The Relationship between Financial Exclusion, Health, Poverty & Wellbeing (3)

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The Relationship between Financial Exclusion, Poverty, Health and Wellbeing | 2014 | Victoria Mackay-Parkin

The Relationship between

Financial Exclusion, Poverty,

Health and Wellbeing

Victoria Mackay-Parkin

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Contents

PAGE NO.

1. Introduction 3-6

2. Health and Wellbeing as a Factor of Financial Exclusion and Poverty 7-9

3. The Effect of Financial Exclusion and Poverty on Health and Wellbeing 10-13

4. Conclusion 13-16

5. Recommendations 16-17

6. References 17-20

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Introduction

Coming at a time where the bite of the recession is still being felt by the majority, when 1 in

5 citizens live below the UK poverty line, and during the largest welfare benefit reform since

the 1940’s, this paper investigates the relationship between financial exclusion, poverty,

health and wellbeing.

The links between poverty and ill-health are well established and it is known that people

with a long term ill-health problem or disability are more likely to be living with a low

income or in poverty (The Poverty Site, 2009). Current evidence also shows that the health

inequality gap is widening - income inequality has risen in each of the last three years and is

now at its highest level since a comparable time series began in 1961 (Brewer M, Muriel A,

Phillips D and Sibieta L, 2009). What is less well known are the root causes of poverty, and

how financial exclusion can play a significant role in the creation and exacerbation of

poverty.

The issue is also an important one for government. Financial exclusion has long been

recognised as an area of disadvantage that bears a cost for both the individual and broader

society (Resolution Foundation, 2008), but increases in the numbers experiencing poverty –

particularly food and fuel – also comes with a price tag. Health conditions and disabilities

are worsened, and new ailments manifest themselves putting a strain on the already

stretched UK health care system. Foodbank usage is at an all-time high (Trussell Trust,

2014), up to one third of the UK population rely on credit to bolster their income (Payplan,

2014), and for 9 million of these people, that credit has become serious problem debt

(thisismoney, 2013).

This paper seeks to explore the impact health and wellbeing can have on levels of poverty

and financial exclusion, but equally, it examines how poverty and/ or being financially

excluded can have a detrimental effect on a person’s health and wellbeing.

The essay questions whether enough is being made of the research available, and whether

the agendas are joined up at a strategic level so as to make a lasting impact.

FINANCIAL EXCLUSION

The term ‘financial exclusion’ first appears in 1993 when a group of geographers concerned

about physical exclusion from banking services reference it as part of their work (Leyshon

and Thrift, 1993). In 1999, financial exclusion starts to be used in a broader sense to refer to

people who have reduced access to mainstream financial services (Kempson and Whyley,

1999).

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European Social Watch state that a person is considered financially excluded “when they

have no access to some or all of the services offered by mainstream financial institutions in

their country of residence, or do not make use of these services”. The study ‘Financial

services provision and prevention of financial exclusion’ (Réseau Financement Alternatif ,

2008) establishes a list of basic financial services considered essential to daily life: a bank

account to receive income; a transaction account to make payments from; a savings

account to store money; and access to unsecured credit to manage temporary cash

shortages and unexpected expenses.

FINANCIAL INCLUSION

As one might expect, financial inclusion is the opposite of financial exclusion.

Transact, the National UK Forum for Financial Inclusion, defines it as: “a state in which all

people have access to appropriate desired financial products and services in order to

manage their money effectively. It is achieved by financial literacy and financial capability on

the part of the consumer, and access on the part of the financial product, services and

advice suppliers.”

In 2004, the Government’s Child Poverty Review highlighted financial exclusion as a

significant contributor to child poverty. Later that year, alongside the Pre-Budget Report,

the Treasury published ‘Promoting Financial Inclusion’, a strategy document that focused on

three key priorities:

• Increasing access to banking services

• Improving access to affordable credit

• Increasing the supply of free face-to-face money advice

In 2005, the then Labour government announced a Financial Inclusion Fund (FIF) to support

the strategy, and a Financial Inclusion Taskforce was established to monitor and evaluate

the progress of the government’s financial inclusion priorities. Based in HM Treasury and

Chaired by Brian Pomeroy, the Taskforce was an independent group of financial inclusion

experts, assisted by a team of civil servants. The Financial Inclusion Fund ran from 2005 to

2011 and provided the sector with £250 million pounds.

