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CSJ - How to help the financially excluded?

Last week this column demanded that the coming general election be a social justice election.

We asked what the next government will do to roll back the rise in family breakdown. How will it address the stark correlation between poverty and a poor education? How will it ensure that every child meets their full potential?

What policies will help those struggling with addiction or severe personal debt? And how can we build on a strong employment record to ensure that work always pays and is available for those that are able?

But while politicians wrestle with these problems in their manifestos, this week the CSJ publishes two separate reports specifically aimed at helping those in financial difficulty, which any future government would do well to consider.

The first, Creating a Society Free of Serious Personal Debt, aims for exactly what the title suggests.

Serious personal debt ruins lives.

It undermines mental and physical health, as well as employment prospects. And without work, there is little chance of paying off rapidly accumulating debts. As we have seen time and time again, poverty is both a cause and a consequence of serious personal debt.

The report examines two major policies: the expansion of the existing Help to Save programme, which gives people a savings buffer against income shocks, and the idea of statutory Breathing Space.

Breathing Space makes good sense and has broad support. The idea is to provide individuals with a repayment amnesty from debts and time to seek expert debt advice while putting together sustainable repayment plans and resolving the triggers that caused their problem debt in the first place. It is an idea whose time has come.

The second report we’ve published, Targeted, Timely and Reliable Access to Credit, explores the idea of a ‘back-banking’ system.

Back-banking is an odd sounding name, but the idea is simple.

Basic bank accounts are designed to serve people with bad credit scores and low incomes. But by design they do not allow overdrafts.

To help with cash flow management, these customers need access to a controlled line of credit at manageable rates. Could advances guaranteed by future Universal Credit income fill the gap?

We know too much cheap credit brings its own dangers, for lenders and individuals. But this report discusses these challenges openly and considers the benefits of a proposal, for which there is a clear need.

Both these reports were drawn from roundtables of politicians, our Alliance of poverty-fighting charities, and experts in the field, with the straightforward aim of helping those that need help most. Implementing them would be cheap and relatively uncomplicated.

For a government looking to tackle social injustices, these ideas would be a good starting point.

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