New research published today looks beyond the welfare debate, and at the untold story of disabled people’s financial exclusion.
Disabled people’s finances are being hit from all sides. Earlier this year, research found that 3.7 million disabled people will lose £28 billion worth of support through the welfare changes – some being hit by six reforms at once. And in the Spending Round earlier this month, the Chancellor announced that there will be an overall cap on social security spending– including the amount spent on disability benefits.
A quarter of disabled people live in poverty, even before the extra costs of being disabled are factored in. The coalition’s cuts and caps will have an acute impact on disabled people and risk pushing more disabled people below the poverty line.
But there is another, largely untold part to the story of disabled people’s finances. In-depth research conducted by Ipsos MORI (PDF 1.2MB) published today examines the financial inclusion of disabled people.
Being financially included means having access to appropriate, affordable financial products and services – and knowing how to use them effectively without incurring costs. It means being able to build a financial safety net through insurance and savings; smooth fluctuations in income perhaps by drawing on credit; manage money and plan ahead. Most of all it’s an essential part of people living independently and being able to partake in all that society has to offer.
The research (PDF 1.2MB) shows that the story of disabled people’s financial inclusion is a complex one. Some disabled people are in a very poor financial situation. Half have relied on credit to pay for the everyday items needed in life, while a similar proportion are struggling to pay their bills. For these, being able to save even occasionally; pay insurance premiums; or make credit card repayments, is unrealistic.
But for disabled people, financial exclusion is about more than just lacking money:
- One in eight (12%) disabled people cannot physically access their bank.
- Some want to protect themselves against financial crises, but feel they are turned down for insurance (8%), or are forced to pay higher premiums, on the basis of being disabled (22%).
- Most (84%) are confident in managing their own money, but do not have access to the right advice, and may be completely in the dark about the welfare changes that will affect them – in 2012 almost half (45%) had never even heard of Universal Credit.
- Some could afford to save a bit each month (17% agreed strongly that they could), or make credit card repayments but without knowing all of the options available to them choose to borrow off family and friends (38%) or ‘do without’ instead (48%).
For these disabled people, it is the role of the government, industry and regulators to ensure equal access to the right financial products. In a series of pamphlets published today, Scope outlines ideas for ensuring financial inclusion for disabled people in three main areas: Credit and Debt, Savings and Insurance and Information and Advice.
The Government wants people to be financially independent – to manage their own money and live their lives with minimal state support. The delivery of these aims so far has involved hastily removing the social safety net from beneath disabled people, without putting in place structures to build up their own financial resilience. For those disabled people who will always need some state support, drastic changes in their benefits mean that poverty, and spiralling debt are a more pertinent risk than benefit traps. For others, becoming more financially resilient is a real possibility – one that could be achieved through access to the right products and advice, and through policies which promote financial independence – and one that the Government would be unwise not to recognise.
View the research: Disabled People and Financial Wellbeing
View the data tables