POVERTY

The UK is the world's six largest economy, yet it is reported that 1 in 5 of the UK population

live below our official poverty line. Whilst poverty does not automatically mean a person

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will be financially excluded, it is recognised that it is a significant factor that will increase the

likelihood of being so. Poverty can be described as ‘absolute’ or ‘overall’, but it has more

recently been accepted that poverty depends on the place and time that you live. Peter

Townsend, a leading sociologist defines poverty as follows:

“Individuals, families and groups in the population can be said to be in poverty when they

lack resources to obtain the type of diet, participate in the activities and have the living

conditions and amenities which are customary, or at least widely encouraged and

approved, in the societies in which they belong”.

Whilst UK government measures take 60 per cent of median income as the poverty line,

Townsend’s ‘consensual’ method uses public opinion to set minimum standards and allows

for choice in lifestyles. A poverty threshold is then identified by relating to income those

who lack necessities because they can’t afford them (rather than from choice) and so

defines poverty in terms of both multiple deprivation and income.

Two specific sub-categories of poverty this report touches upon are that of fuel poverty and

food poverty.

Fuel Poverty

A household is said to be fuel poor if it needs to spend more than 10% of its income on fuel

to maintain a satisfactory heating regime, usually 21 degrees for the main living area, and 18

degrees for other occupied rooms. This measurement is set to be changed by the current

government but most existing statistics refer to this definition.

There are recommendations from the World Health Organization (WHO) to keep indoor

temperatures above 18 degrees, but there are also some critical thresholds around

acceptable temperatures in relation to health (Collins KJ, 1986). For instance, the longer an

individual is exposed to cold temperatures, the greater risk of harm to health. The impact is

exacerbated for vulnerable individuals, and the colder the temperature, the greater the risk

of harm:

Temperatures that are lower than 16 degrees appear to impair respiratory functions.

Temperatures below 12 degrees place strain on the cardiovascular system.

Temperatures below 6 degrees place people at risk of hypothermia.

Not only do low temperatures and cold homes aggravate exiting conditions, in extreme

cases they can actually result in death, especially in older people. This is commonly referred

to ‘Excess Winter Deaths’. Each year around 20,000 more people aged 65 or over die in

winter months than other months. Respiratory problems, cardiovascular issues and

hypothermia are very often the underlying cause or a contributory factor to these deaths.

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Food Poverty

The Department of Health has defined food poverty as “the inability to afford, or to have

access to, food to make up a healthy diet.” Under this definition the drivers of food poverty

are low incomes and high and rising food prices. It also incorporates other non-financial

barriers to a healthy diet, which include a lack of awareness of what constitutes a healthy

diet, not having the skills to prepare healthy food, or being unable to access sources of

healthy food because of mobility problems or because it is not available locally (Department

of Health, 2005).

The impact of a poor diet on health is well documented. Yet it is only in the past few years

that the immense contribution it makes to poor health has been quantified: poor diet is

related to 30% of life years lost in early death and disability (Press V, 2004). Poor diet is a

risk factor for many of the UK’s major illnesses and contributes to:

■ almost 50% of coronary heart disease deaths (Yusuf S, Hawken S, Ounpuu S et al, 2004)

■ 33% of all cancer deaths (Doll R, Peto R, 1981)

■ increased falls and fractures in older people (Vellas B et al, 1986)

■ low birth weight and increased childhood morbidity and mortality (Acheson D, 1998)

■ increased dental issues in children (James WPT et al, 1997)

HEALTH AND WELLBEING

For many, health and wellbeing extends beyond the traditional views of health. The World

Health Organisation defines ‘health’ as a state of complete physical, mental and social well -

being and not merely the absence of disease or infirmity. Psychological perspectives

typically describe wellbeing as the presence of positive health conditions and attributes

(Fraillon, 2004).

When considering health and wellbeing in this report, the following definitions are assumed:

Physical health - referring to the efficient functioning of the body and its systems

including nutrition, physical activity, preventative health care, physical safety, sexual

and reproductive health and drug use. Physical disabilities, conditions and

impairments fall into this category.

