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Unveiling the State of Poverty in the UK and Its Implications for Credit and Collections Professionals

Paul Sweeney | Chief Strategy Officer

Every week Webio produces a podcast for credit and collections professionals presenting a mix of current news, longer term trends, and bringing to your attention particular reports that have caught our eye. The aim is to inform but also to spotlight strategic issues that might play a role in your own planning process.  

One such report that is worthy of your attention is the Two Nations: The State of Poverty in the UK, published by The Centre for Social Justice. This comprehensive report, spanning over 300 pages, revisits the key drivers of poverty identified by the Centre 20 years ago and examines their current state. 

[Listen to the full podcast where Paul Sweeney (Webio CSO) and Delia Jones (COO) discuss this report.]

Impact of the Pandemic on Poverty Drivers 

The report reveals that the pandemic has significantly exacerbated the impact of the five forces driving poverty: family breakdown, addiction, worklessness, serious personal debt, and educational failure. 

Notably, there has been a staggering 700% increase in calls to domestic abuse helplines; mental health issues among young people have worsened, with the rate rising from one in nine to one in six; severe school absence has jumped by 134%; and there has been an 86% increase in people seeking help for addictions.  

Positive Developments Amid Challenges  

Despite these alarming statistics, there have been some positive developments over the last two decades. Unemployment rates have fallen, literacy levels among young people have improved, and overall crime rates have decreased. However, the nature of employment has shifted towards more part-time, insecure jobs with stagnant wages, leading to over 2 million people relying on welfare to supplement their income.  

“One of the things with going back to work is childcare. The cost of childcare is prohibitive. It's a significant chunk of your salary and for a lot of people that doesn't make sense.” Delia Jones, COO at Webio 


Industry Insights: A Credit and Collections Perspective 

Recent conversations that we have had with other professionals in the credit and collections industry reveal that over half of the people seeking help with economic vulnerability are employed.

Additionally, digital interactions in debt collection are becoming increasingly important. When designed correctly, they help de-escalate situations, as machines, unlike humans, do not judge or make individuals feel like failures.
 

Mental Health as a Barrier to Economic Activity 

The report highlights that the most disadvantaged individuals perceive mental health as their biggest barrier, a concern that ranks fifth among the general public. Furthermore, the number of people economically inactive due to long-term sickness has risen to over 2.6 million, an increase of nearly 500,000 since the COVID-19 pandemic. Over half of these individuals suffer from depression, anxiety, or other mental health issues.  

Literacy and Numeracy Skills in Focus 

The impact of literacy and numeracy skills is also raised in the report. While there are many reports on literacy, we might also look to evaluating how well people comprehend information and choices that are put in front of them. Given recent developments in the interpretation and implementation of customer duty legislation, it seems reasonable to make an assumption that companies, organisations, and government agencies will have to make greater efforts to validate that customers clearly understand their choices.   

The Role of Conversational AI Interaction in Addressing Poverty 

At Webio we believe that digital conversational AI interaction can help customers explore their options and question their services in an intuitive fashion. It’s just like texting or WhatsApp-ing your friend. Most people understand how webchat works, and when it works, it’s convenient.  

“Life is very complicated. Life is very interconnected. And this kind of report keeps front and centre that people have a lot on their plates. They have a lot of pressures and it's not a simple matter of, ‘Oh, I just forgot to pay.’” Paul Sweeney, CSO at Webio 


Most importantly the technology can also help you identify when people are not progressing in a conversation, when they are having problems, where they might be expressing and defacto disclosing really important information. We have the data to prove that we are part of the solution here.

This Centre for Social Justice report is essential reading for anyone seeking to understand the current state of poverty in the UK, the challenges faced by various sectors of society, and the potential pathways to address these issues. 

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