New bank data analysis reveals NHS staff in financial distress

A new report by the University of Edinburgh, which focuses on ‘open banking’ analysis, reveals over 100,000 NHS and public sector workers have had direct debits returned.

The University of Edinburgh Business School’s report raises ‘serious concerns about financial resilience’ of many NHS and public sector workers, along with significant questions about why workers who cannot afford loan repayments have been granted credit by Buy Now Pay Later providers.

Edinburgh University looked at 104,661 anonymous bank transactions of NHS and public sector workers and found that 54% had experienced direct debits being returned, suggesting difficulty in meeting financial obligations. Two thirds of people involved in the study earn less than £20k a year and 54% receive benefits in the form of Universal Credit and Working Tax Credit.

A significant proportion of workers’ accounts are frequently in their overdraft, with people’s average monthly account balances under £79 for half of every month. Theodora Hadjimichael, CEO of Responsible Finance said: ‘Imagine the stark reality of having £79 left in a bank account with two weeks until payday. Credit is not the answer to the cost-of-living crisis or low pay.

‘But credit is a fundamental part of how we live our lives in the UK today, used by more than nine out of ten people,’ she continued.

Another report, Financial Resilience and Credit Landscape of Public Sector Workers, reveals more than 10% of the 27,943 people declined for a loan from a specialist community lender because they could not afford repayments and were offered credit by Buy Now Pay Later (BNPL) providers.

Researchers found six out of ten of the 104,661 individuals whose money behaviour was analysed, were BNPL users. In the sample group, these individuals were found to spend more relative to their incomes, have higher overdrafts and a significant minority are heavily indebted.

‘The report demonstrates why we need a purposeful, social-led approach to credit and financial inclusion,’ Lord Iain McNicol, Chair of the Public Responsibility Oversight Body for social enterprise Salad Money said. ‘It is worrying to see the fractured financial resilience of so many NHS and public sector workers. It is also alarming to see people are still being offered credit by BNPL providers, even though they’ve been turned down elsewhere for affordability reasons.’

Photo by Josh Appel