Theresa May's first speech to the country as the new Prime Minister was laudable. Her bold rhetoric on "fighting against the burning injustices" impacting low income communities will be held up as the manifesto for her time as leader. She has firmly presented herself as the champion for social justice and social mobility. The creation of the Cabinet Committee focussed on delivering 'an economy that works for everyone', is a sure sign that she has started as she means to continue.
I applaud Mrs May for tackling social injustice head on when it is increasingly becoming a topic of embarrassment. We are ashamed that as a rich country we are not able to find answers for those communities which risk being left behind. As a result, poverty in the UK has become something of a 'taboo' subject.
However the latest report from the Joseph Rowntree Foundation brought the subject to the top of the agenda again. It highlighted the cost of poverty to the taxpayer - in the UK it costs the average taxpayer £1,200 a year, and the UK £78bn in total. These figures are staggering. But as we examine the cost of poverty in our country, we should also be looking at perhaps the most 'burning injustice' that faces those in poverty - the 'Poverty Premium.' The poorer you are, the more likely you are to pay higher costs for goods and services.
We cannot begin to tackle the cost of poverty without looking at the obstacles which prevent people and communities from helping themselves out of poverty. If you live on a sink estate, your car insurance is likely to be higher than if you live in a safer, more affluent area. If you can't use a direct debit to pay your energy bills, a prepaid meter is likely to inflate the costs you pay. And if you are on a lower income you are more likely to use a fee charging ATM to withdraw money.
This doesn't just affect the unemployed - over half of people who experience poverty have at least one household member in employment and almost two thirds of children living in poverty in the UK come from in-work families. The 'Poverty Premium' and in-work poverty are not issues that Mrs May and her Government can tackle alone - as employers we cannot ignore these issues.
But why should employers care? Financial wellbeing and stress also affects the workplace and can have a big impact on the bottom line - by up to 4% - according to Barclay's Financial Wellbeing report in 2014.
So what can employers do? One of the primary drivers of in-work poverty is the high cost of credit and the lack of access to everyday financial services like credit cards, overdraft facilities and fair loans. This is a pervasive aspect of the Poverty Premium. And as participants in a citizens' jury we ran with BritainThinks on this issue pointed out, financial literacy skills around budgeting or financial services are generally not taught early enough or in a structured manner. Rather, it's a fragmented, life-long learning journey, leaving many people without the skills to make good financial decisions.
The issue is now beginning to be recognised and tackled. For example, the Department of Work and Pensions have launched a payroll savings scheme with three credit unions to help employees save more easily and access sources of affordable finance. I would urge other employers to do the same.
At PwC, we are working with Citizens UK on a nationwide payroll savings campaign with a range of employers to help make financial services work better for employees. We're encouraging businesses to adopt a payroll savings scheme that will help people save directly so that they are more prepared for changes or challenges in their circumstances and are financially more secure. Employers that work with a scheme like this will be helping their employees to improve their financial resilience and avoid high cost credit.
There is so much more that can be done. Employers could be key player in tackling the effects of in-work poverty by implementing initiatives such as joining up with community finance providers, such as credit unions, to support those who need to purchase items in emergencies. Providing financial education in the workplace and payroll deductions can help employees develop a savings buffer or, when necessary, provide access to alternative and more responsible sources of finance.
Mrs May and her government have made bold first steps, but as employers, we need to work together and do more to tackle this 'burning injustice'.
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