This information sheet is part of the Tailor-Made series, which aims to share evidence about the difference the community sector makes to our lives. Specifically, this information sheet looks at the role of the sector in improving local economies, with reference to the multitude of ways in which community groups can impact on both poverty and unemployment.

The economic disturbances of recent years have created a situation in which large sections of the population are in significant need of help; by 2011, 22.7% of the UK population were considered to be at risk of poverty or social exclusion1 and around 4.5 million British adults had just £10 left per month after paying their essential bills.

Though the Government has been the primary source of support for those in need in the past, cutbacks mean that this help is declining in real terms and the poorest places are those being hardest hit. Many people experiencing financial distress are therefore being forced to turn to alternatives for the help they require. The widespread use of payday loans, for example, represents just this; in the three years following the recession this industry grew by a staggering £1.3 billion, with over 8 million payday loans taken out in 2011/12.

In the past year alone the number struggling with payday loans has increased by as much as 42%. The huge demand for help is also evident from the fact that nearly 1 million people in the UK have been fed by foodbanks in the past year, requiring two new banks to be launched every week.6 There are clearly large numbers in acute need. 

Key Points:

• Many people are struggling to cope as economic uncertainties and government cutbacks continue to bite. A situation has been created in which significant parts of the population are forced to depend on payday loans and foodbanks just to meet their day-to-day needs.
• The community sector can help to meet, and prevent, these difficulties. Community groups can provide accessible, trusted advice and support relating to finance and employment. They are able to use their connections to the community to find creative ways to save people money, such as bulk purchasing.
• The sector contributes significant social and economic value to both individuals and society. Community groups reduce the burden on statutory services, reduce unemployment, make areas more attractive to businesses and improve people’s quality of life through financial education and access to fair finance.

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Table of Contents

Summary
Introduction
What role does the community sector play in improving local economies?
What makes the community sector different?
     Example 1: Community First Job Club
     Example 2: Allen Valleys Oil Buying Co-operative
     Example 3: Community First Money Management Project
     Example 4: Parents’ Committee Nursery Project
What value does the community sector contribute to local economies?