Mental health - referring to a person’s cognitive and thinking processes, the capacity

to think coherently, express thoughts and feelings and respond constructively to

situations. It includes factors including a sense of autonomy, resilience,

connectedness, self-efficacy and optimism. Learning disabilities and difficulties are

included in this category.

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Health and Wellbeing as a Factor of Financial

Exclusion and Poverty

People with a disability (mental or physical) or in poor health are not automatically going to

experience financial exclusion or poverty, but there is an increased probability. Disabled

people are twice as likely to live in relative poverty as non-disabled people (Parckar, G,

2008) and when the additional costs disabled people face as a result of their impairment are

factored in, figures imply that well over half of disabled people in the UK could be living in

poverty.

A piece of research from the 1990’s (HMSO, 1990) details that on average households with a

disabled member spend £1.40 per week more on fuel, 8Op per week more on services (of

which 46p is on domestic service), 47p per week more on tobacco and £1.80 per week more

on durables. More up to date research focussing specifically on the financial struggles of

families with a disabled child or children references the challenge of managing additional

costs is exacerbated by the constraints on the parents’ ability to work full or even part time

(Social Finance, 2011). Another study reports that parents of severely disabled children do

14 weekly loads of washing, compared with only two for non-disabled children (New

Philanthropy Capital, 2007). If considering the fuel poverty factor, this one area alone will

cause a significant increase in fuel usage and therefore energy bills.

In terms of accessing financial products and services, evidence suggests people with certain

disabilities are also more at risk of being excluded.

Research aimed to help the Payments Council understand the needs and experience of

using payments systems among people over 80 and those living with cognitive, physical or

sensory impairment (Policis, Toynbee, 2012) identifies a number of issues. These include:

physical inaccessibility of ATMs, bank branches and payment terminals; difficulty with text

layout, screen colours and back-lighting for ATMs; lack of standardisation between ATMs;

small and fiddly buttons on payment terminals and ATMs; a requirement to remember PINs

and passwords.

Some of these findings have been echoed in a recent report undertaken for Dosh Ltd, an

organisation which supports people who have a learning disability with their money via

advice and advocacy services. Their report raises concerns that for people with a learning

disability, basic access to banking can be denied:

“The research has highlighted four key issues in relation to this: mental capacity, proof of

identity, access to money and consistency of service and information. Within these, a

number of common themes emerged, notably around lack of clarity about how to reconcile

the inclusive and supportive message of the Mental Capacity Act and Equality Act with the

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security and regulations focus of banking laws. These problems were compounded by the

inconsistency between the service and information received in different branches which

seemed to stem from head office policies not being effectively communicated to, or

implemented in, branches, as well as a lack of guidance and training for all staff.” (Beckford

M, 2004).

Other acknowledged difficulties for people with disabilities or poor health include the

reliance on family members or carers to assist with bill payment, cash withdrawals,

purchasing goods and day-to-day money management. This in itself causes issues as the

individual can expose themselves to financial exploitation. Equally, carer’s, particularly those

who are not family members, can find themselves in the uncomfortable position of being

asked to help assist with personal finances leaving them open to allegations of financial

abuse. A further concern raised by carers is being asked to be purchase goods/ services but

having to wait to be reimbursed. Given many carer’s receive National Minimum Wage, this

can stretch their own limited funds and make budgeting difficult.

Parents of disabled children who cited lack of time as an exclusion issue claimed complex

benefit forms prevented access to certain benefits, particularly the child element of DLA

(Disability Living Allowance) (Social Finance, 2011). Their findings also indicate that lower

income families with disabled children may not be claiming their full entitlement of benefits

when compared to average income families with disabled children. The report does not

offer a reason for the low uptake from this income group, though the complexity of

applications and the fact many benefits have to be claimed online could be factors. Low

income households very often face the additional challenge of digital exclusion (Burton L,

2013), and literacy can be an issue too (NIACE, 2011) – indeed, poor literacy and numeracy

skills can limit an individual’s ability to gain employment perpetuating the disadvantage and

low income cycle (NIACE, 2013).

