As Michael Sheen's Secret Million Pound Giveaway is set to air on Channel 4, Professor Martin Coppack explores our relationship with credit, debt and the poverty premium. Professor Coppack said:
“Everyone needs credit at some point in their lives, but this is especially the case when you’re on a low or unpredictable income, and when you’re likely to have less savings. Life happens… the car breaks down which you need for work, the kids have outgrown their school uniform quicker than you thought. You lose your job. Overall a quarter of adults have less than £100 in savings, so this is a real issue. The other issue is that many people just don’t have enough income and are in negative budgets. Simply not enough money to survive, including people in work. Here people are turning to credit just to get by. For example, at the end of 2023, 15% of adults had borrowed to cover daily living expenses in the last four weeks.
“But what happens if the market doesn’t want you? What if you’re too high a risk? What if you’re too costly to serve? You are charged more or excluded. In a competition driven market, companies naturally design to make profits. They’re not charities. The question is, what do we do about this when it comes to those things none of us can do without, such as affordable credit.
“As a society we have some hard choices to make. This is where social policy must step in to drive change. Our own latest research on financial inclusion, in partnership with the Financial Inclusion Commission, demonstrated just how high a priority affordable credit is for people struggling with their finances. And with the newly created government-led Financial Inclusion Committee now in place there is a real opportunity to look at how we ensure those with the least can access credit at an affordable rate, alongside other essentials such as insurance.”
