Using data to understand and tackle financial exclusion in Scotland – summary of a round table discussion in the Scottish Parliament, hosted by Social Investment Scotland (SIS) and the Community Investment Coalition (CIC)
On a particularly cold night on 12th December in partnership with Social Investment Scotland (SIS), the Community Investment Coalition (CIC) brought together a group of high-level stakeholders to discuss how to tackle financial exclusion in Scotland.
In Scotland it is estimated that 940,000 people are living in poverty, with many facing financial exclusion. Household debt levels are rising rapidly, with interest rates and inflation putting further pressure on household income. Our event came at a critical time as it is increasingly important that Scottish decision makers fully understand patters of financial exclusion, and develop effective policy solutions to tackle it.
Hosted by Jackie Baillie MSP, Scottish Labour’s spokesperson for Economy, Jobs and Fair Work, she opened the discussion with welcoming remarks in which she underlined the goal of the evening: to gain a consensus on what needs to be done in Scotland to help tackle financial exclusion, and to agree in concrete terms how the government can help to achieve this.
The evening hosted a vibrant discussion between policy, industry and academic experts. The main debates of the night surrounded the expansion of bank lending data disclosure and clarification of its purpose; the importance of responsible finance providers and credit unions in providing credit to those excluded from mainstream finance; and the overall position of the financially excluded in Scotland.
Keith Brown MSP, the Scottish National Party’s cabinet secretary for Economy, Jobs and Fair Work confirmed the government’s commitment to tackling financial exclusion in Scotland. Jackie Baillie MSP highlighted the impact of bank branch closures, that it wasn’t just those on the lowest incomes that experienced financial difficulties and the importance of political consensus to tackle the issue. Tom Mason MSP, Conservative Party Spokesperson for Financial Sustainability, highlighted the importance of local level data and the need for further action on this issue. Damon Gibbons, Centre for Responsible Credit, and David Dooks, UK Finance outlined the value of the bank lending data disclosure and its use in understanding local patterns of financial exclusion.
Data disclosure and banks
In his speech, David Dooks announced that together with Paul Sissons (Coventry University) he will be undertaking a project which will combine the existing postcode data being released by banks with local demographic data. This will be done to create detailed information going beyond the current ‘stock data’, and support targeted interventions to communities under-served by mainstream banks. David and Paul are hoping that by quarter 1 of 2018 they will be able to release a clearer picture of how the data can be used, and we await this with excitement. This is another step forward in making the UK banking sector one of the most transparent in the world.
In his speech, Damon Gibbons illustrated the huge impact big banks can have in communities, when guided by legislation, by citing a recent article in which Santander in the U.S pledged $11 billion to community reinvestment. This led to discussions about the U. S’s Community Reinvestment Act (CRA), with participants of the round table calling for this to be added back to Scottish party manifestos.
Sustainability and reach of responsible finance providers and Credit Unions
The vital role that partnerships can have, as written about in our blogs and report earlier this year, was emphasised by the different attendees. Scotcash is based on a holistic model that brings together a range of organisations that wouldn’t usually co-locate. Sharon McPherson (Scotcash) spoke about the £5 million in high-cost credit interest payments that they have saved people in Glasgow alone and the significant impact that this could have if scaled up across the country would be huge. She expressed the need for CDFIs to gain access to affordable and patient capital to do this.
In addition, she called for an innovation fund to be set up for CDFIs that would allow them to develop and test online services. Specifically, she wants to find a way for the wraparound services offered at Scotcash to be made available online, and believes this fund will enable them to trial options.
Position of the financially excluded
The ‘poverty premium’ paid by those who are marginalised financially was condemned by Jackie Baillie MSP and Keith Brown MSP in their speeches. Surrounding the current bank branch closures, both pledged to pursue the issues in parliament. Jackie Baillie also spoke of the need for post offices to be maintained in local areas. Douglas White (Carnegie UK) called on the government to step up financial inclusion as a policy priority, so that it sits alongside priorities such as education, health and transport.
Together with work to improve access to data, it is essential for those at the margins of society that stakeholders and government to explore measures which undermine the necessity for credit. In particular, Damon Gibbons explored the reasons why individuals may require finance. Commonly, it is to cover rent and council tax arrears. He believes that new methods and ways of thinking could have real impact on the financially excluded, for example by introducing flexible rent and council tax payments, such as those currently being trailed by a housing association in London.
There was consensus around some key actions that the Scottish Parliament could take to tackle financial inclusion. The outcomes included:
- The announcement by UK finance to improvements to bank lending data;
- Cross-party consensus on the need to do more to tackle financial exclusion;
- The value of bank lending data in understanding access to financial services;
- The importance of the responsible finance sector in providing credit to those excluded from mainstream finance and the significant impact they could have with extended reach.
Responsible Finance will now work with stakeholders in Scotland to agree how to progress these to make further progress in tackling financial exclusion in Scotland.
We are hugely grateful to Jackie Baillie MSP for hosting the event and also to Keith Brown MSP and Tom Mason MSP for speaking. In addition, we thank David Dooks and Damon Gibbons for sharing their knowledge and insights with us. We hope that we can build upon the points raised in the discussions to create tangible outcomes and change for people across Scotland.