The positive effect of incorporating welfare benefits advice into health practices is one area

that has been explored, at least to some degree. In a report produced for NHS Greater

Glasgow and Hyde, the author reviewed a broad cross-section of projects which

incorporated some degree of benefits advice into health settings and delivery services

(Dobbie L and Gillespie M, 2010). The findings were largely positive, but recognised that the

data tended to focus on quantitive outputs as oppose to qualitive outcomes. It did find that

benefit advice was generally well received and uptake increased as a result of the

interventions. If properly tailored to people’s individual needs, for example, someone

diagnosed with a long-term condition will likely have different advice needs at the point of

diagnosis as an in-patient with a short-term health complaint, then it could go some way

towards alleviating the barriers to benefit uptake that many experience.

Savings are a further area in which people with disabilities are reported to have lesser

provision. The majority of disabled people (85%) say they have not saved money during the

last 12 months because they cannot afford to, a significantly higher number than non-

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disabled people (79%) (ONS, 2011). This could be as a direct result of having lower

household incomes (HMSO, 1990). Disabled people are also less likely to experience

problem debt or become reliant on credit, but are disproportionately more likely to turn to

a loan shark - 1 in 10 compared with just three per cent of non-disabled people (Ipos MORI,

Social Institute Research, 2013). Individuals with learning disabilities or diminished mental

capacity can be most at risk, with some such victims describing the loan shark as a friend.

Alongside those with physical health disabilities, mental health sufferers can also find

themselves experiencing financial exclusion or finding financial difficulties being heightened

because of their condition. Mind, one of the UK’s leading mental health charities

acknowledges that many common mental health conditions can make managing money

more difficult because of the symptoms a sufferer can experience. It goes on to describe

some specific ways that mental health problems can affect finances:

If the ability to work is affected there may be a sudden or, possibly, dramatic

reduction in income.

If time is spent in hospital, it may be difficult to keep up to date with financial

commitments.

If experiencing symptoms such as mania, capacity to make financial decisions may be

affected as a sufferer could act recklessly or unwisely.

Depression can result in losing the motivation or the ability to concentrate to keep

control of finances.

If unable to make their own independent decisions, a person could be more

vulnerable to financial exploitation or abuse.

If we consider ‘money advice’ which can include information, advice and guidance in

financial areas including; debt, welfare benefits and money management, then many people

with mental health conditions (in which we include learning disabilities) experience access

difficulties. Traditional advice services like those delivered by, for example, Citizens Advice,

are facing funding cuts which puts increased pressure on already stretched face-to-face

services – yet there is a noted preference for this group to receive advice in person. The

complexity of some personal debt cases, debt solutions or welfare benefits claims do not

always translate easily to telephone or web-based services. This can mean in the absence of

a face-to-face service, some individuals are not claiming the benefits they might be entitled

to, or are going without support for debt. Services like comparing and switching fuel

supplier or bank account are also largely web or phone-based, meaning the financial savings

that can be made through such activities are being missed out on.

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The Effect of Financial Exclusion and Poverty

on Health and Wellbeing

We have touched upon how mental and physical conditions and disabilities can lead to

financial exclusion and increase levels of poverty, but what if we reverse this? Can living in

poverty and/ or experiencing financial exclusion have an impact on a person’s mental or

physical health? Mounting evidence would suggest yes.

Financial exclusion is very often associated with something called ‘the poverty premium’ -

this when an individual or households pays more for goods or services. It happens very

often because an individual does not have access to a bank account and is unable to take

advantage of cheaper payment methods like Direct Debits or online paperless incentives. In

the case of home energy, this results in a household having to use a pre-payment meter. A

2013 report by ‘thisismoney’ states people using pre-payment meters pay on average £19

per week more than those paying by Direct Debit. The high costs associated with pre-

payment meters are therefore a well-documented factor contributing to fuel poverty

(Purcell S, 2014).

As has been referenced earlier, fuel poverty can lead to people living in cold, damp homes.

