The Owl Effect - Hoot Credit Union | Wise with money.

Place

Partners

People

The Owl EffectMeasuring the Social Impact of Hoot Credit Union

On average, our members score

25% lower on wellbeing scales

After 6 years, this average score

improves by 20%

We saved members from a potential £833k in interest

to high-cost lenders.

£2m Boost to the local economy

£9.5m in social value

Our average member saved

£200 in interest on a £300 loan

Through our partnerships using HACT calculations

6,000 Members

2018 /19 Impact Summary

members with loans or saving plans are saving for the first time

was spent in Bolton & Bury

Of the money we lent

We help over 400 of our partners’

employees to save and borrow

Established members are 3x less likely to worry significantly

about money

98% of members using Payroll Saving would recommend it

to others

More than half of our members use our central

branch in Bolton

Only 1.5% of our members have a good or better credit rating

£833k 72%

For every £1.00

we lend

£1.93 is spent in Bolton & Bury

4004

in5

On average, our members score

25% lower on wellbeing scales

After 6 years, this average score

improves by 20%

We saved members from a potential £833k in interest

to high-cost lenders.

£2m Boost to the local economy

£9.5m in social value

Our average member saved

£200 in interest on a £300 loan

Through our partnerships using HACT calculations

6,000 Members

2018 /19 Impact Summary

members with loans or saving plans are saving for the first time

was spent in Bolton & Bury

Of the money we lent

We help over 400 of our partners’

employees to save and borrow

Established members are 3x less likely to worry significantly

about money

98% of members using Payroll Saving would recommend it

to others

More than half of our members use our central

branch in Bolton

Only 1.5% of our members have a good or better credit rating

£833k 72%

For every £1.00

we lend

£1.93 is spent in Bolton & Bury

4004

in5

4

Introduction

The Credit Union Difference

Credit unions are unique in the financial services industry in the UK. They are member-owned co-operatives with a structure and culture built around the objects in the Credit Unions Act 1979:

• The promotion of thrift among the members of the society by the accumulation of their savings;

• The creation of sources of credit for the benefit of the members of the society at a fair and reasonable rate of interest;

• The use and control of the members’ savings for their mutual benefit; and

• The training and education of the members in the wise use of money and in the management of their financial affairs.

Any profits made by a credit union, from the interest it charges on loans, is reinvested into the business or distributed to savers as a dividend. Most credit unions are now managed on a day-to-day basis by professional staff, and governed by volunteer directors elected from and by the membership.

Credit unions exist to meet the needs of their members, not to make profits for anonymous shareholders.

In recent years credit unions have been a keystone in successive Governments’ efforts to increase financial inclusion, helping people to save and borrow affordably. Credit unions cannot solve poverty on their own, but by helping people to build a savings pot, manage their finances and avoid excessive interest rates, they can assist families dealing with limited budgets and financial challenges.

They also make great financial sense for people with larger incomes, and are an ethical choice which benefits the wider community.

Staff who run the credit union day-to-day

Members own the credit union and elect the...

Board of Directors who set strategy and employ...

5

Credit Unions in Bolton

Credit unions have provided services to the people of Bolton for thirty years. Over 6,000 people now benefit from the safe savings, affordable credit and financial education that Hoot Credit Union delivers to its members.

Hoot is motivated by the desire to provide approachable, affordable and accessible financial services that meet the needs of everyone who lives, works or studies in Bolton or Bury. The credit union is proud to be based in bright and welcoming premises at the heart of Bolton’s historic centre.

The credit union has been assisted in its growth through the valuable support of its partners, especially Bolton at Home and Bolton Council. This backing has helped the credit union to establish itself as a trusted financial services provider in the lives of many local families.

In 2019, 70% of over 500 Hoot members surveyed said they would strongly recommend the credit union to their friends or family, and the credit union attained a Net Promoter Score of 62.1

The Net Promoter Score is an index ranging from -100 to +100 that measures how likely customers are to recommend products or services to others. It can be used to gauge overall satisfaction and customer loyalty.

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Transaction with Credit Union - 566 Members

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Hoot Members 2020

Don’t know/ Prefer not to say…

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Worry a great deal 24%

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Cost of borrowing £300 over 52 weeksSource lenderscompared.org.uk

Cost Per Week Cost of Credit APR %

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ONS 4: Length of Hoot Membership

Hoot Members < 6 years Hoot Members > 6 years All Hoot Members Bolton Average

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ONS 4 : Personal Well Being Mean Figures

Bolton Average 2018/19 UK Average 2018/19 All Hoot Members

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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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Comparison of Multiple Deprivation Decile 2019 Figures

Hoot Members All Bolton

1 2 3 4 5 6 7 8 9 10Hoot Members 41.4% 17.7% 11.5% 6.5% 5.1% 6.3% 2.7% 2.8% 3.8% 2.2%All Bolton 35.4% 13.7% 7.8% 5.1% 4.8% 12.0% 3.6% 5.9% 5.9% 5.7%

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How likely is it that you would recommend Hoot to your family and friends? Open-Ended Response: 0-10

Net Promoter Score:

+62

6

Measuring Social Impact

Social impact has been described as “the effect on people and communities that happens as a result of an action or inaction, an activity, project, programme or policy.”2

