16 - The myth of easy money: developing financial services that would really help
Published online by Cambridge University Press: 20 January 2022
Summary
Niall Cooper has been National Coordinator of Church Action on Poverty since 1997. He is also co-founder and chair of the Debt on our Doorstep campaign, a network of local and national organisations committed to securing ‘fair finance’ for those currently experiencing financial exclusion in the UK.
We live in an era of fantastically cheap money and easy credit. Unless that is, you are poor. One of the cruellest paradoxes about the use of money within the modern market economy is that those who have least pay most. That is nowhere more true than in relationship to money itself.
As we are all too painfully aware at times, the UK economy is awash with cheap money. Interest rates remain virtually the lowest they have been for decades. Even unsecured loans are available for less than 10% APR (annual percentage rate). Household borrowing now amounts to over £150 billion – greater than the total debts of the 49 ‘least developed’ countries, which inspired thousands to join the Jubilee 2000 campaign in the late 1990s. Is this a sensible way of sustaining demand within an otherwise sluggish economy, or a foolish credit bubble? Clearly, for the majority of UK citizens, credit is now a way of life, and a convenient means of enabling ‘us’ to buy anything from foreign holidays to this week's supermarket shop.
However, my main concern is not the implications of the scale of borrowing on the wider economy, or on the whys and wherefores of over-inflated levels of consumerism, although both are cause for concern. No, my question in relation to the right use of money is quite simple: why should those who have least pay the most?
Ironically, concern about financial exclusion has arisen not because more people cannot gain access to financial services but because use has increased, leaving a minority of people on low incomes behind. (Kempson, 2002, p 9)
There are 13 million people in Britain struggling to exist on low incomes. By that we mean as little as £107 a week for a single person and £188 a week for a lone parent with two children.
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- Information
- The Right Use of Money , pp. 123 - 132Publisher: Bristol University PressPrint publication year: 2004