Such conditions can cause or contribute to the following health conditions :

• Increased risk of hypothermia • Increased respiratory illness • Increased risk of heart attack and strokes

• Underweight infants • Social isolation Other instances of the poverty premium in effect can be evidenced through the accessing of

credit. Many without a bank account, or seeking small loan amounts over short periods, or

with a limited/ damaged credit report are excluded from borrowing from mainstream credit

providers like banks. Such credit is instead obtained via sub-prime lenders who typically

charge an APR (annual percentage rate) upwards of 300%, so the financially excluded not

only end up paying more, they also expose themselves to the increased risk of credit

becoming unmanageable debt due to high repayment costs.

Debt, a growing issue for households in the UK, has a huge impact on mental health and

wellbeing. Nearly half (44%) of people who currently have or have had mental health

problems have severe or crisis debts. Just one in ten people who have never had mental

health problems have severe or crisis debts (survey - moneysavingexpert.com, 2011).

A 2012 survey by debt counsellors Christians Against Poverty found that 68% of those

seeking debt help had been prescribed medication by their GP to help them cope, 75% of

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those in a couple said debt affected their relationship and 40% had considered or attempted

suicide.

In 2013 it was estimated by the Money Advice Service that 9 million UK citizens are

currently experiencing ‘serious debt’. If we apply this figure against the findings of Citizens

Advice who state three-quarters of their debt customers feel their mental health has

affected by their situation, then we might conclude that 6.75 million people are suffering in

the UK as a result. These examples serve to demonstrate how financial exclusion can

contribute to ill health.

On the flip side of debt, having savings and/ or financial products like home contents, health

or life insurance can have a positive effect on health and wellbeing.

‘The Asset Effect’ by Bynner and Paxman (2001), explores the value of owning assets and

having savings – the study concentrates specifically on males and females aged 23 from the

USA. Their findings conclude that having assets at 23 positively effected a number of

outcomes:

Marital breakdown less likely

Less likely to spend time unemployed or experience unemployment

Savings at age 23 relate to positive good health and an absence of depression

People who have assets at age 23 are less likely to smoke at age 33

‘political interest’ is positively related to the possession of assets at age 23, and

there is evidence of more political trust and a commitment to the work ethic

What this report also highlights is that there is very little correlation between the value of

the asset and the resulting positive outcomes. This tells us that it is the presence of an asset,

not its monetary value that matters.

Supporting these findings is a more recent American study which finds that a young person

with their own savings and an account in their own name is seven times more likely to

attend college than a similar youth who did not have an account. A savings account also

increases the chance that they will persevere and do what it takes to get through college.

Those with a savings account opened for them as children are twice as likely as their peers

without savings to have graduated or to be on course to graduate college by age twenty-

three (Elliott, Monique Constance-Huggins, Hyun-a Song, 2012)

In the UK, The Savings Gateway proposal supported these conclusions with a scheme that

would have seen the government match the savings of ‘the poor’ by 50p for every £1, with a

maximum investment of £300. It was due to start in July 2010 following two pilots but was

scrapped by the current coalition government after being deemed too expensive. The Child

Trust Fund, a scheme which gave children two vouchers worth £250 (£500 for children from

low income families) to invest, and enabled friends and family members to invest tax free

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on their children's behalf, was also axed in the same year. To date, nothing at a national

level has been introduced to replace them.

Like savings, insurance products can provide the policy holder with a sense of security and

peace of mind, which can in turn being linked to a person’s health and mental wellbeing.

Both savings and insurance can provide a monetary buffer in times of need, and are a key

determinant of financial resilience. People without such measures in place are more at risk

of making expensive or poor financial decisions if faced with an income shock, this can

include using high cost or illegal forms of credit to make ends meet (Lewis S and Messy F,

2012).

Those diagnosed with potentially life-threatening illnesses like cancer or stroke are also

likely to experience a negative impact on their finances. This could be due to a reduction or

loss of earnings if work has had to be given up or scaled back – both on the part of the

sufferer, and any family carers. As part of their treatment, it is likely that a specific diet,

exercise, hospital visits and a warm home are recommendations to aid recovery – all of

which can add significant financial pressure to potentially stretched household.

And it isn’t just newly diagnosed conditions that affect income or heighten levels of poverty,

existing conditions can also be worsened by the effects of poverty or financial exclusion.