In 2018/19, Hoot worked with the Centre for Community Finance Europe (CFCFE), Liverpool John Moores University and Small Change in a project funded by the Esmee Fairbairn Foundation and CCLA to develop a toolkit for measuring the social impact of credit unions; the true credit union difference.3 This work included the development of a survey, completed by 554 people, and an exploration of how social impact can be assessed and reported. The toolkit adopts a four-stage process to measuring social impact and embedding it in how the credit union operates:

• Working out what impacts should be measured and on whom

• Evidencing changes that have been delivered for members and partners

• Telling the story of that impact through analysis of quantitative and qualitative data – including a survey completed by 554 Hoot members and a range of external sources

• Learning from the findings, reflecting and adapting

A three-level model was created to explore how impacts on Hoot’s members, associated with financial resilience and emotional wellbeing, leads to better and more efficient functioning of statutory bodies, and feeds into Bolton’s wider civic cohesion and economic vibrancy.

The work showed how members obtain greater benefit from their income through Hoot’s collaborative work with other agencies to foster civic development in Bolton: People, Partners and Place.

Partners

People

Place Civic Impacts

Agency Impacts

People Impacts

7

In summary

People

• Hoot provides safe savings and affordable lending services to over 6,000 people.

• 41% of Hoot members in Bolton live in the bottom decile for Income Deprivation.

• Hoot’s average member scores 25% lower on wellbeing scales than the average Bolton resident… after six years of membership their scores rise by 20%.

• Established Hoot members are three times less likely to worry significantly about money.

• 78% of Family Loan and Saving Plan users are saving for the first time in their lives.

• Hoot saves its members around £200 in interest costs on a typical loan of £300.

• The average borrowing Hoot member has a ‘poor’ credit score; only 1.5% have a ‘good’ or ‘excellent’ score.

• 100% of members with the lowest credit scores see them improve after they have repaid a Hoot loan. And Hoot keeps on lending when personal circumstances leads to higher scoring members seeing their scores decrease.

Partners

• Based on values developed by housing ideas agency HACT, Hoot provides £9.5 million worth of social value each year.4

• Hoot helps over 400 employees to save and borrow, reducing financial stress and increasing productivity.

• 98% of Hoot members using payroll would recommend the method to a colleague or family member.

Place

• 72% of money lent by Hoot is spent in Bolton and Bury.

• This leads to a multiplier effect which means that for every £1 Hoot lends, it is estimated that £1.93 is spent in Bolton and Bury, and £2.09 is spent in Greater Manchester. In 2018/19, this provided a £2 million boost to the local economy.

• Borrowing from Hoot saved members from paying a potential £833,000 in interest in 2018/19 and £millions more could be saved in Bolton if more people could be steered away from high-cost lenders.

• Over half of Hoot members use the branch on Victoria Square and for a third, this is their only way of accessing the credit union.

Hoot is proud of what it has achieved and wants to make sure that it can continue to grow and develop to meet the needs of the tens of thousands of people who would benefit from its services.

With the support of its partners it has plans to expand and improve its services in the coming years and cement its position as a valuable social business at the heart of Bolton.

8

People With continuing challenges of economic uncertainty, stagnating wages and benefits reform, the people of Bolton and Bury need a financial services provider they can count on.

The payday lending and ‘sub-prime’ lending market has sapped money from the budgets of many low and middle-income households but even that is now contracting, leaving people with far fewer options.

In November 2019, H & T Pawnbrokers (with two branches in Bolton) stopped providing unsecured short-term loans in the wake of the Financial Conduct Authority’s High Cost Credit Review.5 Peachy was another High-Cost Short Term Credit provider to go into administration in March 2020, following Quick Quid in October 2019.6

The home credit market has also been under pressure; lenders reported lending 42% less in 2016 than 2013 and leading doorstep lender Provident Financial reported a £123 million loss in 2018. Hoot carried on lending during the Covid-19 crisis when many high-cost lenders were quick to withdraw their products from new customers.7

60% of Universal Credit (UC) recipients are not receiving their full entitlement because they are repaying debts, or are being driven to loan sharks; often because of loans taken out during the five-week wait for a first payment.8 Even when full payments are received, 46% of families lose out from the switch.9

Between April 2010 and April 2018, median pre-tax weekly earnings fell by around 3% in real terms.10 Around a quarter of working-age adults have no savings and a similar amount hold less than £1,000.11

The Greater Manchester Poverty Alliance estimates that the Poverty Premium for a typical low-income family in the area was £1,096 in 2018.12 This included a premium of £257 for a £500 loan and £218 for household white goods.

Covid-19 meant that, by June 2020, over 56,000 employees in Bolton and Bury had been furloughed and UK payroll had shrunk by 649,000 in three months.13

Within this context, Hoot is increasingly important to the communities it serves and is at the forefront of helping people to manage in these challenging circumstances. Where some companies cherry pick the most profitable customers, Hoot works to ensure that its products are accessible and beneficial for as many people as possible. This is demonstrated by an analysis of Hoot members which shows that they are more likely than the average Bolton resident to live in an area of higher deprivation and score lower on the Government’s ONS4 wellbeing scale.

Over 50% of Hoot members questioned said that they would struggle to find £300 for an urgent repair or purchase and over half say that they worry ‘a lot’ or ‘to some extent’ about money.

9

Hoot Members

Hoot helps its members to meet their financial needs and challenges at all the different points in their lives.

