Craig Berry is Deputy Director of the Sheffield Political Economy Research Institute at the University of Sheffield. His latest article ‘Citizenship in a financialised society: financial inclusion and the state before and after the crash’ is available on fast track.
While the New Labour-ish language of ‘financial inclusion’ and ‘asset-based welfare’ has been quietly eschewed, since 2010 the Conservative Party has continued its predecessor’s agenda around promoting more extensive and intensive participation in the financial system, through asset ownership, in order to enable individuals to play an enhanced role in ensuring their own long term financial security.
This agenda is, understandably, usually assessed in terms of the impact on financial well-being. Yet its implications for the meaning and practice of citizenship may be just as significant.
The immediate context in which financial inclusion has been pursued is the apparent financialisation of UK society. Financialisation refers to the increased role of finance in individuals’ daily lives as well as the economy in general. Financial inclusion has invariably been presented as a progressive ‘response’ to financialisation. This leads to the suggestion that financial inclusion policies represent a new form of citizenship-based entitlements. As the economy evolves, so the argument goes, welfare-based protections must evolve too. The threat we are being therefore protected from is financial exclusion.
However, it must also be pointed out that by increasing participation in the financial system, and subjecting greater numbers of people to risks associated with engaging with the financial system, financial inclusion also serves to advance the process of financialisation. As such, financial inclusion policies contribute to exposing the financially excluded to new forms of risk, and intensifying financial risks for the already included.
The promotion of individualised ‘defined contribution’ pensions – by all recent governments in the UK – is a telling example. Under the guise of providing a new right to a workplace pension, the coalition government accepted New Labour’s support for this highly individualised form of pensions saving, dismantling the risk-sharing mechanisms that had already existed in private pensions at the behest of employers, as well as simultaneously reducing state pension entitlements.
So, the right to support in saving is established, yet immediately superseded by a duty to shoulder more of the risks of capital market participation. Indeed, the Conservative government is in the process of taking this agenda to its logical extreme, by ‘liberating’ pensions saving by relaxing tax restrictions on how savings can be accessed and used, before and after retirement. Again, the language of entitlement is part of the justification here – but the reality for most people will be a greater burden to make complex, risky financial decisions.
Policies designed to increase prospects for home-ownership also typify the real intent of financial inclusion. Help to Buy and its predecessor schemes claim to be unlocking the dream of home-ownership for disadvantaged groups, yet they have to be understood in a context in which the state’s role as a housing provider – through social housing – has been delegitimised and dismantled.
Even privately-run social housing is not immune from this agenda, as the government extends ‘right to buy’ to housing association tenants. That the private firms which dominate the housing association sector are opposed to this policy tells us definitively that the government’s objective here is not simply to privatise social housing, because that process is largely complete. They want to de-socialise housing altogether.
The implication of this agenda for citizenship is quite clear: it intensifies the ‘responsibilisation’ of citizenship. Despite the rhetoric, our ‘right’ to a pension or housing has been significantly diluted; by default, individuals become more responsible for providing for their own welfare in these regards. The state may appear to be supporting our capacity to shoulder this burden through financial inclusion policies, but in practice it is merely facilitating greater exposure to the associated financial risks to serve its over-riding objective of securing economic growth at all costs.
The right to participate in the financialised economy is, from the perspective of citizenship, no kind of right at all, insofar as participation intensifies rather than alleviates threats to individual well-being. What is missing from the financial inclusion agenda is any sense that we, as citizens of a liberal democracy, have any right to shape financialisation through collective decision-making processes.