The poor, are they always with us?
I will respond to all the comments individually, but I must start by thanking those who responded to my transparent cry for some online TLC. I like being complimented as much as the next person but more important, in the context of a busy responsible job here at the RSA, is the reassurance that my blogging isn’t entirely self indulgent.
I am currently on my way to a Governors’ meeting at the RSA Academy in Tipton. I am looking forward in particular to hearing from the head boy and girl and seeing progress on the new building. The Academy is in a disadvantaged area of a poor part of the country and one which has suffered more than most in the recession. So on the train journey up it was powerful to read the latest poverty report produced by the New Policy Institute for the Joseph Rowntree Foundation.
The top line is that levels of poverty, unemployment and repossession have been rising, not just with the recession, but since 2004. Overall poverty levels are now back at 2000 levels, the number of people out of work and looking for a job is as high as it has been since 1997 and repossession rates are back at 1994 levels. How we respond to these figures will, of course, reflect our different beliefs and values, but I wonder whether some important changes over the last decade may shift the terms of the debate?
Those who see inequality as fair, a reflection of merit or effort may find it harder now to argue that the poor are to blame for their plight. First, surely we all accept that there are many victims – particularly among the young – of a recession caused not by the failings of the general workforce but by greed and stupidity among the rich. Second, the last decade and more has seen the gradually tightening of welfare to work rules. Hardly anyone is now exempt from the requirements to look for or prepare for work. Third, a growing constituency among those in poverty is the working poor. According to the NPI report there are now two million children living in low-income working households, the highest figure ever recorded. Yet, all this is despite the redistributive impact of Labour tax and spend policies since 1997 (to be highlighted in the next few days in a report from the 2020 Public Services Trust, based at the RSA).
All of which suggests that the debate we need about the kind of society we want, and what this means for all of us, needs to be braver and more far reaching. To make a fundamental difference may require society-wide commitment and mobilisation. As Professor Stein Ringen recently argued at the RSA, for all its efforts New Labour never explained that all of us – not just ministers and officials – would have to play a role in creating a fairer society. The biggest danger is that, having had a Government which has tried to tackle poverty and inequality, we look at the grim statistics published today and abandon the hope of progress, perhaps accepting endemically high levels of poverty as he inevitable corollary of globalisation. Whether starting from a political perspective on the right, left or the centre I hope RSA Fellows agree with me that this is a danger we should seek to counter in our lectures, our research and in the activities of our Fellows.
We’ve never had it so good – or have we?
I am on my way to speak at the Chartered Institute of Housing conference in Harrogate, but here is a piece I have in today’s Times – would be really interested to hear readers’ views.
The recession will suit the ‘Provvy’ – should we be worried?
One aspect of the recession is the growth of family debt. The Council of Mortgage Lenders predicts that half a million households will fall into serious mortgage arrears in 2009. But, as with all major aspects of the downturn, it is amongst the least well off that the greatest pain is felt.
Poor families were unattractive to banks before the crisis so they’re probably not even allowed in the building now – which is why many poor people fall back on money lending. The biggest provider of what is referred to as ‘home credit’ is a large, profitable and entirely legitimate company: Provident Financial. But ‘the Provvy’, as it is known to its customers, is constantly subject to criticism: For its door-to-door, week-to-week, small cash loans it charges annualised interest rates of up to 200%.
When I was at ippr we had events sponsored by Provident Financial and we came in for concerted criticism from various charities that saw the company’s agents as nothing more than loan sharks who had somehow managed to gain respectability. In contrast, the company itself claims to provide a unique and valued service to customers whom the rest of the financial service industry ignores.
In the end, I decided that the only way I could get to the bottom of this was to spend a day shadowing one of the thousands of Provvy agents as she went on her rounds in an estate in South London.
I was impressed. The collector had been working the same round for years. She knew all her customers well. One mother had just seen her husband put in prison, another was suffering from cancer, a third had agoraphobia. Many people weren’t able to pay that week. The agent accepted their excuses while encouraging them to start chipping away at their loan as soon as possible. One family asked for more money on top of the £50 already outstanding but the agent gently refused, advising them not to get too deep in debt. I ended up a convert. The Provident was providing a unique service to people with difficult lives who desperately needed the personal touch. The customers knew that the £30 loan today would have to be gradually paid back over the following weeks as £35 or £40, but they preferred this to burning up a credit card or begging a bank. The borrowers may have had impossibly tough lives but they weren’t the hapless or ignorant victims often portrayed by the Provident’s critics.
I wrote up my experiences, but it cut no ice with the Provvy’s critics who claimed I had been brainwashed. So, I was fascinated to read a largely unreported piece of research by the Joseph Rowntree Foundation. The Foundation had set out to explore whether a not for profit, credit union type, home loan service could be created with significantly lower interest rates than those charged by the regulated commercial sector. In essence the answer was ‘no’. What’s more, given that, even on the most optimistic of estimates, a not for profit service would have to charge interest rates of 125%, there was little enthusiasm from the third sector to provide the service.
Our social ambition should be for all families to have the economic know how and financial stability to get conventional banking services. But as long as the mainstream banking sector fails to cater for the very poor, and as long as the Government’s Social Fund is too restrictive and bureaucratic for many short term family needs, then the choice is between the Provvy and unregulated loan sharks.
Not all Provvy agents are as good as the one I spent time with, and given what they do and who their customers are, the company deserves and should welcome close scrutiny (not to mention savage mockery [avoid if squeamish]).
But the JRF report (and my suspicion is it will make little difference to the Provvy’s critics) confirms how much easier it is to attack the problems with an existing service than provide a viable alternative.
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