The credit union’s 7,000 members and young savers range from 1 to 100 years old. A further 30 members are local businesses or community organisations.

65% of Hoot members are female but this figure increases to 82% in borrowers.

The average adult member

The average Hoot borrower

The average amount saved is £100.

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Worry a little 27%



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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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Net Promoter Score:

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saving in the credit union for 5 years

43 years old 36 years old

a member for less than three years

The average amount saved is £246.

10

Building Savings, Creating Savers

Helping people get a savings habit is an important part of a credit union’s role and is more vital than ever with the savings-gap affecting many working-age adults. Hoot helps people to save for day-to-day expenses and regular events such as Christmas, as well as future goals such as education, house purchase and weddings. Hoot turns borrowers into savers by encouraging them to save while they borrow, so they have a pot of money at the end of their loan.

Many Hoot members have been helped to gain a savings habit through the Family Loan and Savings Plan. The plan, introduced in November 2017, has helped many people on low incomes to gain access to both affordable credit and build a valuable savings pot. While repaying their loan members must also pay an amount into their savings, which they cannot take out until the loan is repaid.

Members borrowing £500 over 12 months saving the recommended £3.50 a week have a pot of £182.50 at the end of their loan. They also save up to £300 in interest, compared to a similar loan from a home credit provider.

A survey of 208 members using the Family Loan and Savings Plan, carried out in February 2020, showed that:

• 78% of members had not saved before they started the plan

• 98% said that building up savings had been useful to them; over 90% saying it was very or extremely useful

• 97% said that having to save at the same time as repaying a loan was a good thing

78% of Family Loan and Saving Plan users had

not saved before starting the plan

98% of users said that saving with the plan

had been useful to them

“Nothing would make it better as I’m satisfied with

the plan and what benefits it offers. It doesn’t con people

it benefits people in the long run”

“Easy to apply and a bonus with the saving at the

same time”

11

Income and Deprivation

Anyone who lives, works, or studies in Bolton or Bury can join Hoot, but the majority (82%) are based within Bolton.

An analysis of members’ addresses in Bolton shows that they are more likely to be based in postcodes which are in Lower-Layer Super Output Areas (LSOAS) classed as having higher deprivation – according to Index of Multiple deprivation deciles and particularly Income Deprivation deciles.14

Hoot serves a broad range of members across Bolton; its services are designed to meet the needs of everyone on middle and low incomes. It is through people coming together to save and borrow at different stages in their lives that the credit union thrives.

These figures demonstrate that Hoot is relevant and valuable to people on lower incomes who would otherwise have few or no affordable sources of financial services.

41% of Hoot members in

Bolton live in the bottom decile

for Income Deprivation

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Hoot Members 2020



Worry a little 27%



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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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Worry a little 27%



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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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12

Wellbeing

The member survey carried out in 2019 includes the four questions which the UK Government uses to measure wellbeing.15 ONS 4 provides a way to measure how people feel about their life satisfaction, sense of being worthwhile, happiness, and anxiety. It also allows a comparison between Hoot members and the population of Bolton, and the UK.

The figures show that Hoot members are more likely than the average Bolton or UK resident to report lower on the scale of life satisfaction, feeling worthwhile, and happiness, but higher on anxiety. Those who have been members of Hoot for more than six years, however, are closer to the Bolton average in all four indicators, and score over 20% higher for life satisfaction, happiness, and feeling worthwhile. While other factors may be at play, this does suggest that Hoot plays a role in assisting people to increase their wellbeing.

Personal Well-Being Estimates by Local Authority - Office for National Statistics’ https://www.ons.gov.uk/datasets/wellbeing-local-authority/editions/time-series/versions/1 [accessed 5 December 2019].

Hoot’s average member scores 25% lower on wellbeing

scales than the average Bolton resident… after

six years of membership their scores rise by 20%

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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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13

Access to affordable credit

The Hoot Member Survey asked how respondents would get hold of £300 for an urgent repair to a car or to replace a washing machine:

• Over 50% said that they would struggle to pay out of their own money or savings

• 14% said they would pay with their own money, but would have to cut back on essentials

• 16% said they would not be able to pay the expense and 7% didn’t know how they would pay it

• 11% said they would have to cut back on essentials

• 2% said they would sell personal or household items

In the same Hoot Member Survey, 86 out of 184 borrowers of small amounts (up to £500) said that they would have gone elsewhere for a loan if they hadn’t been able to borrow from the credit union.

40% said that they would have gone to a payday lender or other High Cost Short Term Credit Provider (HTSTC). A further 16% would have gone to a home credit provider.

Over 50% of Hoot Members couldn’t easily

find £300 for an urgent bill

Over 50% of Hoot Borrowers would turn to a high cost lender if they couldn’t borrow from

Hoot

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Net Promoter Score:

+73

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



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Rent to Own Store

Credit Card


Home Credit

Payday Lender


6

7

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9

Worthwhile Happiness Anxiety



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1 2 3 4 5 6 7 8 9 10

Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

0.0%

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45.0%



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0 50 100 150 200 250 300 350 400 450


Net Promoter Score:

+62

14

Access to affordable credit

The clampdown on payday loans by the FCA has led to many big players withdrawing from the market, and others to offer loans over a few months, rather than a few weeks.16 This means that affordable sources of a £300 loan for people without a good credit score are becoming even more scarce.

