Call to boost financial services for recession-hit rural communities

England’s independent watchdog for rural communities is calling for more to be done to help recession-hit rural people access financial support and services. The Commission for Rural Communities’ call comes as debt counsellors warn of a "financial time bomb" brewing in the High Peak area.

Graham Russell, executive director to the CRC, wants ministers to step up measures to give the people and businesses of High Peak and other rural communities easier access to banking services and financial advice.

His call came after High Peak Citizens Advice Bureau counsellors saw their debt caseload double in 12 months, with calls on employment issues up 25 per cent. The centre’s North Derbyshire catchment area includes Glossop, New Mills and Buxton and takes in some of the region’s most disadvantaged rural corners.

CAB manager Stephen Minter says waiting lists for appointments are now so long the centre has introduced a "triage" system to prioritise those in most urgent need of help.

He says: "We’re seeing individuals, small businesses and landlords struggling to cope with the impact of the recession. These effects are accelerated by the financial isolation of people in our rural communities who often have limited or no internet access and little access to banking facilities. For many the nearest hole in the wall is some distance away and charges for withdrawals, making it expensive just to access cash.

"One of our major concerns is the impact locally of lending activities in the sub-prime market. The rural jobs market is already vulnerable to seasonal fluctuations and job losses and we’re seeing a lot of people getting into financial difficulties with loan repayments.

"This is then compounded by government measures which, although intended to support home-buyers, are making building societies and banks reluctant to pursue customers aggressively over arrears. People are turning to second and third lenders to meet their commitments and building up substantial arrears. That’s a situation that cannot be sustained and eventually I fear we’ll see the financial dam break."

In the latest briefing to government on the impact of the recession on financial isolation in rural areas, Graham Russell says: "Demand for financial services such as face-to-face debt advice and affordable credit is outstripping supply in rural areas where the recession is affecting the extent to which people are financially included.

"Around 200,000 people in rural England do not have access to a bank account and rural areas are less well equipped to respond to the rise in demand for financial services brought about by the recession. Despite the recent uplift in government resources and action to promote financial inclusion, the infrastructure required (credit unions, debt advisers, banking facilities etc) is weak and often missing."

Among his recommendations to government, the CRC is calling for:

• A government Financial Inclusion Technology Fund to finance innovative new support services, such as debt counselling teleconferences

• More financial services available through the Post Office network including debit-card facilities, current accounts, business services and loans

• More free face-to-face debt advice in rural areas

• Funding to extend funding for credit unions and community development finance schemes in rural areas beyond 2011.