A disproportionately high number of people in poverty or on low incomes have limited access to, and skills or even interest in, the internet yet almost all public services and most consumer services are going digital. There is a widening divide that is exacerbating social and financial exclusion as cost-saving and modernisation drives the agenda to move online, whether it improves support and services to vulnerable groups or not. It’s an unstoppable force but is it too much too soon or do the advantages outweigh the negatives? How quickly can we equip disadvantaged consumers with the means to not only keep up but get ahead of their money worries and support needs?
Getting more people online is an issue the government has been concerned about too and its response has been to change the culture of interaction between citizen and State to one more often mediated through technology. Universal Credit (UC) is one of the flagship programmes for raising the bar on digital skills through a ‘digital by default’ (or ‘digital first) approach. As claimants move from six existing benefits (JSA, ESA, Housing Benefit, Income Support and Child and Working Tax Credits) to UC, they will have to do so online and support agencies fear this will create significant barriers and delays to payments for people with least already.
“‘Digital by default’ is a sensible idea in theory, but we have found that the words ‘by default’ are redundant as there is no other option available,’ explains Rosie Phillips, Managing Director of West of England-based DHI (Developing Health & Independence), which works with people with housing and substance misuse issues. They operate in Bath, one of the pathway areas for the ‘full’ UC service. “It poses significant problems for our client group, many of whom do not have the requisite equipment, skill or experience to complete Universal Credit claims online or to keep up with messages sent electronically.
“There is a theory that by removing all non-digital options then people will be forced to learn how to use a computer and this will benefit them in other ways but this is just not our experience. The fact is that learning to use a computer from scratch takes longer than someone can go without any income for, so we just have to do it for them more often than not. We would always prioritise ensuring someone has the money that they need in order to stabilise their lives over developing their digital skills, since without stability problems such as substance misuse cannot be meaningfully addressed.”
Quids in! magazine’s research into the financial resilience of social tenants across the UK recently found that 21 per cent of social tenants have no access to the internet and just 41 per cent have a PC at home. Two thirds (64%) were also working age and not in full-time work and so very likely to move onto UC in the next five years. For them the clock is ticking.
Citizens Advice in County Durham runs a Digital Lounge to help ‘digitally excluded’ people gain skills and get online. Describing the lounge as a ‘great success’, Deputy Chief Executive Dawn Kirsopp explains how the project engages claimants: “Many of the service users were those who will transition to Universal Credit, so we looked at how to set up an email address, complete forms online and develop budgeting skills that they were more prepared for the future.
“Some people have little or no digital skills and lack confidence to attend a classroom-based learning environment. The lounge is a very relaxed place with 3 or 4 PCs and a couple of digital money coaches. The users decide what they want to learn and how they want to learn.”
Coaches on hand in the lounge recognise the challenges presented by UC, such as budgeting for monthly payments in arrears, and address them while people grow their IT skills. “Without the correct support people will struggle to meet the requirements that are placed upon them.”
A Department of Work and Pensions video on how UC’s new registration platform works claims it is as easy as setting up an email address or uploading a photo to a computer. For many with no experience of IT, or confidence with it, these can be daunting tasks – even setting up a password that must be keyed in the same way each time is a new concept for many.
“Currently IT might look daunting to many but the speed and propensity for all of us to engage with new mediums of communication is truly surprising. Technology is changing every aspect of our daily lives and soon the penetration of smart phones in the UK population will be near total. With this power in the user’s hands and a strong enough reason to engage it will be possible to ‘help’ all parts of our society.”
What Ernest hopes to achieve depends on Niall being right. “We strongly believe the future is intelligent interfaces to bank accounts and we are building this layer with machine learning/ artificial intelligence and Natural Language Processing technologies.”
Online banking is reported to improve financial capability and generally support good money management. [https://www.moneyexpert.com/news/online-banking-improves-personal-finance-knowledge-800580550/] Key to this are consumers’ ability to monitor their account status in real-time and 24/7, check income and expenditure against a budget or money goals (so spotting unexpected items), and set up alerts and oversee progress. In principle, it also enables remote banking, making payments and even depositing cheques without visiting a branch and some people like the ready access to information on new products and the lack of queues. Institutions are downsizing their high street presence but face criticism that this is based on false assumptions about access, with rural customers who often have poorer broadband on offer and older or vulnerable customers without IT access left high and dry.
“The days of the basic free bank account are coming to an end,” says Niall Bellabarba, “and now the evolution is for a basic intelligent free bank account that helps you highlight where the money is going and helps you get better at managing this money and set a savings target, if you so wish.” His product, Ernest, aims to help all customers, including those on low incomes, with alerts when account activity is unexpected or could be more cost-effectively managed. It will periodically review what has gone where and offer hints and tips on reducing expenditure, for example if energy bills look higher than average.
There remains a mismatch between what could be achieved for people on low incomes through tech and the way they currently live their lives. Whether in response to the carrot of new help that can be made available to consumers online or the stick of digital by default, comply or go without benefits, it remains to be seen how well excluded communities keep up. There is no arguing that it is the direction of travel, however, and support services, landlords and authorities may need to pay closer attention to the practical needs of people struggling to make the transition.