Recent Experian data ranking areas of deprivation in England listed the ‘risk of chronic

obstructive pulmonary disease’ (COPD) as one of its key poverty indicators. As the only

medical factor on the list, COPD highlights the strong impact of fuel poverty on chronic

health conditions in England.

COPD, a collection of respiratory diseases including emphysema and chronic bronchitis, is

usually caused by smoking. However, there is also sufficient evidence to suggest that living

in inadequately heated environments can exasperate pre-existing health conditions such as

COPD, indicating a link between COPD and poverty. In 2009 NHS Northeast published

findings that high levels of fuel poverty in the region due to elevated fuel costs is causing

people to live in the cold conditions known to exacerbate COPD (Roger E, Ford C, Sumby P,

2009).

Food poverty is another growing area of concern which can be directly linked with low

incomes and financial exclusion, and has negative health impacts.

According to an independent report commissioned by the current government, low

incomes, unemployment and benefit delays have combined to trigger increased demand for

foodbanks among the UK's poorest families. (Lambie-Mumford H, Crossley D, Jensen E,

Verbeke M and Dowler E, 2013). Cutting out fresh food or skipping meals is also

commonplace as household budgets are increasingly squeezed. A third of the households

consulted in the second Real Life Reform paper reported that they now spend less than £20

a week on food, partly to cope with spiralling gas and electricity bills. This is up from a

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quarter since their previous report in September 2013. The households spent an average of

£2.10 a person each day on groceries, having cut their daily food budget drastically (from

£3.27) since the summer of 2013 (NHC, 2013). However, it is not just those impacted by the

welfare reforms that have changed their eating habits, an IFS report found that household

food purchasing behaviour has changed significantly since the recession with people

spending an average of 8.5% less. Pensioner households, single-parent households and

households with young children saw the largest declines in the nutritional quality of the

foods purchased between 2005–07 and 2010–12 (Griffith R, O’Connell M and Smith K (2013)

So what does this mean for health? Well it will come as no surprise that going without food

or consuming food with a poor nutritional value will have a negative effect. Obesity and

obesity-related illnesses like diabetes are on the rise in the UK. Many families cite

diminishing household budgets on making food choices for their family they know lack

nutritional value or are filled with empty calories – this is especially evident in the school

holidays when children normally in receipt of free school meals have to be catered for all

mealtimes at home (Gill O and Sharma N, 2005)

Low birth weights, dental cavities and a weakened immune system are all linked to

malnutrition, a sure sign of food poverty. A poor diet is also associated with low academic

performance in children as concentration levels wain amongst pupils who have no breakfast

or an insufficient/ inappropriate breakfast. According to a 2005 study published in

‘Physiology and Behaviour’, eating a healthy breakfast in the morning has beneficial effects

on memory and attention, allowing children to more quickly and accurately retrieve

information.

Households experiencing financial exclusion and low income may also find the cost of food

heightened further if they are unable to afford the transport costs to shop at cheaper, large

supermarkets, frequently built out of town. It is well documented that local convenience

stores cost significantly more in comparison, though many families feel they have no choice

but to purchase goods there. Not having access to the internet or a bank account aggravates

the situation as individuals are be unable to take advantage of online discounts, offers and

home delivery services.

Conclusion

Health and Wellbeing as a Factor of Financial Exclusion and Poverty

Physical Health - There is sufficient, albeit limited evidence, that people with a physical

health condition or disability can experience levels of financial exclusion as a result of their

impairment - particularly when it comes to managing money and utilising banking products

and services.

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Many experience difficulty accessing ATMs as the majority are not designed with physical

limitations in mind (though this is improving). A dependence on carers and family members

to help access and manage money can increase the probability of financial abuse. This is a

particular risk for those who struggle with online or telephone banking due its complexity or

poor design, or for those who rely on others to withdraw cash for them.

Results of a 2009 survey carried out by Social Finance cited time as a factor for financial

exclusion. That looking after a disabled child took up a lot of time and didn’t leave much for

financial planning and researching (products and services). This can lead to reactive and

poor decision making, or an oversight in the payment of bills.

