Urgent support needed for struggling Britons as report reveals that access to good credit has not improved post pandemic

  • A new report from the cross-party think tank Demos is calling on the government to take swift action to support families struggling to access good sources of credit in the midst of a cost-of-living crisis
  • The Good Credit Index 2022, now in its fourth year, has mapped the geographic variation in access to affordable credit in the UK
  • It finds that low credit scores, high need for credit and lack of access to good sources of credit remain entrenched in certain parts of the UK
  • In response, the think tank is calling on the government to introduce a range of new measures, including bringing forward the benefit uprating to January, tapered support on energy bills and investment in community finance organisations

A new report from cross-party think tank Demos, the Good Credit Index 2022, has found that access to good sources of credit has stalled since the government withdrew pandemic financial support, leaving British families vulnerable to financial difficulty as the cost-of-living crisis worsens.

The research also offers limited evidence of recovery since the pandemic, with credit scores having improved by just 0.66% on average, down from the 2.02% reported last year.

The index reflects entrenched inequalities, with London boroughs such as Westminster and Chelsea topping the table, and areas in the Midlands and the North remaining low-scoring, Overall, the research shows a complex landscape of a “fractured” United Kingdom.

Indeed, the research demonstrates a strong need for good credit in certain areas of London and the South Coast, as well as within the devolved nations. Likewise, in South Wales there are clusters of lower credit scores, termed ‘credit deserts’, such as in Neath Port Talbot, Rhondda Cynon Taf and Merthyr Tydfil.

The need for credit is relatively high across the whole of Wales, as well as Northern Ireland. Scotland is more variable, with some pockets of good access to credit. However, there are still very few local authorities in Scotland with the lowest need for credit.

To combat these challenges, the Good Credit Index 2022 proposes the following government measures:

  1. To bring forward the Autumn Statement-announced benefit uprating to January.
  2. Introduce tapered support on energy bills for those on incomes above the benefits threshold.
  3. Invest in community finance organisations at the local level, particularly in areas we have identified as ‘credit deserts’.
  4. Ring fence spending on services that support financially vulnerable individuals, including debt advice, vouchers for food and energy, or support with housing and work.
  5. Organisations like the ONS and FCA to collect data on the use of online credit at a local authority level

Dr Kate Harrison, Lead Researcher at Demos and co-author of the Good Credit Index 2022, said:

“There is a tendency in policymaking to reduce geographic trends to a simple North-South divide, but this year’s Good Credit Index shows a far more nuanced picture, with pockets of traditionally wealthy areas demonstrating a very strong need for good credit.

“While measures like furlough were effective in protecting families during the pandemic, those on lower incomes and not in employment remain extremely vulnerable, particularly as the cost of basics continues to rise.”