and provided a simple savings account that could be used for collateral for low cost loans. All three providers accepted Big Issue ID, GP or Benefits Agency/DWP letters as proof of identity, and cards were sent to the bank branches or Big Issue offices. None of these accounts require credit checks as vendors are unlikely to pass as they have no address, regular income or may have a bad credit history. No loans are available from the Credit Union until people have a permanent address, although they do now offer rent deposit loans and bill paying facilities. None of the accounts’ bill-paying facilities were attractive enough for people to swap from using PayPoint or the Post Office where it was felt they retained greater control over the process.
Collard et al’s research found advantages and disadvantages in the three types of schemes the Big Issue offices worked with. A focus group of vendors found that the 38
Co-operative Bank’s account offered the best ease of withdrawals and deposits as it was linked to the Link and Post Office networks, and offered an Electron card for debit card payments in shops. For the Grand Central Savings Scheme vendors had to offer three days notice of withdrawal and vendors felt unsafe depositing or withdrawing money at a Big Issue offices. The credit unions practice of similarly restrictive opening hours did not find favour with the vendors. Whilst the vendors found the Co-operative Bank account the best option they felt banks did not understand homeless people and were only interested in making money, whereas they felt positively towards the Leeds Credit Union as an organization that would understand their needs, where they would be treated with respect and dignity which was important to rebuild their self-esteem. Vendors were also uninterested in the standing order or direct debit facilities offered by the Co-op account although did appreciate it having no overdraft facility. The Grand Central Savings Account did not offer any bill paying facilities and only received BACS and was thought not to be a proper account. Some did however value the money management advice that came with the account, whilst others thought it was patronising. Vendors liked the simplicity of the Co-op Cashminder account but thought themselves poor money managers so liked the Credit Union as well if they were working.
The Big Issue runs its own vendor savings accounts as a depository for their takings, issues passbooks and has no overdraft facilities (Big Issue, 2000). Whilst 39 per cent of vendors held these in Leeds, 12 per cent had these accounts in Liverpool, but they were used to store money rather than save. In Manchester, 29 vendors held an average of £13.93 in their accounts. These accounts, and other deposit facilities by homeless organizations, may act as a barrier towards clients opening up accounts with more transactional services, such as receiving BACS payments, bill paying facilities and debit cards. These facilities may offer the potential to help clients move on with housing and employment, although organisations are assisting clients to open up Basic Bank Accounts and have negotiated acceptable
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forms of identity such as Big Issue badges and telephone checks to offices (Big Issue, 2000).
Despite developments with particular organizations or in specific areas the Wilmslow Express (25 February 2005) was still able to report that a homeless man was unable to bank a cheque obtained from his employer, who was unable to pay cash, as he did not have the requisite utility bill to open a bank account locally, despite having support and advice from employers, Job Centre and banks. A local building society cited the money laundering regulations as the barrier.
The issue of money and banking provision is a complex one for homeless people, as stories about money often involve conflict or loss of self-esteem (Big Issue, 2000). Khan and Jones (2001) conducted focus groups with homeless people in Glasgow and found that some people were nervous of using ATMs as it provided a temptation for them to steal and made them concerned for their own safety when publicly withdrawing cash. Collard et al (2003) found unease with handling money within Big Issue premises, whilst Khan and Jones (2001) found there was also concern about a local bank facility that had a separate queue for supported accommodation clients to use, which they felt was stigmatising.
Life skills training The Citizens Advice Bureau is involved in many financial literacy projects, and through some of its branches provides outreach work to homeless people and particularly young adults (NACAB, 2005a). However, life skills training for homeless people is the most common delivery vehicle for introducing budgeting skills, money management and financial literacy education provided directly by homeless organizations or by local shared services attached to tenancy resettlement agencies for example.
