Why community finance is a lifeline in the wake of a cost-of-living crisis - Lauren Peel

It’s true for former mining villages and industrial towns and the more obviously deprived areas of the county, through to Yorkshire’s tourist magnets and, yes, its county town. Across Yorkshire, there are thousands of adults living in what we refer to as financially vulnerable circumstances.

The term covers a range of situations. It encompasses people with very low incomes, many of whom have been experiencing a cost of living crisis for years, through to those who, in spite of earning what appears to be a healthy household income, find it hard to access the products they need or are struggling to repay debt.

Yorkshire’s largest cities all have higher rates of financial vulnerability than the national 31 per cent average: 42 per cent in Bradford, 38 per cent in Sheffield and 37 per cent in Leeds. Even in York, it’s 27 per cent. Across Yorkshire as a whole, there are 1.47 million who fit the definition of being in financially vulnerable circumstances.

This means it’s harder for 1.47m people to access the right kind of financial support and products, something which is critical in the current climate. It means adults are facing fewer or worse options than ever when it comes to credit: if your fridge or washing machine packs in and you can’t afford the up-front cost, then you’re facing the agonising choice between going without, or going to an exploitative high-cost or illegal lender.

With an estimated 1.1 million already borrowing from loan sharks across the UK, this is already a major concern and there are worries about how much that figure may grow during the current downturn.

That’s why Fair4All Finance is keen to highlight a key source of support you may want to turn to if you’re worried about your finances.

There is already a well-established but often-overlooked community finance sector ready to support – and already supporting - many, including those in financially vulnerable circumstances. UK credit unions now serve around two million members and other community finance firms have more than doubled their customer base in the past few years.

Most of these providers offer savings products, including Christmas savings schemes, enabling you to ensure you can enjoy the festive period without breaking the bank. They may also offer short and longer-term loans which help you spread the cost of unexpected expenses or smooth your income when budgets are tighter.

These organisations can also offer helpful information or resources such as budgeting tools, or benefits calculators. Research shows that a staggering £15bn of benefits go unclaimed each year, meaning many people are missing out on hundreds or even thousands of pounds of income. There are a number of these tools online; have a look and you may be surprised to find what you uncover.

While Fair4All Finance is a passionate advocate for the good work done by community finance providers, we also know that credit is not the right solution for everyone. In fact, it’s a mark of the quality of these organisations that they realise this too, and are more than happy to direct customers to other sources of support where it is more appropriate.

Lauren Peel is head of consumer insights and product design at Fair4All Finance.