“Rural Financial Inclusion and the Challenges Involved”

1. “Rural Financial Inclusion and the Challenges Involved”

2. Rural Financial Inclusion: Western Isles experience • Financial inclusion • What does it look like in the Western Isles? • Rural barriers • Opportunities • Western Isles – sustainable change • Issues and questions.

3. adapted from the Scottish Executive Financial Inclusion Action Plan. Rural Financial Inclusion: definition (1) Financial exclusion can be defined as the inability of individuals, groups and communities to access and use appropriate and affordable personal, business and organisational financial products and services.

5. Rural Financial Inclusion: definition (2) • What this means for us in the Western Isles; • seeking ways to prevent financial exclusion from arising • providing individuals and households with the advice, information and guidance needed to manage their way out of poverty and stay out • being ‘cleverer’ about the ways we get this help to people and doing so when it is most needed • ensuring access to the products and services needed to underpin financial inclusion • encouraging individuals to plan and manage their finances over the short and longer-term • providing social enterprises with the advice, support and resources required to grow and create new opportunities … it’s not just about poverty and the poor!

6. Rural Financial Inclusion: what does it look like (1) • What are the conditions we seek to change – underpinning issues; • declining population – 10% since 1991; young people in particular • 26% of population is over the age of 60 - 23% for Scotland; more pronounced in smaller communities • over 15% of the population recognised as ‘income deprived’ • unemployment of 3.1% compared to 2.9% in Scotland • … but labour market characterised by seasonality, low income occupations and dependence on declining industries.

7. Rural Financial Inclusion: what does it look like (2) • What are the conditions we seek to change – higher costs;

8. Rural Financial Inclusion: what does it look like (3) • What are the conditions we seek to change – the outcomes; • the average gross weekly salary in 2005 was £380.5 - Scottish average was £411.7 • average Western Isles household income during 2003 was £21,700 - Scottish average of £25,500 • heavier reliance on pensions – 14% of income compared to 7% in Scotland • highest levels of fuel poverty in Scotland, 24% in 2005, more prominent in smaller communities • CAB reported over 6,000 Benefits enquiries in 2004/05 - 45% of these being Disability Benefits/Disabled Person Tax Credit constituting the single most frequent form of enquiry • Money Advice had dealt with over 2,000 enquiries, taking on almost 600 crisis debt cases with £6,000 worth of debt on average

9. Rural Financial Inclusion: rural barriers • choice of and access to services more limited – heightened by concern over post offices • ‘specialist’ support limited – extra pressure on partners such as CAB • both above exacerbated by costs of providing services in most remote and fragile communities • local people not inclined to give information about themselves relating to finance • scale/nature of communities precludes any targeting of services at too narrowly defined social groups • financial wellbeing of young people migrating for education/work, without the support available to their mainland peers is a concern • awareness of good practice in financial inclusion in a rural setting is very limited.

10. Building up a picture of what where we want to be in terms of our people, our organisations and services Mapping current services – where are we strong; what are the gaps; what we can realistically change Building a consensus around the changes we want and testing or pump-priming new approaches using resources over the next two years to lay groundwork for sustainable change. Western Isles: sustainable change (1) Our action planning process… Understanding the nature and characteristics of financial exclusion – people and place

11. Rural Financial Inclusion: opportunities • Western Isles has many natural advantages; • extremely vibrant voluntary sector – can reach most vulnerable groups • services know each other – although we are aware that joint working can still improve • staff involved in delivery as well as strategy – closer to clients • excellent broadband infrastructure can provide a platform for information and new services • new Credit Union central to our plans • understand and comfortable with the need for sustainable developments

12. Support for CU to ensure a focus on financially excluded Enhanced Service Coordination – CAB and Credit Union at core Targeted multi-agency awareness and take-up campaigns Preventative approaches – schools and young people, tools and materials Supported by a Financial Awareness Communication Strategy Western Isles: sustainable change (2) A joined-up approach – key themes:

13. key messages; generic and client specific • information channels e.g. vol sector • information means e.g. broadband TV • build capacity of mainstream staff e.g. health Financial Awareness Communication Strategy • support sustainability of Credit Union • develop inclusion approaches through CU • assess feasibility of social enterprise CDFI • inter-agency awareness and referrals • targeted information campaigns • holistic advice and guidance to clients Products and Services Service Co-ordination • new Credit Union accounts opened and additional savings • vulnerable clients receiving advice/information through trusted intermediaries • people living in most remote communities receiving advice and information • increased incomes. Outcomes Western Isles: sustainable change (3)

14. Rural Financial Inclusion: issues/questions • to what extent are the conditions in the Western Isles different from more urban areas or other rural communities • we have sought to avoid targeting specific communities or groups too explicitly to avoid stigmatisation – is this the correct approach • there is still a need to target vulnerable groups and we will do this through the voluntary sector – is this achievable in other rural areas • what role might information communication technology play in the financial inclusion agenda in rural communities • we see social enterprise as a means of creating growth opportunities in a low income economy and this is part of our agenda – would you agree • what networks exist for sharing practice and learning on rural financial exclusion in Scotland and with other parts of the world?