Life skills training is seen as particularly important to develop not only the 40
knowledge of how things are done once living independently but to develop the social skills and resilience necessary to sustain moves into employment and housing (Lownsborough et al, 2004). A review of life skills provision in Scotland (Jones et al, 2001) shows that most homeless organisations offer life skills training in some form where money management and budgeting advice are central, but this may have been at the level of budgeting and bill paying (Franklin, 1999). With the advent of Benefits Direct, advice on opening basic accounts may now be routine. The levels of literacy and numeracy amongst homeless people can be lower than average and life skills training necessarily offers services to increase confidence and abilities in these areas which are prerequisites for further financial advice (Betal, 2004). Centrepoints’ (2005) work with indebted young people echoes that of Demos above, and suggests that support cannot be built on practical factors alone but must also include softer factors such as building resilience. The priorities for the young indebted people were access to affordable credit, tools to manage their finances, fast, efficient and less complex benefits system, affordable ways of resolving debt without recourse to the courts, ways to repair their credit rating, free good quality advice, and less credit marketing based on incentives but more facts and limitations on unrequested increases in credit.
Crisis provides life skills through their Pathways and Skylight programmes, which includes modules designed to increase self-esteem and social skills as well as impart knowledge and confidence to cope with budgeting, debt or problem solving. Crisis worked with Demos to call for more emphasis on life skills to overcome social exclusion and to facilitate entry to employment (Lownsborough et al, 2004, 2005).
Conclusion It is apparent that there is much activity relating to financial inclusion projects, with interventions ranging from sophisticated area-based initiatives using multi-actor partnership arrangements to individual agencies making links with local bank 41
branches to secure assistance with one product. There are few examples of cross over activity between schemes involving homeless people and community based initiatives, perhaps because of residency requirements or being unable to meet similar common bonds. Moreover, there also exists the possibility that financial literacy or money education and budgeting skills programmes are being delivered by various agencies to the same or similar population in terms of pre-employment or life skills training.
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3. Discussion This report has documented what is known about financial exclusion and how it affects homeless people in the UK. The review confirmed that most of existing literature is focused on financial exclusion issues quite broadly as they affect the general population; very few studies or information currently exists on the financial exclusion of homeless people. In particular, whilst a range of initiatives have been launched in this area, and homeless organizations continue to prioritise life-skills training, to date no robust evaluations of ‘what works’ have been undertaken of interventions. One of the conclusions of the review is the need for more research in this area, including investigating the role of financial problems and debt in contributing to homelessness, as well as evaluations of emerging possible models of good practice in the area. However, whilst the evidence base is weak overall, the review has identified a number of key issues that are likely to be important in the future development of services.
Principles underlying service delivery Leading homelessness organizations working in this area have emphasized the need to consider the underlying principles of any service delivery aimed at increasing the financial inclusion of homeless people. In particular, the Big Issue, one of the largest enterprising financial inclusion project in this area (generating £12 million per year for vendors), attempts to encourage enterprise and self-reliance as an alternative to the perceived dependency generated by charitable hand-outs. Within this framework, it is recognised that the Big Issue can mediate between vendors and high street banks or credit unions so financial services can be obtained, but the underlying principle remains one of self-sufficiency. In addition, vendors themselves are involved in self-financing support to each other through their contributions to the Vendor Support Fund. A second example is Centrepoint’s (2005) changed approach to income recovery from residents, moving from a
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toleration of residents building up rent arrears to one where debts are enforced although assistance is provided to people to address these issues. Both these examples highlight an organizational emphasis on responsibility and promotion of agency for resolving financial problems and poverty. This accords well with the present government rights and responsibilities agenda, however remains largely untested empirically.
Responding to ‘need’ or ‘demand’? Closely aligned to the above point, it appears to be important for providers to consider the extent to which service interventions are responding to service user ‘needs’ or ‘demands’. Bradshaw’s (1972) taxonomy of social need identified four different categories of need including: normative need, as defined by professionals; felt need, as ‘wanted’ by the individual; expressed need, in terms of a need that becomes a demand, and comparative need, whereby if X and Y have similar characteristics, and Y is in receipt of a service, then X is said to be in need. It is often acknowledged that services are likely to be more successful if designed to take account of the felt and expressed needs of any population, however ‘expert’ views often continue to dominate the design of social policies and services. Surveys of target groups have already indicated some important lessons in this area. For example, in a survey of tenants of three housing associations in Scotland, it was concluded that large investment intensive schemes would not have been appropriate and a modest approach based upon information, advice and education that provided routes to financial services without the risks inherent in large initiatives was most likely to be supported (Market Research Ltd, 2004). The work of housing associations conducted under the Community Learning Finance Initiative (Brown, 2004) found that some schemes had no demand and had to be shelved. The costs of the development of any schemes need to be weighed against the actual benefit, as opposed to the potential to benefit (Scottish Homes, 2001).
