Fair4All Finance Insights – Research Roundup – February 2023

We know there’s a lot of other research taking place out there and it can sometimes feel a little overwhelming to stay on top of it.

Our new look research roundup pulls together recently released data and research in one space, giving you bite-sized insights on topics relevant to those working in and around financial inclusion.

In February’s Research Roundup we take a look at research from Citizens Advice, Joseph Rowntree Foundation, Fair4All Finance and the Resolution Foundation.

Ellie Suckling, our Social Researcher talks you through the latest research in this video. Alternatively, you can download a copy of the slides at the bottom of this page.

Announcements that the UK narrowly avoided a recession are likely to be unwelcome news for the most vulnerable in society, following the harsh realities created by inflation that reached its highest level in forty years. The decrease in inflation to 10.1% (the Bank of England target for inflation is 2%) is welcomed, but inflation is still highest for those in the lowest income decile (11.7%) compared to the richest decile (8.8%).

The light at the end of the tunnel isn’t seen yet, with estimations from the Resolution Foundations Living Standards report suggesting we are only halfway through this crisis, with two more years to go, as disposable income for non-pensioners is set to drop £1,000 by 2024. 

The government’s implementation of the Energy Price guarantee in 2022 meant Citizens Advice positively reported a decrease in the number of pre-payment meters unable to top up in October 2022, showing that targeted intervention does make a positive impact. This respite was not felt for long, as food price increases over the last 17 months ran in parallel to the increasing energy costs, with food prices peaking in December 2022 at the highest since rate 1977 (17.6%). 

Once again, Citizens Advice reported surging figures with as 3.2 million people unable to find the money to top up their pre-payment meter (a 229% increase compared to last year). Leading to their startling finding that more people in one year couldn’t find the money to top up their pre-payment meter than the last 10 years combined, with one in five of these people literally in the dark, with no gas or electricity to heat their home, or cook meals, for more than two days. 

We are also seeing that mainstream lenders are tightening lending criteria of the market. Credit cards, dominated by owners, are hitting a peak of £1.2 billion November 2022 alone, which is the biggest monthly increase since 2004.

Those on lower incomes continue to have limited access. Home Credit and High-Cost Short Term Credit have declined for several years, but there has been a significant growth in credit unions lending in 2022 (£300 million).

For those no longer using high-cost credit, after tighter regulations, what credit are they using now? The recent abrdn Financial Tracker suggest 4% of UK Adults are using illegal lenders (between 1.6 million of working age adults and 2.1 million of all adults), which may be the only option for those that cannot access credit through the mainstream or affordable space.

Our own commissioned research will soon build on other findings around illegal money lending. 

There is a real financial and social support gap. The affordable finance sector creates a tangible difference and can positively impact people with vulnerabilities, as shown by Fair For You’s health and wellbeing report, highlighting that 67% of customers who borrowed to purchase household items, reported a positive impact on health and wellbeing.  


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