An analysis of home credit loans available to an individual living in Johnson Fold on the Lenders Compared website shows interest costs are around £250 for a £300 loan over 52 weeks.

Similar high costs are found at Rent to Buy Stores, which are only operating online through Perfect Home following the demise of Brighthouse in March 2020. Interest on a washing machine costing around £300 over a year would take the price to over £400. If insurance and service package was purchased, the cost would rise to over £500.17

Hoot members could save as much as £200 on the credit costs of a loan of just £300 over 52 weeks.

Hoot members can save up

to £200 on the cost of a £300

loan over a year

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Net Promoter Score:

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



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0 5 10 15 20 25 30 35 40

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1 2 3 4 5 6 7 8 9 10

Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

0.0%

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0 50 100 150 200 250 300 350 400 450


Net Promoter Score:

+62

15

Financial Worries

413 hoot members answered the question “To what extent, if at all, do you worry about your current financial situation?” Over half said that they worried ‘a lot’ or ‘to some extent’.

Those who had been in the credit union for over six years were much less likely to say they worried a great deal and more likely to say they didn’t worry at all.

This could reflect the financial situation of many more recent joiners, who have been prompted to join to access affordable finance. It could also suggest that the relationship with the credit union increases financial wellbeing. As the next section shows, Hoot membership can and does improve people’s financial health. Over time this can lead to a reduction in anxiety and growth in self-worth.

Established members

are three times less likely to

worry a great deal about money

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Net Promoter Score:

+73

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



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1 2 3 4 5 6 7 8 9 10

Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

0.0%

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Net Promoter Score:

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Net Promoter Score:

+73

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



0%

5%

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0 5 10 15 20 25 30 35 40

Rent to Own Store

Credit Card


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Payday Lender


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1 2 3 4 5 6 7 8 9 10

Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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0 50 100 150 200 250 300 350 400 450


Net Promoter Score:

+62

16

Credit Scores

Hoot makes use of a range of information to inform its lending decisions. This includes credit scores, which have the added advantage for the member that repaying a loan to Hoot can help increase the credit score, opening up their future options for financial services in the future.

A poor credit score can play a major part in increasing the poverty premium: stopping people from accessing services such as phone contracts and lower priced utility bills.

The average Bolton resident already has limited financial choices because of their relatively low credit score and those applying for a Hoot loan have an average credit score that is 20% lower.

An analysis by Experian placed credit scores in Bolton as the 316th highest out of 391 local authorities across England, Scotland and Wales.18

The average credit score in Bolton, according to Experian, was 732 out of 999. The average score for Hoot members applying for their first loan, with adjustments made for scoring differences, was 595.

This puts the average Hoot member within the ‘Poor’ segment for its credit scores, which range from 560-720.19 According to Experian, those with such a score might be accepted for credit cards, loans and mortgages but they may have higher interest rates.

Over 40% (582/1440) of Hoot members applying for a first loan had the equivalent of a ‘Very Poor’ score of below 560. This, according to Experian, means that they would be more likely to be rejected for most credit cards, loans and mortgages that are available.

Just 21 out of the 1440 Hoot members had a credit score defined as ‘Good’, giving them a good chance of accessing most mainstream credit products.

Credit scores improved

in 100% of borrowing

members with credit scores of

below 450

17

Analysing Credit Scores

An analysis of the credit scores of people reapplying for a loan demonstrates that many people with lower scores see them improve after repaying a Hoot loan: this is particularly true for people with the lowest credit scores. 100% of those with a score of below 450/1299 saw their score improve after repaying a Hoot loan.

Recent research examined on page 21 suggests that raising the credit scores of individuals can also have a positive cumulative effect on the wider community.20

A variety of circumstances can lead to a reduction in an individual’s credit score. A continuing relationship with Hoot means that members retain access to affordable credit. In other circumstances, they may have been pushed towards higher cost lenders, despite changes which are often out of their control.

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Net Promoter Score:

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



0%

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Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

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Net Promoter Score:

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18

PartnersMany of the issues outlined in Chapter 1 which impact on the people of Bolton can be compounded for organisations dealing with people on lower income. Social landlords such as Bolton at Home are engaged in helping their tenants navigate various aspects of their lives, not just housing, and Hoot is able to help its tenants to better manage their finances.

Many of Hoot’s savers and borrowers are also tenants of Bolton at Home. Information about Hoot services can also be accessed at UCAN centres throughout Bolton and Hoot has plans to extend outreach work in areas such as Johnson Fold in the next two years. By helping members to save, manage their incomes and borrow affordably, Hoot helps decrease the chance of tenants becoming overindebted and falling into arrears with their rent or other domestic bills. This in turn impacts on Bolton at Home’s costs in managing tenancies.

The Financial Conduct Authority has recently clarified that Registered Social Landlords can now refer tenants, or potential tenants, to a credit union without requiring authorisation.21 This can be seen as a strong endorsement of the relationship between a credit union and an RSL.

Credit union members who save and borrow by payroll deduction know about the value, ease and convenience of the method. This has been backed up by a range of research focussing on the effects financial worries can have on workplace performance. Employees from a range of employers including Bolton Council and Bolton at Home benefit from saving and borrowing direct from their wages.

Hoot also works with a range of smaller partners where doing so would benefit their members and the community. People using Furniture 4U (which shares an office with the credit union) can pay for their goods with a credit union loan. Purchasers benefit from an alternative easy way to pay for good value white goods and furniture and gain a valuable relationship with the credit union. Hoot also partners with Bolton Council to enable people to access interest free loans through the Local Welfare Provision scheme.

