2024 Cooperative Case Studies
- May 2024
Why do we need fair finance?
The growing pressures on families in the current economic climate; regional unemployment and reports of a cost of living crisis in the UK with decreased earnings since the financial crisis of 2008; is pushing a growing number of households into financial difficulties.
Trends show that increasing numbers of people are turning to more expensive sources of credit in order to purchase necessities such as household goods. A widening group of residents are becoming trapped within a debt spiral; going from some debt to a significant amount of debt in a very short period of time.
Many of our poorest families are finding they have no choice but to borrow just to pay for the everyday essential costs of living. While many people use a range of means, including hire purchase and credit cards, to spread the cost of consumer goods, people on low incomes must often rely on ‘sub-prime’ credit shops. This has led to a “poverty premium” with the poor paying the most when acquiring credit.
Nationally a significant amount of work is being done to tackle both legal and illegal high interest lending. However, the provision of alternative methods of credit remains low.
Oldham Council is tackling this problem head on by opening a shop, Oldham Essentials, on the high street. Oldham Essentials will provide household essentials (for example, fridges and washing machines) at fair prices on fair financial terms.
Providing fair finance for household essentials:
Oldham Council is providing a ‘fair and accessible’ alternative to the rent-to-buy market for household essentials. Access to “fair credit,” is essential for those citizens most in need within the Borough. Oldham Essentials provides Oldham residents with a much greater choice of where they purchase their household essentials.
Many of our most vulnerable residents do not have bank accounts or credit ratings, reducing their financial options and putting them at risk of financial exploitation.
Oldham Essentials will aim to support Oldham residents in the following ways:
- By ensuring that Oldham residents gain fair access to household essentials at as low a cost as possible
- By helping households gain better control of their long term finances by providing household essentials at fair prices and on fair credit terms. (This will see residents paying back significantly less that if they borrowed from high interest lenders).
- By aiming to reduce debt across the Borough through providing affordable credit people can afford, eliminating high charges and repossession that result from high interest missed payments.
Oldham Essentials brings together Oldham’s co-operative aims whilst providing genuine value to the residents of Oldham with affordable and responsible lending.
Oldham’s Co-operative Approach
As well as providing accessible fair finance for household essentials, Oldham Essentials has a wide range of additional benefits for both residents and the council. This added co-operative value will aim to maximise the benefit of the shop for residents through: –
- Promoting saving and membership of the Credit Union
- Tackling exclusion and promoting financial responsibility
- Supporting Oldham residents build a positive credit history
- Promoting other financial inclusion services
- Providing a method to administer the fulfilment of the Local Welfare Provision Scheme
- Reinforcing the Council’s town centre presence
- Creating employment
The main advantage of our approach is that Oldham Essentials supports the individual, providing fair financial terms and affordable goods. This leaves residents with more money in their pockets, supporting residents to control their spending and minimise their debt.
Through providing residents with more choice of where they can spend their money on the high-street, Oldham Council can support residents to make positive choices with regard to their personal finances.