The reported higher living costs that many with a physical disability can experience, coupled

with living in a low income household, will undoubtedly have an impact on the lifestyle and

consumer choices an individual can make – although subjective, this could in turn result in

lower levels of happiness and wellbeing. The main reason that disabled working-age adults

are more likely to be in low-income households is because they are less likely to be in work,

rather than because they are more likely to be in low income if not in work. Poverty and

low-income as detrimental factors on health are therefore real concerns. From a financial

exclusion perspective, having low levels of income generally means an individual is less likely

to save or have insurance products in place which can leave them exposed to financial

shocks.

There was no evidence to suggest that a physical health condition or disability affects a

person’s ability to access credit, however, if out of work and reliant on benefit income, an

individual is unlikely to be able to access mainstream credit via the likes of a bank. This

might subsequently force an individual to utilise sub-prime credit sources like door step

lenders, pawn brokers or pay day loan providers.

Mental Health - People suffering from a mental health condition also found themselves

more likely to be financially excluded, though often in different ways.

Certain conditions enhance the probability of a person making rash financial decisions,

experiencing difficulty managing their finances, or keeping on top of bill payments – fuelling

the likelihood of problem debt. Yet debt solutions and accessing debt advice in the first

place can present a huge problem for many, particularly those dealing with anxiety and

depression.

Dementia-like conditions come with other access barriers, namely in the need to remember

PIN numbers and passwords, or keep track of bills and purchases. A reliance on others may

place them at increased risk of financial abuse, or cause them to consider themselves a

victim if certain transactions cannot be recalled.

Learning disabilities or difficulties present their own set of challenges, not least in the

heightened probability of falling victim to a loan shark. Without support, and depending on

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the severity of the disability, some people might experience day-to-day problems with

budgeting and making informed financial choices. The ease of access to credit via online

loan providers can also result in individuals entering into agreements they are unable to

honour or fully understand. This group also reported difficulty in accessing banking services

due in the main to a lack of understanding of Mental Capacity Act and Equality Act by staff.

There was no evidence to suggest mental health is a barrier to financial products, though

the complexity of some products, particularly the policy wording associated with insurance

products can be off-putting to a great many.

The Effect of Financial Exclusion and Poverty on Health and Wellbeing

Financial Exclusion - This report notes that there is very little research available which

specifically draws parallels between health and financial exclusion, far more is written about

poverty, particularly low income, and the impact it has on health and levels of wellbeing.

Debt, which can be a symptom of financial exclusion, is in contrast a well -documented

financial area that has a specific impact on health and wellbeing – particularly mental

health.

Debt can cause significant damage to person’s mental health; the stress and worry of being

unable to make payments, and the added burden of creditors applying pressure and making

recovery threats can cause countless individuals to experience amplified levels of anxiety

and depression. This in turn can result in the breakdown of relationships, absenteeism and

even dismissal from work, weight loss through lack of appetite, and in extreme cases,

feelings of and attempts at suicide. Other pre-existing health conditions are also often

worsened if a sufferer is experiencing the negative mental health effects of debt.

The inability to access bank accounts is cited as the main reason for people falling victim to

the poverty premium. As we have heard, those without a transactional account are forced

into the sub-prime lending market, and have to pay for their energy consumption via costly

pre-payment meters. They are also unlikely to be able to access traditional insurance

products which require the holder to pay premiums by Direct Debit or standing order

leaving them financially exposed.

Not having insurance cover or a savings buffer can not only leave an individual vulnerable,

but can also invoke feelings of worry. Conversely, we have explored that having such assets

not only results in feels of security and wellbeing, but is also linked to a whole host of

positive outcomes, especially in young people.

The uptake of welfare benefits is one area where, if the claimant is successful, income can

be maximised helping to alleviate the effects of poverty. However, the complexity of the

welfare benefits system coupled with the largely digital access route has resulted in many

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going without. The findings in the review carried out for NHS Greater Glasgow and Clyde

evidences the important role that the health sector could play in overcoming some of these

access issues for patients.