In the spirit of co-operation, Hoot works with credit unions across Greater Manchester on a range of collaborative projects to improve services and help grow credit union services across the ten boroughs. Hoot has led on a range of initiatives including the development of an online portal for a payday lending type product and a range of marketing initiatives.

19

Social Value for Tenants

The importance of tenants’ financial health to a social landlord is reflected in the HACT Value Calculator.22 This provides a monetary value for a number of financial inclusion outcomes worth between £2,000 and £13,000. The services Hoot provides can help tenants to meet these outcomes in a variety of ways, including:

• Tenants are helped to save regularly through accessible methods of savings and encouraging people to save while they repay a loan.

• By providing an affordable means of borrowing, tenants are prevented from turning to high cost credit and the burdens of heavy debt.

• Through saving and borrowing affordably, tenants are helped to keep their house furnished and well decorated.

• Ultimately, being able to better manage their finances can mean that people are able to pay for their housing.

In 2012, 39.2% of Hoot members lived in Bolton at Home properties. Since then, many more members have joined from areas managed by Bolton at Home and it is now estimated that at least 50% of Hoot’s 6,000 adult members live in Bolton at Home properties.

The HACT Social Value Calculator uses a bank of methodologically consistent values to allow social housing providers to measure the impact of a range of activities on the generation of social value. Some of the outcomes contained in the calculator are relevant to the work that Hoot carries out. The use of this tool provides an additional way of measuring the wider impact Hoot’s work has on the community it serves:

Using HACT calculations,

Hoot provides value worth an

estimated £9.5m to members

each year

Outcome How does Hoot Help HACT Value Estimate

Are able to save regularly or from time to time

Members are helped to get into the savings habit by making saving easy and by requiring them to save an amount with each loan repayment. Hoot currently has around 4,000 active members who are saving regularly.

£7.1 million

Can afford to keep house well decorated

Members can borrow affordably to help them to spread the cost of home decoration. In 2018/19 approximately 21% of loans were taken out for home improvement so this figure has been used as a measure of the loans that contributed towards this outcome.

£1.9 million

Relief from being heavily burdened by debt

A small number of members are assisted by Hoot to consolidate unmanageable debts into a Hoot loan, reducing interest and making debts more manageable. In 2018/19 3% of loans were taken out for debt consolidation, so this figure has been used to estimate Hoot’s impact on this outcome.

£493,000

Total £9.5 million

20

Payroll Deduction

Over 400 Hoot members save and borrow via payroll deduction. Employees from a range of employers including Bolton at Home, Bolton Council, Greater Manchester Mental Health NHS Foundation Trust and Examworks UK can pay into Hoot direct from their salary.

By partnering with Hoot, employers can provide a workplace benefit for their staff that is easy and cost-effective to administer.23 Credit union payroll deduction reduces reliance on payday and other high cost lenders and can be a major tool in tackling financial worries, a major cause of stress and reduced productivity at work.

Research published in 2019 found that worries about money affected 72% of employees at work, with 39% saying they always or often worried about money.24 Other research, published by the CIPD, shows that money worries have affected one in four workers ability to do their job.25

In a 2020 survey of Hoot members using payroll deduction, almost 22% of respondents (17 people) agreed with a statement that money worries had affected their ability to do their job over the past year, with 2 people strongly agreeing.26

In the same survey 31% said that they worried either a great deal or to some extent about money, compared to 53% of all Hoot members.

The survey also shows that members strongly value both the services Hoot provides and the payroll deduction service itself: 85% of respondents (66) would be very likely to recommend having a payroll deduction to a colleague or family member and a further ten people said they would be likely to recommend (13%). This amounts to a Net Promoter Score of +73, eleven points higher than the NPS for Hoot as a whole.

98% of members using payroll

deduction would be likely to

recommend it to a colleague or family member

21

Place Money gained by households can have a very different impact on a local community depending on where it is spent. Understanding how people use their money is central to understanding what this means to the economy. When people borrow from commercial companies, the interest paid – which can often be as much as the original loan – leaves the community.

Money put into the local economy by a credit union comes from that community and is redistributed to other members in the form of loans. People work together to share economic resources and keep it circulating within the community. Money repaid to the credit union – including the interest – goes back into the credit union, recirculating in the local economy multiple times and creating a sense of local achievement and pride. Fairness Commissions across the country have recognised the importance of credit unions to local communities and increasing their high street presence has been an important part of this.27

Research carried out by Respublica has suggested that linking saving and borrowing to payroll can increase collective credit scores at the local authority level. This, they argue, can tackle problems such as unaffordable credit, financial exclusion that impacts whole communities, as well as individual households.28 They suggest that an improvement in a local authority’s aggregate credit rating, from the bottom 10% to the middle of the credit score

distribution, could improve median weekly earnings by 9%, the employment rate by 3% and home ownership by 6%. The improvements in credit scores identified on page 17 could be a major contributor to such a transformation.

Hoot proudly occupies a prime position in Bolton’s historic Victoria Square. Centrally located it is ideally placed near to council offices and a range of retail and entertainment facilities. The bright and accessible offices are visible and welcoming, making sure people know the credit union is there. Importantly, the offices also present a professional image, which is necessary to attract middle income members to join and contribute to the community pooling of resources.