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Voluntary or compulsory services? If interventions are responding to expressed need on an individual basis and attempting to stress rights and responsibilities, then it could be argued that services should be voluntary. For example, Crisis financial inclusion courses are voluntary which is seen as important to enable people who are homeless to make meaningful choices within a safe environment where the consequences of poor choices can be reversed, leading people to alter their perception of their own abilities and their own self-efficacy giving them confidence to change their lives (Lownsborough et al, 2004). The voluntary nature of the courses also means participants see the value of learning although their involvement can be hard to achieve within chaotic lifestyles. However, St Mungo’s (Betal, 2004) raises a debate regarding whether some life skills and financial education should be compulsory where people are engaged in practices detrimental to themselves. Furthermore, the FSA (undated) notes that some Entry to Employment courses which deal with money management and building financial capability are indeed compulsory for some young people not in employment, education or training (NEET).
Method of delivery The review’s findings suggest that particular attention needs to be paid to the delivery vehicles for financial inclusion projects for homeless people. As Chapter 2 outlined, whilst the dominant model of service provision for addressing financial inclusion is direct and community partnership models, most current interventions that are aimed at or reach homeless people are delivered through limited partnership models. Here, one or usually a number of organizations (often including different sectors like private and voluntary sector providers) deliver a specific service targeted to homeless people. It seems timely to consider whether this balance of service provision is appropriate.
The most compelling argument, and one that is relatively well-supported by evidence, for the provision of specialist services is the increased take-up and 45
acceptability of such services, compared to community or general approaches. A number of studies have suggested that specialist staff delivering services to homeless people may be a valuable resource in securing participants trust, providing a welcoming informal relationship that provides purposeful activity (Lownsborough et al, 2004). It is known that psychological barriers may be the hardest to overcome in the delivery of financial services, in particular as people often mistrust banks who are seen as disinterested and prefer informal means of organizing their money (Kempson et al, 2000). Even within specialist provision, some organizations may be preferred to others. For example, Khan and Jones (2001) found that the Royal Bank of Scotland’s bank account offer was not well used and that homeless people trusted the Big Issue more than other homeless professionals and wanted to see them provide more services.
Community partnership models may also overcome the challenge of mistrust of some providers and act as intermediaries to bring services and investment to disadvantaged communities. At least one study has highlighted how homeless people feel more positive about credit unions and not-for-profit services than high street providers (Collard et al, 2003). However, it is unknown whether homeless people feel inclined to belong, or the extent to which they would be accepted by local communities, through which financial inclusion services are being channeled. In short, whether this model may be replicated by alternative community providers is presently unknown. Their success for homeless people may be hampered by the differing geographical limits of organisations and the difficulties in proving residence for a transient population.
A number of other issues are salient to the method of delivering services. Firstly, the recruitment of workers with both financial and community knowledge was found to be difficult in the Savings Gateway /CFLI pilots because it is an unusual combination of skills and a new field (Brown, 2004). Within specialist provision, the
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recruitment of appropriate staff is likely to be key in delivering effective services. Secondly, consideration needs to be given as to whether there is any scope for electronic delivery of financial inclusion services. Research has suggested that the use of technology may not be the best way to reach marginalized people as people do not feel in control of this type of delivery, although the automation of Benefits Direct payments may be a step towards the greater acceptability of such methods (Kempson et al, 2000). Websites like www.moneybasics.co.uk exist but are not necessarily geared towards the needs of low-income households or the particular experiences of single homeless people.
