Report: Credit Emancipation: How salary-linked lending can help turn around disadvantaged places

By considering how local credit building strategies can help individuals take control of their financial lives, this report from ResPublica focuses on the role that employers have in turning around deprived communities. In particular, it examines the potential of ‘salary-deducted lending’ – where employees apply for loans that are delivered through payroll – as a more affordable credit option.

Key findings

• The report advocates that those employers who run the public or the private sector in disadvantaged communities can make a crucial difference, not just to their employees but also to their places of work, if they initiate salary-linked lending schemes that offer the greatest amount of interest relief on debt.
• A drop of two-thirds in the average cost of interest charged for debt can have transformative impacts on places as well as people.
• The report outlines how salary-linked lending and savings alongside financial education can form part of a broader set of place-based solutions to help employers and employees make local communities more productive and prosperous.

The report makes several recommendations to overcome poor credit and indebtedness, including: all public-sector employers should adopt salary-deducted lending and savings systems and promote financial education in the workplace; Local Government and Local Enterprise Partnerships should use their convening power to encourage private employers to adopt salary-linked lending; and, the Money Advice Service should consider the introduction of Kite Marks to standardise financial advice and guidance.