Bolton’s town centre has not escaped the nationwide decline in high street shopping which has seen more than one in twelve shops close since 2013.29 This has led to calls for towns centres to again become places where people can “come together, do business and interact” and co-operative, community owned businesses such as Hoot are excellent examples of just that.30 The fact that over a third of members surveyed only access the credit union via the branch shows how valued and necessary it is. As plans to give the town centre a more residential focus are put into effect, this will become an even more valued resource for local people.

22

Keeping money in the local community – Spending

Local Multiplier 3 (LM3) was developed by the New Economics Foundation (NEF) to measure how a source of income is spent and then re-spent within a community.31 As NEF states, “A higher proportion of money re-spent in the local economy means a higher multiplier effect, because more income is generated for local people.”

This principle can be used to estimate the cumulative effect of the money that Hoot makes available to its members.

• In 2018/19, the credit union lent £1.045 million to members in Bolton and Bury. (Round 1 under LM3 calculation)

• 72% of Hoot members surveyed in 2019 (240 / 331) said that they had spent the money from their loan in Bolton or Bury. 72% of the lending figure in 2018/19 amounts to £752,400. (Round 2 under LM3 calculation)

• If just 30% of that money was again spent locally, this adds a further £225,720 to the cash retained in the local economy. (Round 3 under LM3 calculation).

• Adding the three figures together gives an LM3 ratio of 1.93: for every pound lent by Hoot, nearly two pounds is spent in the local economy.

• This equates to a boost of nearly £2 million to the local economies of Bolton and Bury.

The same survey showed that 84% of money borrowed by Hoot members was spent within Greater Manchester. Applying the same steps to this larger area shows that for every pound Hoot lent to its members, two pounds and nine pence is spent in the region.

Money spent locally will have benefitted local businesses and employees, preventing leakage out of the local economy.

In fact money saved in Hoot provides an economic impact for local people of many times this value as it is lent out, repaid, and lent out again to other members.

For each £1 lent by Hoot, it is

estimated that at least £1.93 is

spent in Bolton and Bury and £2.09 is spent in Greater

Manchester

Hoot loans boost the local

economy by nearly £2 million

each year

23

Keeping money in the local community – Interest payments

Financial Conduct Authority (FCA) research published in 2019 showed that nearly 50% of users of High Cost Short Term Credit (HCSTC) – made up of pay day loans or short-term instalment loans – had missed or fallen behind on payments for credit commitments or domestic bills in at least three of the previous six months.32 This over-indebtedness can in turn lead to further problems including risks to tenancies and family stability.

The research also showed that the North-West had the highest amount of loans per head of adult population (125 per 1,000). Figures obtained through a Freedom of Information request show that nearly 60,000 payday loans were taken out in Bolton in 2018, with a value of £13.5 million. If these loans had been taken out through Hoot instead, millions of pounds would have stayed in the pockets of local people and within the local economy.

In 2018/2019 – 85% of Hoot loans were for less than £500; 1,606 members took out a loan of less than £500, totalling £607,819.

It is likely that each of these members would have paid an average sum in additional interest of £250 if they had turned to a HCSTC provider instead of Hoot; a total of over £400,000. If all Hoot borrowers in the year had turned to a comparable higher cost lender instead of the credit union, they would have paid an extra £833,000 in interest.

Survey results, set out on page 13, suggest that not everyone would have gone down this route if Hoot lending was not available to them. Nevertheless, 40% of small-sum borrowers said they would have turned to a payday lender and 16% said they would have turned to a home credit provider. This would still amount to a loss of over £220,000 to household budgets and to the local economy.

This analysis does not include an estimate of the impact of illegal lending, as figures are not available. The cost of borrowing from illegal loan sharks can be far higher to both households and communities as fear and intimidation take hold. Working closely with partners, Hoot works to raise awareness of loan sharks and signpost potential victims to sources of support.

Members borrowing from Hoot have saved up to £833,000

in interest in 2018/19

85% of Hoot loans in 2018/19

were for £500 or less

24

A Valued Central Presence

Members were asked to indicate all the different ways they transacted with the credit union: 58% (328 out of 565 members) said that they came into the branch on Victoria Square. 36% (218 out of 566) said they did not use any other method to transact with the credit union, demonstrating the importance of retaining an accessible physical location for a large proportion of members. This is at a time when communities in Bolton and Bury have lost at least 25 bank branches since 2015 and many Post Office branches are also at risk of closure.33

Hoot recognises the importance of face-to-face financial services as part of their offer to members. Members who use other methods to transact can also benefit from visiting the branch on occasions when they need to discuss their finances with a member of staff in a safe and confidential space.

Hoot’s central location also serves to increase footfall to Bolton’s town centre, which is in close vicinity to the town’s shopping area, including the market. In the year ending 31 March 2020, 2,822 different members carried out nearly 20,000 transactions in the branch.34

Around 300 members have relied on Hoot as their only source of financial services. They turned to the credit union when they struggled to open a basic bank account at a mainstream provider. With benefits paid into the credit union, they relied on the central location to access their money on a weekly basis. During the Covid-19 crisis, Hoot helped many people to manage their cash with a prepaid card but it kept open for the people who still needed to visit the premises.

