There are many definitions of financial inclusion available.
The Scottish Government defines it as:
Access for individuals to appropriate financial products and services. This includes people having the skills, knowledge and understanding to make best use of these services.
Access to financial services is an important part of everyday life. Being financially included helps people to:
- feel confident and make the right decisions about money matters
- open suitable bank accounts
- borrow at a reasonable cost when necessary
- buy insurance to protect family and home
- build up savings for emergencies
- access money and benefits advice from free and reputable services
- stay in their home and out of debt
- make more informed life choices
However, benefits to financial inclusion are wider reaching that just money-related.
It can also help to improve:
- health and wellbeing
- personal development
- job opportunities
These benefits are directly linked to the Angus Community Planning Partnership three priority areas of reducing child poverty; improving mental health and wellbeing and improving accessibility and connectivity.
Our financial strategy will aim to improve the well-being of all our residents in line with these wider priority areas.
Financial exclusion can be the result of a number of factors including financial products that do not meet the needs of low-income consumers, high interest rates and other charges, lack of information, self-exclusion, disability and cultural barriers.
However, it is most closely associated with poverty and low income and tends to be geographically focused, with large numbers of financially excluded people living in areas of high deprivation.
The effect of financial exclusion is exacerbated where people living on a low income pay more – known as the ‘poverty premium’ – the extra costs that families in poverty pay to access essential goods and services, such as fuel, food and credit. This premium arises because those in poverty pay higher costs per unit for particular goods and services.
Angus is a mix of rural and urban conurbations which means there are certain items/services that can particularly impact on our communities. The following sets out some of the more common issues but is in no way exhaustive:
Many Angus homes have no access to mains gas or electricity and so have no choice of service providers available. We have a higher than average elderly population and while there have been some improvements from the big providers, understanding which fuel deal is best for you can be very confusing.
Similarly, many comparison sites require an internet connection and digital skills to access them which can be problematic for many.
Direct debits attract discounts, but you need access to a transactional bank account and good money management skills to make them work.
People on a low income often receive their money at different payment frequencies not suited to a monthly Direct Debit.
Pre-payment meters are often popular among those on a low income to allow control over spending. However, the downside to pre payment meters, which operate on a pay as you go basis, is people on a low income often struggle to afford to heat their homes during the winter months when usage is high.
Residents in rural areas are less likely to live within walking distance of a large supermarket where produce is cheaper. Transport costs and access and availability are also an issue for many of our communities within Angus.
Those who are on lower incomes, or unemployed, are often deemed higher lending risks and so are limited to higher cost credit.
Those living on a low income are often unable to pay for large items up front and so rely on expensive sources of credit usually through two options - take a loan or use hire purchase weekly payment stores or mail order catalogues.
Those without insurance are more vulnerable to risk. Insurance premiums are often more expensive in lower income areas, which tend to also be areas with a higher risk of crime, fire and flooding.
Basic bank accounts
Having a bank account is a pre-requisite for many jobs and Universal Credit claims. Unlike a full current account, basic bank accounts lack access to debit and credit cards preventing residents from purchasing goods online at a cheaper price. They also lack overdraft facilities for short term borrowing solutions.
Access to cash
Rural and lower income areas tend to have fewer fee-free cash machines.
Our aims of a Financially Inclusive Angus are:
- A county where all sectors and stakeholders will show a commitment to work collaboratively to deliver an effective financial inclusion partnership network.
- A county which provides financial education to young people with regard to responsible and affordable money management.
- A county which makes the most of digital inclusion through access to IT. (e.g. basic computer skills training and availability of devices and connection)
- To engage with financially excluded residents through proactive initiatives in the community.
- A county where everyone has access to free benefits advice and debt advice.
- A county where residents have access to appropriate banking, safe savings products and responsible credit.
- A county which promotes awareness of financial harm, financial abuse and scams and the support which is available to those affected.
- A county where partners are committed to eradicating poverty where possible along with an understanding that employment may be a key route out of poverty for some; however in-work poverty, under-employment, illness, disability and caring responsibilities mean this is not an option for all.
- To work in collaboration with other Community Planning partners to support anti-poverty strategies.
Local and national context
The Welfare Reform Act 2012 introduced a wide range of reforms to the benefit and tax credits system.
These reforms have seen the biggest changes to the welfare benefits system in over 60 years and present many challenges.
Some of the reforms have now been fully implemented, such as the Benefit Cap and the freeze on means-tested benefits, others are still ongoing, for example, Disability Living Allowance migration over to Personal Independence Payment and the continued expansion of Universal Credit.
These reforms have presented financial and digital challenges to Angus residents and have resulted in increased workloads for support organisations and advice agencies, there is also evidence of increases in rent arrears as a result of Universal Credit.
Partners recognise that the UK continues to experience one of the most difficult public funding climates in decades. It is estimated that £30m per year will be lost to the Angus economy as a result of the welfare reform changes.
The Social Security (Scotland) Act was passed into law in June 2018 and a new Social Security Scotland agency was launched in September 2018. The new agency will be responsible for the delivery of 11 devolved benefits and four brand new payments.
The Child Poverty (Scotland) Act 2017 was introduced by the Scottish Government. There is now a statutory duty on local authorities and health boards to jointly prepare and publish annual local child poverty reports.
