1. Financial Exclusion Topic Report: a presentation to the Scottish Household Survey User Day Keith Hayton GEN 26 th November 2007

2. Structure Defining financial inclusion; Use of SHS to produce the Topic Report; The issues: technical, questionnaire and policy; Recommendations; and Conclusions.

3. Financial Inclusion Defined by the Government as:- “access for individuals to appropriate financial products and services”. Includes the capacity, skills, knowledge and understanding to make the best use of these products and services.

4. A Moving Target The definition has, and is, evolving; Not too long ago inclusion (and exclusion) tended to be very much about physical access to such things as banks and cash machines; Now it includes capacity issues, that is people who have access to products and services but get into financial difficulties; This has implications for SHS as the needs of policy makers are continually evolving; and SHS tends to lag behind.

5. Understanding Considerable research underpinning of the causes and characteristics of those who are financially excluded; Much of this work has been done by Kempson and colleagues from Bristol University; However, the Scottish dimension is often poorly developed and it is unclear if the general GB characteristics apply to Scotland; Despite this many policies have been implemented without there being a clear evidence base; and The SHS analysis was intended to provide this.

6. Financial Exclusion Topic Report Used 4 datasets (1999/00, 2001/02, 2003/04, 2005/06(last 3 quarters); The key questions fell into 3 groups:- –Ones that related specifically to access to financial products and services (HI in 2005); –Ones that related to financial capability; and –Explanatory variables such as income, illness/disability, age, economic/financial status.

7. An SHS Overview Generally we felt that SHS was a superb source of data containing a wealth of information that deserved to be made greater use of; Our criticisms of it are, to some extent, inevitable in that we were looking at its utility from the perspective of a particular research area whilst SHS collects information across a wide range of subject areas; and Despite this our criticisms are intended to be positive.

8. Technical Issues Had some problems in merging the data sets – lost half the sample in some cases; These problems were resolved with SHS support but seemed to relate to the LA identifier being coded differently in different years; The problem emerged as we were considering absolute numbers; Might not have been apparent if the results had been viewed as cross tabulations; and Some problems were never fully resolved (data on bank accounts for 2001/02 related to only half the sample).

9. Questionnaire Issues (1) SHS asks questions of a householder (Person 1) and a Random Adult (Person 2); The issue is that different questions are asked of the different persons:- –Person 1 asked questions about financial products but not about educational qualifications; and –Person 2 asked questions about education but not about financial products.

10. Questionnaire Issues (2) Research on financial exclusion indicates that it affects people at the extremes of the age spectrum; The way the survey respondents are selected (householder or spouse/partner) may mean that the exclusion problems of the young and elderly are not fully identified; and This clearly depends on how the household operates and whether exclusion is seen as a household or individual phenomenon (probably both).

11. Policy Issues (1) Information needed to inform policy has increased; A lack of time series data either as data was not disaggregated in the earlier years (bank and building society accounts), or new questions have been added ((use of credit and borrowing in 2005); Some questions (bank account) are not sufficiently detailed: Interest in the financial implications of cancer:- –Although there are many questions about illness, cancer does not figure explicitly ( Progressive disability or illness).

12. Policy Issues (2) Support for credit unions has been a feature of Government policy for a number of years; Very little information on the characteristics of union members; SHS data showed that members had greater than average access to products and services; Reflects polarity of unions – employee and community based ones; This polarity is not picked up in SHS.

13. Recommendations Ask more detailed questions about type of bank account held (Family Resources Survey); Ask what credit union people are members of; For those who have loans should be asked who provides these – (differentiate between high cost and mainstream lenders); Question on financial advice received and source; and Question on household or personal debt based on national Families and Children Study.

14. Conclusions SHS contains a wealth of data that is freely available to researchers; When looked at from a topic perspective it is very easy to propose that different questions be included; Even without this, the analysis of the data provided a far greater insight into exclusion in Scotland than had been possible before and identified some results that contradicted the GB picture (exclusion being largely an urban local authority characteristic); and Access to the datasets should be promoted more widely to researchers.