In its efforts to maintain a service which meets the needs of everyone in the community it serves, a physical branch remains a vital part of its offer to members. Increasing convenient access to those who want digital access, will allow Hoot to further develop its support to those who need and value the extra support that only a face-to-face encounter can bring. The branch is also a permanent and visible advertisement for the credit union and its professionalism.

Over a third of members only access services via the Victoria Square branch

Hoot provides transactional banking to around 300

members who have struggled

to access mainstream

banks

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Net Promoter Score:

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350-400 400-450 450-500 500-550 550-600 600-650 650-700 700-750



Under 18 8%

18-25 10%

26-3524%

36-4519%

46-5519%

56-6512%

66+8%

Hoot Members 2020



Worry a little 27%



0%

5%

10%

15%

20%

25%

30%

35%

40%




0

50

100

150

200

250

300

350

400

0

50

100

150

200

250

300





%ag

e



0 5 10 15 20 25 30 35 40

Rent to Own Store

Credit Card


Home Credit

Payday Lender


0

1

2

3

4

5

6

7

8

9




0

1

2

3

4

5

6

7

8

9




1 2 3 4 5 6 7 8 9 10

Hoot Members 37.3% 24.2% 11.2% 5.0% 5.6% 3.4% 5.4% 2.5% 4.1% 1.4%

All Bolton 32.9% 17.7% 7.6% 4.5% 6.6% 3.9% 11.1% 4.5% 7.3% 3.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%




0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%



0

1

2

3

4

5

6

7

8

9

10

0 50 100 150 200 250 300 350 400 450


Net Promoter Score:

+62

25

Conclusion and Plans for the Future Hoot is proud of what it achieves for the people of Bolton and Bury each year. By saving its members £833,000 in interest each year, boosting the local economy by £2 million and providing value worth £9.5 million to Bolton at Home tenants, Hoot has an impact on the local economy that is out of proportion to its size.

It is heartening that the social impact exercise that Hoot has carried out has produced these figures, but it has also been an invaluable source of information to enable the credit union to understand how it can better meet the needs of its existing and potential members. This report and the figures behind it will be used both as a baseline for future comparisons and as a tool for business change.

The process has already led to the introduction of the Family Loan and Savings Plan, helping people with low credit scores to borrow affordably and build a vital savings pot.

Hoot is also working on a range of new initiatives to reach out to more people and ensure that they reach more of the tens of thousands of Bolton and Bury residents who will benefit from their services.

• The development, in partnership with other credit unions in Greater Manchester, of a new online portal for Reasonable-Cost Short Term loans, designed to steer more people away from high cost lenders which cost local people and the local economy millions of pounds each year.

• The introduction of a new Community Engagement Manager, to reach out to communities which can benefit from credit union services and engage with employers to introduce payroll deduction to many more local workers.

• The development of a digital financial education tools to help members to increase their financial wellbeing and manage their finances.

• A pilot project in Johnson Fold using community champions to promote financial capability.

• A new platform which, by utilising open banking technology, will enable bespoke loans to be created to fit in with individuals’ needs

The original credit unions object of saving, affordable credit, thrift and financial education are still at the heart of what Hoot does every day. With the help of modern technology and the support of valuable partners who also care about the people and communities of Bolton and Bury, Hoot wants to make sure that its benefits are felt by many more people in years to come.

26

Bibliography1 Survey of 565 Hoot members, 2019.

2 ‘Social Impact. What Is It? How Do I Measure It?’, Good Finance, 2018 <https://www.goodfinance.org.uk/latest/post/blog/social-impact-what-it-how-do-i-measure-it>

3 CFCFE, ‘The Credit Union Difference’, <https://www.cfcfe.eu/the_credit_union_difference/>

4 ‘Publications and Tools, HACT’ <https://www.hact.org.uk/publications-and-tools>; HACT, Simetrica, ‘Community investment and homelessness values from the Social Value Bank’, < www.socialvaluebank.org>, License: Creative Commons Attribution-NonCommercial-NoDerivatives license (http://creativecommons.org/licenses/by-nc-nd/4.0/deed.en_GB)

5 Patrick Collinson, ‘Pawnbroker H&T Halts Short-Term Loans as FCA Launches Review’, The Guardian, 18 November 2019, section Money <https://www.theguardian.com/money/2019/nov/18/pawnbroker-halts-short-term-loans-as-fca-launches-review> [accessed 3 December 2019].

6 ‘UK Payday Lending Giant QuickQuid to Close’, BBC News, 25 October 2019, section Business <https://www.bbc.com/news/business-50174367>; Rupert Jones, ‘Payday Lender Peachy Falls into Administration’, The Guardian, 5 March 2020, section Money <https://www.theguardian.com/money/2020/mar/05/payday-lender-peachy-falls-into-administration>

7 ‘Amigo Stops Most Lending & so Do Some Other High Cost Lenders · Debt Camel’, Debt Camel, 2020 <https://debtcamel.co.uk/amigo-stops-most-lending-coronavirus/>

8 Chaminda Jayanetti, ‘Million Universal Credit Households “Do Not Get Full Entitlement”’, The Observer, 23 November 2019, section Society <https://www.theguardian.com/society/2019/nov/23/million-families-cut-universal-credit-benefits-debts; Patrick Butler ,, ‘Universal Credit “Sending People into Arms of Loan Sharks”’, The Guardian, 23 January 2020, <https://www.theguardian.com/society/2020/jan/23/universal-credit-loan-sharks>

9 ‘The Long and Winding Road ‘, Resolution Foundation, <https://www.resolutionfoundation.org/publications/the-long-and-winding-road/>

10 ‘Employment: What’s Happened to Wages since 2010’, Full Fact <https://fullfact.org/economy/employment-since-2010-wages/>.

