IMPACT20: The National Conversation Report: An interview with Joanna Elson OBE

Joanna Elson

As the number of Britons in poverty reaches record highs, the Chief Executive of The Money Advice Trust reveals the impact on those at the sharp end – and the financial schemes and partnerships that can help.

On financial hardship

Even before the pandemic, millions of people were in financial difficulty. According to The Money and Pensions Service, 11.5 million people had less than £100 in savings to fall back on and nine million people were often using credit to pay for food or essential bills.

On the pandemic

More than 600,000 people have lost their jobs in the UK and 2.8 million people are now claiming work-related benefits – an increase of 126% since the beginning of lockdown. With lots of people already struggling before the pandemic hit, many may find themselves falling behind on household bills or having to take on further credit.

On young people

The under-25s saw the biggest rise in unemployment during lockdown. There are schemes out there to help young people with their finances. Help to Save, for example, was launched by the Government to help low-income earners claiming universal credit or working tax credits to save: it pays a 50% bonus on the amount saved, up to a maximum bonus of £1,200 over four years.

On in-work poverty

I popped into a little coffee shop in the City of London the other day: there was a poster on the wall stating that it was one of only two coffee shops in the area paying its employees the National Living Wage, which is concerning. Employers have a responsibility not only to pay people properly but also have a key role in ensuring employees can access help with their finances, whether that’s debt advice or savings information.

On affordable credit

Having to borrow from a high-cost lender can compound a person’s financial situation, and debt can quickly escalate if people can’t afford to repay as required. To address this, we need to expand access to more affordable forms of credit. There’s a brilliant micro-finance programme in Australia, Good Shepherd Microfinance’s No Interest Loan Scheme, which offers people on low incomes safe, fair and affordable loans for fridges, washing machines and furniture, as well as education and medical expenses. The loan capital is provided by National Australia Bank and the operating budget is supplied by the government. I’d love to see something like that replicated here.

On partnerships

We’re a £12m-turnover organisation with 250 staff. When you think about the amount of people who need our help, there’s no way we can do it all on our own. We rely on partnerships to push for change. By teaming up with Citizens Advice and StepChange, for example, we persuaded the government to prevent bailiffs (enforcement agents) from visiting the properties of people who are already struggling with the financial impact of the outbreak. There’s power in numbers.

On mental health

Half of people in problem debt also have a mental health problem. In England, 100,000 people in problem debt attempt to take their own life each year. That’s why we backed Money and Mental Health’s Stop the Debt Threats campaign, calling on the government to change decades-old laws and make default notices – the distressing letters people receive when they are seriously behind on payments – more supportive and less intimidating. These small changes could save lives.

On racial inequality

Research from IPPR suggests that BAME communities are particularly vulnerable to increased debt and financial hardship as a result of the coronavirus outbreak. This links to wider issues and inequalities such as the ethnicity pay gap but show the importance of policy makers and organisations focusing specifically on these groups when tackling financial exclusion.

To create a more inclusive society, I would...

... encourage companies to co-design new products and services with their users so they’re accessible to everyone. Too often, savings and loan schemes are targeted at a kind of mythical, perfect customer and they end up excluding people who need them.