Timing of service delivery People become homeless for a large range of complex reasons, but irrespective of cause, homelessness is likely to be experienced as a time of personal stress and difficulty. Homelessness is also multi-dimensional and people are unlikely to be able to address all issues facing them at the same time, even with the support of effective agencies. Khan and Jones (2001)’s study suggested that it was often difficult to engage people in considering financial inclusion issues alongside other more pressing issues of homelessness. However, they found that as people moved through homelessness and began to consider a possible move to employment that their interest in financial issues increased as the relevance of finance to their life became more immediate. Whilst this study was conducted prior to the advent of Benefits Direct, and it is unknown to what extent this move has drawn homeless people into more frequent use basic financial services, it is likely that employment (possibly along with other factors) may be a trigger for interest in financial services pointing to the need for careful consideration of the timing of interventions to homeless people. It should also be noted that it was found to be difficult to interest settled people in disadvantaged communities to attend financial inclusion courses (Brown, 2004) so it may be important to consider when best to deliver projects, as well as how, to people with often chaotic lifestyles.
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Identifying ‘what works’ Finally, as mentioned above, there remains considerable scope to further understand ‘what works’ in financial services for homeless people. Only a couple of studies of note exist. In a review of financial education provision for the DWP, England and Chatterjee (2005) found effectiveness aligned to how much a programme is tailored to the needs and characteristics of the client group; that take up and retention amongst adults depended on their immediate needs, ease of attendance, trust in providers and environment in which it was delivered; method of delivery and content of courses needed to be relevant and tailored to suit individuals; and that partnership and delivery through intermediaries worked well. A report by Market Research UK Ltd (2004) for Communities Scotland examined different financial inclusion models that involved housing associations, but were unable to determine the most effective, although the role of housing associations as not-for-profit agencies clearly had a role to play. The risks, costs and set up time involved in larger projects were highlighted. Finally some studies also suggest that success is often attributed to the tenacity of individual workers on projects, rather than any one particular model. However, no studies exist that have compared and contrasted the benefits of different financial inclusion models for homeless people.
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References Adams, L. Bunt, K and Bright, D. (2005) Customer Experience of Direct Payment. London, DWP. Anderson, I, Kemp, P.A. and Quilgars, D. (1991) Single Homeless People. London, HMSO. BBA(2000) Promoting Financial Inclusion-The work of the Banking industry. London: British Bankers Association. Barnes, P. (2002) ‘Reaching the socially excluded?’ Chapter in Kober, C. and Paxton, W. Asset-Based Welfare and Poverty: Exploring the case for and against asset-based welfare policies. London: IPPR. Basic Skills Agency (2003) Basic Skills and Financial Exclusion, London: Basic Skills Agency. Betal, D. (2004) Getting a Life: Helping homeless people get back on their feet. London: St. Mungo’s. Big Issue (2000) Out of Pocket: How banking systems fail the poorest. Manchester, Big Issue in the North Trust. Bradshaw, J. (1972) ‘A Taxonomy of Social Need’, in McLachlan (ed) Problems and Progress in Medical Care, Seventh Series, Oxford: Oxford University Press, pp. 69-82. Brown, D. (2004) Financing a Better Future: Five housing associations tackle financial exclusion. Birmingham, People for Action. Burrows, B. (1999) Living in a hostel: You wouldn’t credit it. Money Advice Scotland. Centrepoint (2005) Too Much Too Young. Problem debt amongst homeless young people. London, Centrepoint. Collard, S., Kempson, E. and Whyley, C. (2001) Tackling Financial Exclusion: An area-based approach. Bristol, The Policy Press. Collard, S., Kemson, E. and Dominy, N. (2003) Promoting Financial Inclusion: An assessment of initiatives using a community select committee approach. Bristol, The Policy Press. 49
