Lessons from the Financial Inclusion Summit
?Nearly 2.8 million people are in work but living in poverty, according to cross-party think tank Tomorrow’s Company
That’s why 18 months ago it set up a Financial Inclusion Alliance (FIA) made up of businesses, banks, financial services and charities to find out what powers employers have to make a difference.
Throughout 2019 it held a series of roundtable events and innovation labs with key stakeholders to develop a movement where employers could learn about the disparate problem and how to tackle it in their own workplaces.
The result of this was the creation of a report, Serving All: Exploring the role of businesses in developing financial security, wellbeing and inclusion strategies, which came up with a set of recommendations to help employers recognise the signs of in-work poverty and introduce the right financial benefits and tools for employees.
The report was launched at a Financial Inclusion Summit at the City of London Guildhall earlier this year.
The event was attended by more than 200 business leaders and featured a prestigious list of speakers including head of the Roman Catholic Church in England and Wales cardinal Vincent Nichols, CEO of Hermes Investment Management Saker Nusseibeh, and chief economist at the Confederation of British Industry (CBI) Rain Newton-Smith.
The summit explored how easy it is for employees to fall into the poverty zone, how workers can create greater financial resilience and increase personal savings, and the technology and solutions out there to help make work pay.
It’s one thing for successful businesspeople to come together to admit they need to do more to prevent in-work poverty. Another thing entirely is hearing the ‘lived experience’ of it. Presenting this at the summit was Amanda, who works with charity ATD Fourth World to provide insight into the key problems.
She said: “People are told what financial inclusion means to them, but for some it’s when you consider whether to put the heating on or eat. Some people go without eating food so their children can eat, or their children often become isolated for not having the latest fashion.”
Amanda touched on the harmful impact of the media and its positioning of those in poverty as “lazy, feckless, scroungers”. She added: “Financial inclusion feels disempowering and shameful to those of us who live in poverty. It strips away our dignity and humanity and leaves you at a place where you feel there’s no point getting up in the morning.”
The multifarious ways poverty can strike and the range of those affected is paramount to our understanding. Jane Portas, a partner at PwC, spoke passionately regarding the impact a single financial decision can have on someone living within the poverty zone.
She said: “During the school holidays one parent has to drop hours because of the cost of childcare, then having children at home all day puts extra burden on finances as children don’t understand why they can’t have something – they don’t understand the finite nature of money.”
Newton-Smith spoke earnestly regarding her own difficulties in reaching a work/life balance, and how the support of her employer had made all the difference.
She said: “For businesses to be truly inclusive employees need to not live with stress. We have all had times where things have felt on top of us, but I am fortunate to work in a company where I can take time out. It is so much tougher when you have worries about debt and paying rent. We know that this financial stress leads to absenteeism and poor performance.”
In-work poverty is a complicated landscape for employers to understand, and decisions aimed at helping the employees most in need can miss the mark. Portas gave the example of the well-meaning intentions of Greggs, which following the boost in sales from its vegan sausage roll decided to dole out a profit share of £7 million.
This took workers on Universal Credit above the threshold to receive top-up benefits, leaving some people worse off and having to deal with a reduction in income.
Simon Linares, HR director at Direct Line Group, told delegates that employers therefore need to think outside the box when it comes to spotting the signs of in-work poverty and making demonstrable change.
He said: “Money is awkward and poverty is even more so, so we need to look for signals where you wouldn’t expect them. For example, we found out that the week before payday our [free] vending machines were running out of soup. It turned out that some of our employees were having to make a choice whether or not to buy lunch, and that to us was shocking.”
Rounding up the event was CEO of Legal and General Nigel Wilson, who encouraged more firms to step up.
He said: “Too much time is spent on situational analysis and not actions. We need more and better-paid jobs and to invest in modern industries. More businesses are beginning to join a movement that could lead to much greater inclusivity. There has never been so much money available, so let’s step up and deliver real financial inclusion.”
This piece appears in the March 2020 print issue. Subscribe today to have all our latest articles delivered right to your desk