Today’s budget outlined a raft of welcome support to vulnerable individuals who may be at risk as a result of the coronavirus outbreak.
Theodora Hadjimichael, chief executive of Responsible Finance, said:
“The Chancellor Rishi Sunak announced a pioneering £500 million hardship fund for local authorities to support vulnerable people in their areas. Our message to local authorities is that responsible finance providers, which work with financially-excluded and vulnerable people and households, must be used to help deliver this fund to where it is needed most.
“Responsible finance providers are ethical lenders which help people unable to borrow from mainstream sources. Commercial lenders, such as banks, are largely unable to lend to the poorest people; and these people tend to be the most vulnerable to income shocks such as that caused by the coronavirus outbreak. Responsible finance providers are trusted within their communities. Acting through the responsible finance network will ensure that the hardship fund reaches those people in real need of support.
“The Chancellor made other welcome announcements, including that statutory sick pay would be available from day one rather than day four, with extra benefits for those in the ‘gig economy’; he announced he would make it quicker for those not entitled to statutory sick back to access benefits; remove the minimum income floor on Universal Credit, and said he will relax the rules on the requirement for individuals to physically attend jobcentre appointments.
But a notable omission in this “invest to create opportunity” budget – and a huge missed opportunity – was the extension of community investment tax relief to apply to personal-lending responsible finance providers. This scheme was devised to stimulate the flow of private finance to support enterprise in the UK’s deprived communities. It has proved effective at attracting investment into enterprise lending Community Development Finance Institutions, however personal lending responsible finance do not currently qualify for access to it. Launching a tax relief for the personal lending sector would support financial inclusion by generating investment for onward lending for responsible finance providers that are competing head-on with high cost credit providers.”
What next?
- Media outlets are welcome to quote Theodora’s comments. If you would like more information or to arrange an interview with Theodora, please contact the Responsible Finance office on 020 7520 9215 or call Jamie Veitch on 07904 272 200.
- Today’s budget included welcome measures of emergency financial support for SMEs and microenterprises vulnerable to an economic downturn as a result of the coronavirus outbreak and Covid-19. But if the Chancellor is truly serious about doing whatever is necessary, he must ask responsible finance providers to help deliver these emergency financial support measures. More here.
- The scale and scope of the UK’s responsible finance sector:
- Responsible finance providers lent a total of £200 million to 40,000 customers in 2019.
- The providers lent £78 million to over 4,200 businesses, creating 3,400 new businesses and creating or saving 8,300 jobs. The businesses they lent to reported an average £320,000 increase in turnover.
- £93 million was lent to almost 400 social enterprises – creating and saving 5,500 further jobs.
- £24 million was lent in 35,000 loans to individuals, saving low income households over £7.5 million in interest payments.
- £3.3 million was lent to over 200 homeowners, enabling people to bring their homes up to a decent standard and to stay in their own homes.
- Responsible finance providers, otherwise known as community development finance institutions, lend to viable but under-served businesses and social enterprises (and to financially excluded individuals).