Collard, S. and Kempson, E. (2005) Affordable Credit: The Way Forward. Bristol, Policy Press. Dane, K. (1998) Making it Last: A report on research into tenancy outcomes for rough sleepers. London: Housing Advisory Services. Dayson, K., Paterson, B. and Powell, J. (1999) Investing in People and Places. Salford, Community Finance Solutions, University of Salford. Dayson, K. (2004) Improving Financial Inclusion: the hidden story of how Building Societies serve the financially excluded. London, BSA. Dodds, L. (2003) Financial Inclusion Newcastle Ltd: Final Report. Newcastle: Sustainable Cities Research Institute, Northumbria University. England, J. and Chatterjee, P. (2005) Financial Education: A review of existing provision in the UK. London, DWP. Financial Services Authority (undated) Helping Young Adults become Financially Capable. London, FSA. Financial Services Authority (2005) Consumer views on proof of identity checks. London, FSA. Fitzpatrick, S. and Kennedy, C. (2000) Getting By: Begging, rough sleeping and the Big Issue in Glasgow and Edinburgh. Bristol, The Policy Press. Gillinson, S., Lownsborough, H. and Thomas, G. (2004) Using Life Skills to Tackle Social Exclusion. London: DEMOS. Goodwin, D., Adelman, L., Middleton, S. and Ashworth, K. (1999) Debt, money management, and access to financial services: Evidence from the 1999 PSE Survey of Britain. Working Paper No.8 . Centre for Research in Social Policy. HM Treasury (1999) Access to Financial Services: PAT 14. London, HM Treasury. HM Treasury (2004) Promoting Financial Inclusion. London: HM Treasury. Jones, A., Quilgars, D., and Wallace, A. (2001) Life Skills Training for Homeless People: A review of the evidence. Edinburgh, Scottish Homes. Jones, P. (2001) Access to Credit on a Low Income: A study into how people on low incomes in Liverpool access and use consumer credit. Liverpool, The Co-Operative Bank.
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Jones, P. and Barnes, T. (2005) Would you Credit It? People telling stories about credit. Liverpool, The Co-operative Bank/Liverpool John Moores University. Jowett, S, Banks, G. and Brown, A. (2001) Looking for Change: the role and impact of begging in the lives of people who beg. London: Rough Sleepers Unit. Kempson, E. and Jones, p. (2000) Banking without branches. London, British Bankers Association. Kempson, E., Whyley, E., Caskey, J. and Collard, S. (2000) In or Out? Financial exclusion: a literature review. London, FSA. Kempson, E., McKay, S. and Collard, S. (2005) Incentives to Save: Encouraging saving amongst low-income households. Bristol, Personal Finance Research Centre. Kempson, E. and Whyley, C. (1999) Kept Out or Opted Out? Understanding and combating financial exclusion. Bristol, Policy Press. Kennedy, C., Neale, J, and Barr, K. and Dean, J.(2001) Good practice towards homeless drug users: Service Provision and practice in Scotland. Edinburgh: Scottish Homes. Khan, H. and Jones, D. (2001) ‘Financial Exclusion and Homelessness: Focus group sessions with homeless people in Glasgow and with professionals working in the homeless field.’ Edinburgh, Social Enterprise Institute, Herriot-Watt University. Leyshon, A. and Thrift, N. (1997) ‘Financial Desertification’ in Rossiter (ed) Financial Exclusion: Can mutuality fill the gap? London, New Policy Institute. Lloyds Bank TSB (undated) Community Banking Partnership Models. Lownsborough, H, Thomas, G. and Gillinson, S. (2004) Survival Skills: Using life skills to tackle social exclusion. London: Demos/Crisis. Lownsborough, H. and Hacker, E. (2005) What obstacles do homeless people face when it comes to finding and sustaining employment? London, Demos. Lownsborough, H. (2005) Include Me In: How life skills help homeless people back to work. London, Demos/Crisis. Market Research UK Ltd (2004) A feasibility study intot he application of a community banking initiative model for housing association tenants in the north and east of Scotland. Edinburgh, Communities Scotland.
