Cutting credit costs will benefit employees and the Government can make this happen

Of great relevance is the impact on financial wellbeing, particularly at a time when industrial action by employees across the private and public sectors is increasingly prevalent.

It’s also an area, however, where government action could provide a remedy and relief to working people who are stuck in a potentially inescapable spiral of high interest rates. The solution at hand would be cost-free to the taxpayer and employer alike.

What government could do 

It would involve the government making access to fair financial services and free financial education a statutory right for all UK workers; in the same way that auto-enrolment provides the basis for universal pension provision. 

Providers of financial employee benefits, like us, have already demonstrated how these services can make a significant impact on employee financial wellbeing, with the provision of lower cost loans repaid by salary deduction to employees across the private and public sectors; set alongside the delivery of free financial education for entire workforce groups.

So, we are making a stand. We’ve called on the government to give UK employees the statutory right to access fair financial services and free financial education in their workplace.

We’ve given evidence to the House of Lords Financial Exclusion Select Committee, where we set out an employee benefit reform agenda and now we’ve written a letter to the Rt Hon Damian Green MP, Secretary of State for Work and Pensions.

Indisputable evidence

We have indisputable evidence of a financial crisis affecting our 30 million strong workforce, with millions of hard working people just able to manage, not least as a result of their paying punitive interest rates. 

We surveyed 10,000 UK employees and the results provide stark reading for the benefits and HR community:

• 70% of the UK workforce admit to wasting a fifth of their time at work worrying about finances, costing the economy an estimated £120.7bn per annum
• At least 17.5m work hours being lost per year as a result of workers taking time off work due to financial stress
• 55% of employees say that being under financial pressure affected their behaviour and ability to perform their job in the workplace – rising to 62% for those under 34
• 51% say that financial pressures affected their relationships with their colleagues
• 31% lose sleep over money concerns, with 39% suffering from anxiety

The survey also evidences how those “just about managing” lack sufficient buffer savings to meet emergency expenditure needs; with over 30% of employees having less than a months’ salary held in reserve for these purposes.

Employees who are unable to meet short term expenditure needs are also likely to resort to pay day lenders, further compounding their indebtedness and financial exclusion.

The evidence to date shows how lower cost loans and free financial education benefits can transform the lives of employees and positively impact on their financial wellbeing.

Employees who have accessed Neyber loans repaid by salary deduction have saved on average 20% on their monthly credit costs and managed to consolidate existing loans into one manageable repayment.

Free financial education has also helped employees to make better informed decisions about their family finances that have improved their financial resilience too.

In an age where cost pressures deny companies the option of paying their employees more or offering costly new benefits, this proposal would enable the Government to help working people across the UK. 

Neyber has written to the Secretary of State for Work and Pensions to request that the Government makes access to fair finance in the workplace a right for all. This is an issue around which the entire benefit community can coalesce and press for in the year ahead.

Monica Kalia is co-founder of Neyber. 

This article was provided by Neyber.