Debt on Teesside: Pathways to financial inclusion

1. Description of the programme
2. The study
3. What are the outcomes?
4. Key findings
5. Points to consider

Description of the programme

Reductions in benefits, rising food and energy costs, and an uncertain economic situation are increasing the extent and severity of financial exclusion in some communities. Earlier work by Church Action on Poverty (CAP), Thrive and Durham University highlighted how household indebtedness was linked to high cost credit for low income households in the Teesside area. Many of these households experience financial exclusion, and are without bank accounts, insurance, pensions or an adequate safety net of savings.

This programme aimed to develop a sustainable programme of mentoring on money management.  It aimed to:

• counter financial exclusion through community action and campaigning;
• support positive change away from high cost credit use; and
• help households develop skills and confidence in money management.

The mentees were 24 low income households experiencing unmanageable debt in the Teesside area of North East England. The mentoring scheme provided 64 sessions of mentoring (households received between 1-8 sessions). In addition, the programme held two workshops for mentees, convened two public assemblies to highlight issues of irresponsible lending, and organised campaigns to raise awareness of high cost credit locally and nationally.

The programme initially recruited 10 mentors, comprising volunteers and staff seconded from organisations advising the project. Staff delivered the project within an 'action research' framework.

The study

A researcher, based within the project team, evaluated this project. The research element of the project aimed to explore people’s financial choices, their attitudes to money management and debt, and to assess how the mentoring influenced their financial behaviour and attitudes over time.

The researcher held two small focus groups in the project areas to obtain information on attitudes, views and experiences relating to debt in low income households, which they used to inform the design of the scheme and the evaluation.

They then gathered detailed information from each of the 24 Teesside households taking part in the scheme. A questionnaire was completed by one ‘key contact’ per household during an initial interview covering demographic details, household income, financial service use, attitudes to money matters, health and well-being and household finances (including income, debt and credit) with qualitative data collected via open-ended questions.

The research then held further interviews and workshops with some participants in the programme as it progressed, and mentors gathered data after each mentoring session to record how financial behaviours changed over the course of the programme.

What are the outcomes?

• Financially capability (behaviour)
• Financially capability (attitudes)

Key findings

Scheme outcomes:

Mentoring had some success:

• Some mentees did change their attitudes and behaviour in relation to money management. The authors identified that the main benefit mentees got from the programme was an increased feeling of control over their lives. Many had complex social and medical needs, and mentees felt this improvement over a wider range of problems in their lives, beyond just their financial situation. Some were able to save on their outgoings, move towards lower cost credit and improve their overall financial capability.
• Those who completed the scheme reported improved self-confidence, particularly in decision-making and money management.

Delivering the scheme:

Individual mentoring was difficult to sustain:

• The support required was very intensive, making it expensive and time consuming to provide. The workload for both those taking part in the programme and those acting as mentors was higher than anticipated.

Life circumstances and motivation to change are important:

• For future schemes, the authors recommend targeting households who have a motivation to change. They hope this will reduce dropouts and cancellations, which were a significant issue during this programme; 72 booked sessions were cancelled or missed, compared to 64 delivered.

Group-based schemes could be more successful, especially if they encourage peer support:

• The authors suggest that workshops could be more effective than one-to-one mentoring in future projects. An initial course around financial capability could help develop peer mentoring as well as enhance individuals’ financial capability. Peer support would then be in place after the end of the formal course. This approach would require fewer resources and potentially be more sustainable over time.

Points to consider

• Methodological limitations: The authors note they found it difficult to quantify the achievements of the mentoring scheme, as the households involved were in a constant state of change. The sample size is very small: only six households remained in the mentoring scheme until it ended, so they were the only ones to take part in a final evaluation interview. Of the 24 initially recruited, seven households did not participate in any sessions.
• Applicability: This study would be applicable to anyone with an interest in how mentoring or small group approaches can be delivered to improve financial understanding and money management skills among households in low income, highly indebted communities.

Full report

Debt on Teeside - full report