The Angus Child Poverty Working Group has been established to map out activities and contribute to the first of these annual reports in 2019.
The latest Child Poverty figures for the whole of Angus show that approximately 1 in 5 children (after housing costs) are living in poverty. These figures rise to nearly 1 in 3 children living in poverty in the Arbroath and East Lunan ward and almost 1 in 4 children in poverty in the Forfar and Brechin wards.
Partners recognise the impact which financial exclusion can have on child poverty and wellbeing and we will continue to raise awareness of the importance of the responsibility of supporting families to access advice on financial issues.
There is also evidence that helps us to understand the ‘drivers’ of child poverty. These can vary depending on household, health circumstances and life events. The direct drivers of poverty fall into three main categories – income from employment, costs of living, and income from social security.
The Community Plan
The Angus Financial Inclusion Partnership supports the work of the Angus Community Planning Partnership and their vision that Angus is a great place to live, work and visit. Our strategy aims to help make a difference to people’s lives and tackle inequalities along with supporting the community planning priorities which are; reducing child poverty, the improvement of mental health and wellbeing and; the improvement of accessibility and connectivity.
The Scottish Household Survey 2017 notes that 14% of households in Angus whose main source of income is from benefits report they ‘do not manage well’, 39% report they ‘get by’. 18% of Angus residents have no savings and 20% have savings of less than £1000. 99% of Angus residents have a bank or building society account.
We also recognise that there is an ageing population in Angus. It is anticipated that by 2026 there will be a 4.9% increase in 25-44 year olds and a 33.3% increase in those aged 75+. This will no doubt place additional demand on frontline services such as housing, health and social care, community service and infrastructure.
The Angus Financial Inclusion Partnership has identified five themes for their 2019-2022 strategy. These themes are:
Helping residents access the right financial support
- Commit to providing residents with trained front line staff with the skills to signpost and refer onto other services that encompass financial inclusion.
- Ensure that Angus residents know where they can access appropriate debt and benefit advice when they need it.
- Ensure that Angus residents can access appropriate banking, safe savings products and responsible credit and information about financial harm.
- Provide information about financial matters that can be accessed in a suitable format
- Support the work of the Angus Adult Protection Committee by referring financial abuse concerns onto the Financial Abuse Support Team (FAST).
- Promote access to digital skills courses and IT facilities.
Helping residents to maximise their money
- Promote income maximisation and financial health checks as widely as possible through various channels.
- Support, signpost or refer residents who require help to navigate through the benefits and debt advice system.
- Where possible, provide financial inclusion information on their organisation's website.
- Promote access to online benefit calculators for residents who can self-serve.
- Support the work of Social Security Scotland to publicise their new benefits and local service provision.
- Where appropriate, (ie social landlords) continue to work closely with new tenants from the outset of their tenancy so they are financially prepared to maintain their tenancy.
- Continue to work with local credit unions’ to provide residents with greater opportunity to access a wider range of affordable credit and savings opportunities.>
Helping residents save on utility bills
All partners will:
- signpost or refer residents who require help with fuel related advice or to access energy grants.
Our home energy partners will:
- Provide residents with impartial home energy advice to contribute to lowering fuel bills
- Assist households in, or at risk of fuel poverty and provide support and advice with accessing financial assistance, social tariff checks, tariff options, methods of payments, cost comparisons, fuel billing issues and energy efficiency grants.
- Where possible demonstrate efficient use and control of heating in the home.
- Conduct a minimum of one energy awareness campaign each year.
Help residents to access affordable financial products
- Ensure that local credit union services are promoted where possible.
- Promote free and impartial pensions advice through the Government Pension Wise free service.
- Recognise that people on low incomes often face particular barriers in obtaining financial products. leaving them vulnerable to unexpected costs, this is often referred to as the poverty premium.
- (social landlords will promote) access to low-cost Home Contents Insurance for their tenants.
Help increase residents to make financial capability decisions
- Support the delivery of financial education sessions within education establishments to better prepare young people with financial decision making.
- Support the delivery of adult learning classes to build competence and confidence in both literacy and numeracy as we believe this will help residents to make appropriate choices on financial and budgeting matters.
- Promote access to digital skills courses and IT facilities so residents can be empowered and skilled to make financial capability decisions.
Partners will work collaboratively to achieve the aims and ambitions of this strategy.
Partners will commit to:
- Meeting quarterly to review progress.
- Work together to deliver at least one annual event, for example, National Money Week.
- Maintain partnerships with other external colleagues who help contribute to financial inclusion matters.
- Identify any financial inclusion barriers and suggest actions to overcome these.
- Ensuring that residents can access financial inclusion support when they need it.
- Ensuring that their staff are knowledgeable on financial inclusion issues and able to offer or signpost. residents onto appropriate financial inclusion related advice.
- Continually monitor and update our work plan.
- Angus Council
- Angus Citizens Advice Bureau (SCOI)
- Angus Housing Association
- Angus Women's Aid
- Bank of Scotland
- Clydesdale Bank
- Department for Work & Pensions
- Hillcrest Housing Association
- NHS Tayside
- Stewart Ivory Trust
- Voluntary Action Angus
As a partnership we welcome and value contributions and input from a variety of partners. If your organisation would like to discuss joining the partnership please email email@example.com in the first instance.