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Marshall, N. (2004) Financial Institutions in Disadvantaged Areas: a comparative analysis of policies encouraging financial inclusion in Britain and the United States. Environment and Planning A. 36 pp241-261. NACAB (2001) Summing Up. London: National Association of Citizens Advice Bureau. NACAB (2005a) Financial Literacy: a guide to activities in the CAB service. London, NACAB. NACAB (2005b) Front-line Financial Capability Interim Project Report (Feb-Apr2005) Unpublished. New Economics Foundation (2004) Community Banking Partnership: a joined up solution for financial inclusion. London: NEF/NACUW/Community Finance Solutions and Lloyds TSB. Newcombe, R. (2001) Community Finance Initiatives and Registered Social Landlords. London: Housing Corporation. OFT (1999a) Vulnerable Consumers and Financial Services. London, Office of Fair Trading. OFT (1999b) Qualitative Research into Ethnic Minorities and Financial Services. Appendix 5 Vulnerable Consumers and Financial Services. London, Office of Fair Trading. Palmer (2004) Monitoring Poverty and Social Exclusion 2004. London, New Policy Institute. Pilley, C. (2004) ‘Immigrants and Financial Services: Literacy, difficulty of access, needs and solutions. The UK experience.’ Working Paper 2 Fonazione Giordano Dell Amore, Lombardy, Italy. Pleace, N. and Quilgars, D. (1996) Health and Homelessness in London: A Review. London: The Kings Fund. Pleace, N. (1998a) Single Homelessness as Social Exclusion: The unique and the extreme.Social Policy and Administration. Vol 32, No.1, pp46-59. Pleace, N. (1998b) The Open House Project for People Sleeping Rough: An Evaluation. York: University of York.
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Quilgars, D. and Pleace, N. (2004) Meeting the health needs of homeless people: An effectiveness review. www.healthscotland.com/research/cr. Randall and Brown (2003) Supporting People: Support Needs of Homeless People. London: ODPM. Regan and Paxton (2002) Beyond Bank Accounts. London: IPPR. Rossiter (ed) Financial Exclusion: Can mutuality fill the gap? London, New Policy Institute. Scottish Homes (2001) Financial Exclusion: the potential role of Registered Social Landlords and Scottish Homes Edinburgh, Scottish Homes. Singh, P. (2005) No Home, No Job: moving on from transitional spaces. London: Off the Streets and into Work. SITF (2000) Entreprising communities: Wealth beyond welfare. London: Social Inclusion Task Force. Sheridan, M. (1991) Assets and the Poor: a new American welfare policy. M Sharpe Publsihers. Sheridan, M. (2002) ‘>From a social welfare to a social investment state’. Chapter in Kober, C. and Paxton, W. (2002) Asset-based Welfare and Poverty: Explroing the case for and against asset-based welfare policies. London, IPPR. Social Exclusion Unit (1998) Rough Sleeping-Report by the Social Exclusion Unit. London: Department of the Environment, Transport and the Regions. Stegman, M. (2003) Banking the Unbanked: Connecting residents of social housing to the financial mainstream. In Housing and Social Change: an International Perspective. London: Routledge. Wallace, A., Croucher, K., Quilgars, D. and Baldwin, S. (2004) ‘Meeting the Challenge-Developing systematic reviewing in social policy’ Policy and Politics32 (4) pp455-470.
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Appendix 1 Literature Review Methods Databases searched: SIGLE
Business Source Premier
ASSIA
Econlit
Social Care Abstracts
Google.co.uk
Social Science Citation Index
Scholar.google.com
Websites searched: ABCUL
Housing Corporation
Barclays Bank
Inside Housing
Big Issue
JRF
Broadway
Money Advice Scotland
CDFA
NACAB
Centrepoint
NatWest
CHANGE
New Economics Foundation
Community Finance Solutions, University of Salford Co-Operative Bank
New Policy Institute ODPM Personal Finance Research Centre
Crash Index
University of Bristol
Crisis
Royal Bank of Scotland
DTI
Royal Mail
Ethical Performance
SAFE
Fair Finance
Social Investment Taskforce
Fairbridge
St. Mungo’s
Financial Services Authority
The Passage Daycentre
HM Treasury
Triodos Bank
Homeless Link
Unity Bank
Homeless Pages
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Keywords A combination of the following were used to search the various electronic databases and websites: Homeless* AND financial exclusion or inclusion OR banking OR saving OR budgeting OR credit unions OR financ* services OR microfinance
Information was requested from the following organizations: (Many thanks for helpful responses received). ABCUL
GE Capital Financ
Barclays Bank
Inside Housing
Big Issue
Ipswich and Suffolk Credit Union
Broadway
Leeds Credit Union
Centrepoint
Move-On
CHANGE – London and Quadrant
NatWest/Bank of Scotland
Housing Association
New Economics Foundation
Community Finance Solutions
Personal Finance Research Centre
Co-Operative Bank
SAFE – Toynbee Hall
Crisis
Scottish Council Single Homeless
Crisis
Shelter
Esme Fairburn
St. Mungo’s
Ethical performance
The Passage
Fair Finance
Triodos Bank
Fairbridge
Unity Bank
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Appendix 2 Examples of Interventions Organisation Move On 52 Enoch Square, Glasgow. G1 4AA
Type of intervention Life Skills
Fairbridge
Life Skills
Crisis Skylight (Pathways)
Life Skills
Scope of work Training & development programme; Literacy & numeracy; housing education to senior secondary pupils and care leavers; Mentoring; Money & debt advice; Long term intense community support Managing money is part of course delivering a programme of life skills training to excluded young people across Fairbridge's 13 centre's across the Uk. It delivers 42 courses per annum. Fairbridge West specifically deals young people in education or not in training work or full time education or excluded from school in Bristol area.