Poverty - Putting financial exclusion aside, poverty clearly has the biggest impact on health

and wellbeing. Fuel poverty and food poverty in particular are reported to not only worsen

existing health conditions and disabilities, but are also the direct liked to the development

of new ones. Low birth weight, malnutrition, cerebral palsy, respiratory diseases, heart

failure, stroke, type 2 diabetes, obesity, sudden infant death, and many mental health

conditions have all been linked to poverty – either as a direct or indirect cause.

Worryingly, trends show that the income gap is widening forcing more low income families

into poverty. This will not only have an impact on those individuals affected, but will be

detrimental to the UK economy, potentially increase the country’s welfare bill, and put

added costs and pressure on the advice sector and the NHS – all of which are unsustainable.

Recommendations

1. The first recommendation of this report is to conduct further qualitive and quantitive

research into existing projects and new opportunities for financial inclusion information and broader money advice to be incorporated into the health care

sector. This could be through the training of health care professionals to deliver some aspects themselves, the inclusion of advice services and information in health

care buildings, or a robust referral system allowing practitioners to identify financial needs in patients and refer them to the appropriate specialist service. An example of

the latter in practice is the recently launched ‘prescribe a boiler scheme’ aimed at reducing the health impacts of cold/ damp homes piloted by housing provider

Gentoo in conjunction with local GP surgeries.

2. The second recommendation is to replicate a model like that of the ‘dementia friend’, training volunteers to become locally based ‘champions’ in financial inclusion

with skills to offer information, guidance and signposting to specialist help. A national network of such individuals would help ease the pressure on advice

organisations and other financial inclusion professionals, but would also allow deeper penetration into communities, with a greater likelihood of reaching those in poverty and most in need.

3. As part of their patient offer, Macmillan Cancer Support provides debt and welfare

benefits advice to cancer sufferers and their families . The service is well utilised but is not available in all Local Authority areas. It is recommended that such provision be

made available nationally, and that other charities supporting people with health conditions consider the merits of incorporating money advice alongside their care

package.

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4. The benefits of holding assets, regardless of size or value, is evidenced in a variety of

studies. A number of Housing Associations already promote home contents

insurance to tenants in support of their financial inclusion work. These schemes are generally designed with excluded tenants in mind, offering features like no excess,

low premiums and the ability to pay weekly in cash negating the need for a bank account. A further recommendation of this report is to develop and extend the

target audience of such schemes to include other financially excluded groups , for example, private tenants. A broader range of insurance products should also be

considered, particularly those relating to affordable and accessible options around health insurance, life insurance and funeral cover (according to research by the

University of Bath, 100,000 UK citizens do not have financial provision to cover the cost of a funeral, meaning many families are taking on debt to meet the costs for the

deceased).

5. Developing a savings culture amongst the young, the financially excluded and those on low incomes is very important. Not only does it provide a financial safety net if the unexpected was to happen, it also evokes feelings of satisfaction, s ecurity and general wellbeing. A program in Glasgow which has the potential to be reproduced is that of Glasgow’s Future Savers ‘Starter for Ten’. This innovative scheme will provide every year 7 pupil with a community credit union account so, as adults, they will always have access to an affordable credit source. They will also have £10 deposited to help kick start their savings habit. This is the first scheme of its kind in the UK, and this report recommends other Local Authorities to consider replicating it themselves.

6. Recommendations for banking services mirror those already raised in reports referenced in this paper. They include; developing a means of ensuring the privacy and the security of personal information while delegating payment services; a way to share access to banking to enable family members to provide support without account holders ceding control; the flexibility to specify the scope and limit delegation so that individuals are able to tailor delegation to their needs and circumstances, a standardisation of ATM screen information and button layout,

greater number of wheelchair-friendly ATMs positioned at an appropriate height,

options for increased text size and voice activated guidance as standard in all ATMs, developing ways around the challenges faced by those with dexterity and memory or

focus issues in negotiating payment terminals and Internet shopping and banking, clarity about how to reconcile the inclusive and supportive message of the Mental

Capacity Act and Equality Act with the security and regulations focus of banking laws, review of the ID requirements for opening a bank account which continue to prevent

many from accessing services, and further opportunities for appropriate organisations to gain ‘trusted partner status’ with banks which would allow them to open accounts for their clients.

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The Relationship between Financial Exclusion, Health, Poverty & Wellbeing (3)

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