11 ‘Savings Evidence Review | Review | What Works Fund - FinCap’ <https://www.fincap.org.uk/en/reviews/savings-evidence-review>.

12 i3oz9s, ‘Poverty Premium’, Greater Manchester Poverty Action <https://www.gmpovertyaction.org/poverty-premium/>

13 UK Payrolls Shrink by 649,000 Jobs in Lockdown’, BBC News, 16 July 2020, section Business <https://www.bbc.com/news/business-53427304> ; ‘Coronavirus Job Retention Scheme Statistics: June 2020’, GOV.UK <https://www.gov.uk/government/statistics/coronavirus-job-retention-scheme-statistics-june-2020>

14 ‘English Indices of Deprivation 2019: Postcode Lookup’ <http://imd-by-postcode.opendatacommunities.org/imd/2019>

15 ‘Personal Well-Being User Guidance - Office for National Statistics’ <https://www.ons.gov.uk/peoplepopulationandcommunity/wellbeing/methodologies/personalwellbeingsurveyuserguide>.

16 ‘High-Cost Credit and Consumer Credit’, FCA, 2019 <https://www.fca.org.uk/firms/high-cost-credit-consumer-credit>.

17 ‘Hoover 10kg Washing Machine - Graphite’, BrightHouse <https://www.brighthouse.co.uk/washers-and-dryers/hoover-10kg-washing-machine-graphite-hv610awg>

18 ‘Map of Average Credit Scores Across the UK | Experian’ <https://www.experian.co.uk/consumer/credit-score-map-uk/>

19 ‘Check Your Free Credit Score | Experian’ <https://www.experian.co.uk/consumer/experian-credit-score.html>

27

20 ‘Credit Emancipation: How Salary-Linked Lending Can Help Turn around Disadvantaged Places’, ResPublica <https://www.respublica.org.uk/our-work/publications/credit-emancipation-making-communities-more-prosperous-and-productive/>]

21 ‘FG18/6: Helping Tenants Find Alternatives to High-Cost Credit and What This Means for Social Housing Landlords’, FCA, 2018 <https://www.fca.org.uk/publications/finalised-guidance/fg18-6-helping-tenants-find-alternatives-high-cost-credit-and-what-means-social-housing-landlords>.

22 ‘Publications and Tools, HACT’ <https://www.hact.org.uk/publications-and-tools>; HACT, Simetrica, ‘Community investment and homelessness values from the Social Value Bank’, < www.socialvaluebank.org>, License: Creative Commons Attribution-NonCommercial-NoDerivatives license (http://creativecommons.org/licenses/by-nc-nd/4.0/deed.en_GB)

23 ‘Work Not Worry – Good Financial Health for Employees’ <http://worknotworry.org/>

24 ‘Most Employees Now Affected by Money Worries at Work, Survey Finds’, People Management <https://www.peoplemanagement.co.uk/news/articles/most-employees-affected-money-worries-at-work>

25 ‘Employee Financial Well-Being’, CIPD <https://www.cipd.co.uk/knowledge/culture/well-being/employee-financial-well-being>

26 Survey of 78 Hoot members using payroll deduction, 2020.

27 ‘Fairness Commissions’, New Economics Foundation <https://neweconomics.org/2015/07/fairness-commissions>

28 ‘Credit Emancipation: How Salary-Linked Lending Can Help Turn around Disadvantaged Places’, ResPublica <https://www.respublica.org.uk/our-work/publications/credit-emancipation-making-communities-more-prosperous-and-productive/>

29 Holder, Josh, and Josh Holder, ‘High Street Crisis Deepens: 1 in 12 Shops Closed in Five Years’, The Guardian <https://www.theguardian.com/cities/ng-interactive/2019/jan/30/high-street-crisis-town-centres-lose-8-of-shops-in-five-years>

30 Alakeson, Vidhya, ‘High Streets Can Be Saved. Here’s How to Reinvent Them for the 21st Century | Vidhya Alakeson’, The Guardian, 1 May 2019, section Opinion <https://www.theguardian.com/commentisfree/2019/may/01/high-streets-saved-debenhams-close-stores>

31 ‘Local Multiplier 3 (LM3) - NEF Consulting’ <https://www.nefconsulting.com/our-services/evaluation-impact-assessment/local-multiplier-3/>

32 ‘Consumer Credit — High-Cost Short-Term Credit Lending Data’, FCA, 2019 <https://www.fca.org.uk/data/consumer-credit-high-cost-short-term-credit-lending-data-jan-2019>.

33 Gareth Shaw, ‘Bank Branch Closures: Is Your Local Bank Closing?’, Which? Money, 2018 <https://www.which.co.uk/money/banking/switching-your-bank/bank-branch-closures-is-your-local-bank-closing-a28n44c8z0h5>; ‘Post Office Network Close to Collapse, MPs Warned’, The Independent, 2019 <https://www.independent.co.uk/news/uk/home-news/post-office-collapse-branch-closing-sub-postmaster-nfsp-a8921241.html>

34 Hoot Credit Union transaction figures.

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