Target group
Funders/Partners
Homeless
Scottish Executive, Scottish Enterprise, Edinburgh City Council & Glasgow City Council
Disadvantage d young people age 13-25
Course financially supported by Royal Bank fo Scotland/Nat West. Also Fairbridge West project part of FSA young adults working group part of National Strategy Financial Capability.
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Organisation CHANGE Project Osborn House Osborn Terrace London. SE3 9DR
Type of intervention Financial inclusion
Scope of work
pan-London community finance RSL tenants inititiative includes in various boroughs: credit union; micro-business lending; money management advice; signposting debt advice and affordable credit.
SAFE (Services Against Financial Financial Exclusion) inclusion Toynbee Hall
Provides financial education, a debt support programme, improved access to financial services (basic Bankd accounts), and an incentivised savings programme (Savings Gateway Pilot).
JVCo/ Places For People Unit 3 Gorton District centre Garrat Way Gorton Manchester
Savings Gateway Pilot.
Financial inclusion
Target group
Funders/Partners Consortium of RSLs (Hyde, Family, EastThames, Galleons, Wandle, Circle 33, Metropolitan, L&Q, Affinity, Orbit Bexley, Notting Hill, Horizon, Threshold, Genesis, Southern); Esme Fairburn, City Parochial Foundation; Housing Corporation; European Union; Barclays Bank; Lloyds TSB. A number of funders support various strands of work including HM Treasury and DfES Community Finance and Learning Initiative for the Savings Gateway; NatWest/Royal Bank fo Scotland, Co-Operative, Halifax Banks are also involved; Peabody RSL.
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Organisation The Passage Day Centre/Barclays Bank Birmingham Community Banking Partnership
Type of intervention Financial inclusion Financial inclusion
Grand Central Savings Financial Scheme inclusion
Leeds City Credit Union 2nd Floor Westminster Building 31 New York Street Leeds LS2 7DT Wester Hailes Community Banking Agreement
Financial inclusion
Financial inclusion
Scope of work Support for clients to open Basic Bank Accounts The CBP aim is to provide financially excluded households with a seamless service offerings savings, affordable loans, access to basic banking, bill and debt repayments, money advice and support, Savings scheme for Big Issue vendors in Scotland operated through the Big Issue and employs one former vendor. Vendors have saved severhundred pounds and can have beenfits or wages paid into it. Community-wide credit union offering full range of financial services to residents of city. Offers savings accounts to Big Issue vendors.
Increses access to bank accounts, improving financial literacy, developing savings and loans schemes, support for entrepreneurship
Target group
Funders/Partners
Homeless Any financially excluded people.
Homeless
Living or working in Leeds including Homeless people Local residents
New Economics Foundation, Barclays Bank, Lloyds TSB, Royal Bank fo Scotland/NatWest, Esme Fairburn Foundation, the Monument Trust, , the Adventure Capital Fund, Tudor Trust and Northern Rock Foundation. Bank of Scotland, Big Issue in Scotland
Works with Big Issue to provide savings account for vendors, and when housed can become full members.
Halifax Bank of Scotland.
