Four million low-income households have poor access to mainstream financial services. People living in poverty pay an additional ‘poverty premium’ of around £490 a year for goods and services.
Social investment is supporting social business models that provide ethical finance, help people buy affordable household items with affordable credit and support small businesses. Revenue is mainly generated by interest and repayments to loans from customers. The Fair by Design initiative which we are currently developing with the Joseph Rowntree Foundation aims to end the ‘poverty premium’ in the UK in the next 10 years.
Social impact evidence in this area has traditionally been light but this is now changing as organisations adopt better measurement approaches. We would like to see better evidence about the wider impact of both financial capability and inclusion. This will help build a clearer understanding of how social investment can best be used alongside other forms of support.
Further information is available on our social issue pages for financial inclusion.