For a “fair” financial system, the banks must give something back

The leaders’ economy debate overlooked society’s most disadvantaged, and their relationship to the b

If this election has a buzzword, it is undoubtedly "fairness", which, along with "change", has been co-opted by all three main parties.

Last night's leaders' debate focused on the economy, covering banker's bonuses, regulatory reform and reducing the Budget deficit.

But what does this actually mean for most people? For all the vague talk of helping small businesses and protecting jobs, there was very little discussion of those now sitting at the bottom of the social and financial ladder, who continue to feel the fallout from a crisis they did little to create.

There are two main issues here. First is the plight of small businesses, many of which are struggling to obtain credit. Just a few months ago, it was reported that RBS, 84 per cent owned by the taxpayer, had failed to meet its target of increasing lending to businesses by £16bn.

The Better Banking campaign points out that some 25,000 businesses a year with viable propositions find it impossible to access credit. Small businesses in the UK have the highest rate of failure of all the OECD countries, largely because of undercapitalisation.

This is not "fair", and if economic growth is to be ensured, lending to small businesses must be a priority. The three main parties have all made nods towards this, but it remains to be seen whether they will go far enough.

Second is an issue that has largely been ignored across the board. David Cameron spoke last night about protecting the "frail" members of our society and Gordon Brown pledged to create jobs, while Nick Clegg argued for a tax system that is "fairer" to those on low incomes.

But what about the millions of people whose income is too low to pay any tax? Between five and seven million people have no access to credit because they don't have a bank account, or any credit history.

These people are disenfranchised, and at risk of falling into a cycle of debt. In January, the Financial Inclusion Centre said 100,000 families had borrowed £29m in total from illegal moneylenders over Christmas. The average amount borrowed was £288, but the average repayment was £820.

Even apart from such illegitimate loans, these families lose an extra £1,000 each year on average, through not being able to set up direct debits or flexible billing arrangements.

The 2010 Budget stated that banks would be legally obliged to provide a basic bank account to all UK citizens, to begin to redress the balance between banks and society's most disadvantaged members. It remains to be seen whether this will be upheld in the emergency Budget published after the election.

The Better Banking campaign is urging the party leaders to implement a series of measures: full disclosure on lending to small businesses, incentives and obligations for banks to take social responsibility, capping the amount that can be charged for credit, and reinvesting 1 per cent of banks' profit for public benefit.

Labour has adopted some of these promises in its manifesto, and the other parties must follow suit. The deep-seated sense of injustice felt by much of the electorate will not disappear, as disadvantaged people and local communities continue to suffer while banks return to profit. From this perspective, splitting banks up, or temporarily capping bonuses, all seem like distant, token measures.

As the banking crash painfully illustrated, the financial sector has roots running deep into every section of our society. The only way that long-term "fairness" can be ensured is if a more reciprocal relationship is created, in which the banks nurture the society that bailed them out.

Follow the New Statesman team on Facebook.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

Getty
Show Hide image

“I felt very lonely”: addressing the untold story of isolation among young mothers

With one in five young mothers lonely “all the time”, it’s time for employers and services to step up.

“Despite having my child with me all the time, I felt very lonely,” says Laura Davies. A member of an advisory panel for the Young Women’s Trust, she had her son age 20. Now, with a new report suggesting that one in five young mums “feels lonely all the time”, she’s sharing her story.

Polling commissioned by the Young Women’s Trust has highlighted the isolation that young motherhood can bring. Of course, getting out and about the same as you did before is never easy once there’s a young child in the picture. For young mothers, however, the situation can be particularly difficult.

According to the report, over a quarter of young mothers leave the house just once a week or less, with some leaving just once a month.

Aside from all the usual challenges – like wrestling a colicky infant into their jacket, or pumping milk for the trip with one hand while making sure no-one is crawling into anything dangerous with the other – young mothers are more likely to suffer from a lack of support network, or to lack the confidence to approach mother-baby groups and other organisations designed to help. In fact, some 68 per cent of young mothers said they had felt unwelcome in a parent and toddler group.

Davies paints what research suggests is a common picture.

“Motherhood had alienated me from my past. While all my friends were off forging a future for themselves, I was under a mountain of baby clothes trying to navigate my new life. Our schedules were different and it became hard to find the time.”

“No one ever tells you that when you have a child you will feel an overwhelming sense of love that you cannot describe, but also an overwhelming sense of loneliness when you realise that your life won’t be the same again.

More than half of 16 to 24-year-olds surveyed said that they felt lonelier since becoming a mother, with more than two-thirds saying they had fewer friends than before. Yet making new friends can be hard, too, especially given the judgement young mothers can face. In fact, 73 per cent of young mothers polled said they’d experienced rudeness or unpleasant behaviour when out with their children in public.

As Davies puts it, “Trying to find mum friends when your self-confidence is at rock bottom is daunting. I found it easier to reach out for support online than meet people face to face. Knowing they couldn’t judge me on my age gave me comfort.”

While online support can help, however, loneliness can still become a problem without friends to visit or a workplace to go to. Many young mothers said they would be pleased to go back to work – and would prefer to earn money rather than rely on benefits. After all, typing some invoices, or getting back on the tills, doesn’t just mean a paycheck – it’s also a change to speak to someone old enough to understand the words “type”, “invoice” and “till”.

As Young Women’s Trust chief executive Dr Carole Easton explains, “More support is needed for young mothers who want to work. This could include mentoring to help ease women’s move back into education or employment.”

But mothers going back to work don’t only have to grapple with childcare arrangements, time management and their own self-confidence – they also have to negotiate with employers. Although the 2003 Employment Act introduced the right for parents of young children to apply to work flexibly, there is no obligation for their employer to agree. (Even though 83 per cent of women surveyed by the Young Women’s Trust said flexible hours would help them find secure work, 26 per cent said they had had a request turned down.)

Dr Easton concludes: “The report recommends access to affordable childcare, better support for young women at job centres and advertising jobs on a flexible, part-time or job share basis by default.”

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland