2.1 Holistic finance and accounting models
Around 14 million people can’t afford one or more essential household goods (PSE UK, 2013). In Britain, 1.5 million people – three times the population of Edinburgh – are excluded from financial services (e.g. unable to get credit or don’t have a bank account).
There are six million ‘just-about-managing’ households, who struggle to live modestly with their earnings. The poorest third of society not only lacks disposable income but financial education in how to manage loans. Better access to micro-credit for this sector would encourage entrepreneurial ventures and help sustainable living issues.
Why it matters
Greater microfinance can save the government, with a study finding that for every £1 invested, around £3 is saved, and up to £7 can be saved in benefits (Kamall). Ethnic minority community groups are discluded from charitable giving, with a study finding only 1% of the 15,000 that exist in Britain are registered with charities and receive just 3% of charitable giving. Barriers to funding include lack of literacy, numeracy and IT skills, time constraints and understanding difficult financial jargon and criteria (Edge Fund).
- Edge Fund Barriers to funding, Edge Fund [Online]. Available on the Edge Fund website [18 August 2017].
- Kamall, S. Friendly Lending: Bringing microfinance back home, IEA [Online]. Available on the Institute of Economic Affairs website (PDF) [18 August 2017].
- Living Standards in the UK: PSE UK first summary report (2013) The Impoverishment of the UK, ESRC [Online]. Available on the Poverty and Social Exclusion website (PDF) [18 August 2017].