Social Innovation in Micro-Savings conference Brussels, 10 September 2013 Savings: a political issue

a global network for exchange of knowledge and practice 4,000 practitioners, activists, researchers, institutions, policymakers goal: tackling poverty and inequality through community development approaches (focus on strengths; harnessing, connecting, mobilising people’s innate resources) About IACD

Why does inequality matter?

“A smaller gap between rich and poor means a happier, healthier and more successful population” (The Equality Trust)

Discussions of poverty and inequality tend to focus on income, not wealth Income inequalities are relatively well understood But assets are far more unevenly distributed And yet…

UK:  1 household in 10 now has total assets exceeding £1m  The top 10% of households earns 10 times the annual income of the poorest tenth;  The top 10% own 850 times as much as the bottom tenth (LSE, May 2013) Asset inequality Scotland:

The highest earning 1% own approx a fifth of the UK’s marketable wealth ⅔ of households have less than £3000 in non- housing savings and assets 10-20% of people in UK have no assets at all

Do we care? ‘Building a Better America’ (2011): estimates of wealth distribution and wealth distribution preferences both differed dramatically from actual wealth distribution, irrespective of political stance

Without savings:  Financial insecurity  Vulnerability  Inability to plan or to make choices, e.g. about work or education Why save? With savings:  Ability to weather storms  Opportunity to make life-changing choices  Inclusion in the wider economy / in society  Positive intergenerational change

“Savings institutions are competing in a ‘race to the bottom’ as rates continue to fall across the market…” “Austerity is making everyone hold onto their money… but every £1 you spend £1 that goes towards someone else’s salary... Spending is the only way of fuelling growth…” “There’s no point!” Some views on saving…

The cosy image of credit…

Political and economic structures do not support saving by low-income people:  Savings incentives tend to target higher earners  Austerity measures = less ability to save  Financial institutions not responsive to needs Asset inequality has a disproportionate effect on certain groups Culture of consumerism and popular myth (the “feckless” poor) Why is this a political issue?

Evidence shows that poor people can and do save No direct link: saving and income levels Behaviours can change The process of saving can build: – confidence – skills – social capital – assets: individual, family, community Can poor people save anyway?

An example of community asset- building: Self-Reliant Groups

Savings matter! Poor people can and do save Many (most?) of us want a society where wealth is more equally distributed The process and outcome of saving can be an integral part of building strong communities BUT policies and economic structures must be coherent and support saving by low-income people In conclusion…

Continue the conversation… Theme of Day 3: Wealth International conference 9-11 June 2014 Glasgow, UK

Skype: gill.musk Tel: +44 (0) Thank you!