5 - Financial inclusion as financial subjectivity: the case of financial capability in the UK

Summary

I described in the previous chapter how one of the explanations for the widescale defaulting on sub-prime mortgage contracts (the event that triggered the Great Financial Crisis of 2007– 8) was the lack of financial knowledge among those groups that had previously been excluded from this market. Unsophisticated in matters of interest rates, budgeting and risk, vulnerable consumers were held to have signed up to expensive contracts they could not afford.

This chapter explores the capability to access and use financial services as a specific dimension of financial inclusion. While the forms of financial inclusion discussed in the previous chapters focused upon mitigating the exclusion of households and communities through a combination of geography and historical oppression, this chapter addresses attempts to overcome deficiencies of financial knowledge and skills among excluded groups. As I set out in Chapter 2, if microcredit and reverse redlining concerned the expansion of opportunities to underserved groups, this chapter addresses situations where these opportunities are presumed to be already available for consumers; their exclusion arises from their lack of knowledge about how to access, choose between and best utilize them.

The chapter explores these questions through the specific context of the UK under the New Labour (1997– 2010) and Coalition (2010– 15) governments, describing how it is that enhancing financial capability became a central policy objective and sphere of intervention. As noted in Chapter 2, it was in the UK that the concept of financial exclusion was first elaborated within economic geography, a period of academic interest that presaged a concerted policy programme of financial inclusion during the New Labour governments of the late 1990s and 2000s. The broad body of work done in the UK in this period formed a blueprint for financial inclusion research and policies implemented elsewhere in Northern Europe (Carbó et al. 2005: 99), Australia and New Zealand (Chant Link & Associates 2004).

The chapter begins by describing the work of Leyshon, Thrift and others on financial exclusion, moving on to address the specific development of financial inclusion as a key policy objective under the successive New Labour administrations and how this related to previous and ongoing academic research.