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Organisation
Type of intervention
Scope of work
Target group
Funders/Partners
and for local community organisations
Financial Inclusion Newcastle (FIN) Ltd
Financial inclusion
Face 2 Face With Finance
Financial Education
Citizen's Advice
Financial Education
Improve savings and loans and support the credit union network in deprived areas of city. Provides money and debt advice with CAB, financial awareness, special loans to assist residents out fo high interest lending, access to basic bank accounts, and support for those wishing to take up self-employment Introduces personal finance and teaches money management and enterprise skills to 11-16 year olds, using classroom activities, work experience, teacher placements and a website for teachers. Delivered by teachers as well as specially trained Royal Bank or Nat West staff. Based in Oldham, Basildon and Norwich. Is developing ways of delivering financial traning to front-line practitioners working with young adults, such as Connexions
CAB, City Council, Newcastle College
Secondary school children
NatWest/Royal Bank of Scotland through their Financial Capability Centre at Warwick University. Recived quality mark from the personal finance education group (pfeg) charitable trust funded by FSA.
Professionals working with young adults
Pilot of Young Adult Working Group National Strategy for Financial Capability under FSA.
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Organisation
Type of intervention
Scope of work
Target group
Funders/Partners
staff, youth and social services, RSLs, and youth charities.
www.moneybasics.co. Financial uk Education
Website to help people of all ages understand money and finance
Financial Skills for Life Financial Education
Citizens Advice new national financial literacy project. Working in 9 CAB to deliver face to face personal finance education Aims to explore innovative ways of 16-25 year olds Edinburgh City Council, Scottish delivering debt advice to young in Edinburgh Executive. people. Includes facility which enables young people to contact advisor by text-messaging and a dedicated advisor who can travel to 'young'
Young Person's Money Financial Advice Project Education
Anyone
Partnership between Credit Action, the Consumer Credit Counselling Service and GE Consumer Finance, a provider of consumer credit. Working with TRB and Credit Action to develop 9 money management modules including introductory sessions on different financial services and the financial aspects of different life events. Working with Prudential plc.
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Organisation
Type of intervention
Scope of work
Target group
Funders/Partners
venues across city
StreetCred Rochdale
Credit Union
Street UK www.street-uk.com
Community Development Finance Initiative
Fair Finance
Community Development Finance Initiative
PEARLS pilot credit union providing Barclays Bank. affordable loans 12.68%, as opposed to 177% APR local residents were formally paying. Pearls is a business planning and financial modelling tool designed to help credit unions be strong financially viable organisations. National organisation offering Micro-entrpre Esme Fairburn, New Economics micro-business lending being pilotted neurs in Foundation, Lloyds TSB Bak, mainly in the West Midlands. disadvantaged Community Finance Solutions communities. (Salford), National Association of Credit Union Workers. Provision of affordable loans to individuals and small businesses. Grown from netwrok of community organisations, housing associations and private sector partners. Builds pon work pioneered in debt advice by The Environment Trust and moves towards creating inteegrated financial services for excluded communities.
Environment Trust; NatWest/Royal Bank fo Scotland, Barclays.
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Type of intervention East End Micro-Credit Community Consortium Development Finance Initiative Organisation
Portsmouth Area Regeneration Trust
Community Development Finance Initiative
Adventure Capital Fund
CDFI funding
Scope of work
Target group
Funders/Partners
Provides credit and advice to excluded people who want to start-up a business. Active in Tower Hamlets, Waltham Forest, Hackney,
Works with Street Cred and Accounts 3 Womens Consultantcy Services and is sponsored by a range of funders that include: EU, Neighbourhood Renewal Unit, Dti, Nat West, Esme Fairburn, CHANGE, Deutsche Bank, SRB and Wakefield Trust. Offers loans , financial advice, Local residents EU Social Fund, SRB, hamshire cheque-cashing service, direct debti TEC, City Council, Portsmouth services, loans and financial advice to HA, Lloyds TSB. small businesses, repair and improvement loans to low-income homeowners. The fund is set upto provide Funding to New Economics Foundation, invrestment for community CDFIs Development Trust Association, enterprises, to accelerate growth and Scarman Trust and Local create sustainable institutions for Investment Fund. long-term community renewal.
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