Advertisement
Become a member of the Big Issue community
JOIN
Social Justice

Families are pawning their belongings to pay for food as the cost of living rises

Pawnbrokers are playing an increasingly important role in people’s financial lives as the cost of living crisis continues to surge, a new report has found.

Coins

People on low incomes are resorting to pawning household goods to pay for food and rent amid the cost of living crisis, a new report reveals.

The Social Market Foundation (SMF) found pawnbroking has become an essential source of credit for people who have no alternative way to borrow money – typically due to their credit score – and is a “simple fact of life”.

But now more than ever, with over seven million adults having difficulty finding the money to feed themselves, according to new research from The Food Foundation, the need for pawnbrokers is rising.

The report interviewed customers who said they use pawnbroking as a form of cashflow management, gaining access to credit that they use for routine living costs when cash is short.

Yet amid growing demand, the number of pawnbroking shops is falling, and has halved in seven years.

The National Pawnbrokers Association found 2,091 shops existed in 2014, but last year the number had fallen to just 865.

Advertisement
Advertisement

The SMF found a common reason people use pawnbrokers is to get cash that is used for household essentials – including food and rent – typically at the end of the month, when they are running out of money, adding that loans secured by pawning possessions are typically less than £100.

One interviewee said: “I need this money to be able to buy food. It is as simple as buying food.”

Another person added: “Usually it’s for food and bills. It’s more near to the end of the month if I’m struggling or if it’s been a long month.”

Article continues below

Current vacancies...

Search jobs

When asked about the potential impact of pawnshop closures, interviewees said alternatives included going without food, heat, using doorstep lenders or payday loans.

Some raised concerns that if their local pawnbroking shop were to close, they would not be able to afford to travel to the nearest alternative shop, in another town or area.

One person explained: “It would have a detrimental effect. If I have an emergency at the end of the month or I need to get a week’s shopping it would be making ends meet by me and my husband not eating very much. It would be the same with limiting gas, water, and electric usage.”

Jake Shepherd, SMF researcher and report author, said: “Having spoken with customers directly, I’ve learned that pawnbrokers can play an important role in people’s financial lives. At times when we’re in need of a financial safety net, many of us take credit cards, bank loans, and even savings for granted. But they are luxuries that not all people have access to.

“For people on low incomes, the alternatives to pawnbroking can be even more risky and costly. In a credit environment where options are already limited, the closure of pawnbrokers could be devastating for some customers.

“As the cost of living continues to surge, policymakers ought to recognise the importance of credit for people on low incomes and consider improving the borrowing options available to them.”

SMF director James Kirkup said it was a “simple fact of life” that some people on low incomes need credit to manage their expenses.

He said: “We might wish to live in a world where wages and benefits were higher and people don’t need to borrow money just to make it to the end of the month. But sadly that isn’t the case, so some people on low incomes do indeed borrow just to get by. Politicians and regulators should pay more attention to that fact, and think harder about how to ensure the market in credit for low-income customers works better and more fairly.”

Ray Perry, CEO of the National Pawnbrokers Association, explained people from all walks of life use a pawnbroker when they have gaps in their cash flows.

He added: “We at the NPA are concerned that the banks’ attitude to the pawnbroking sector, based on outdated perceptions, is a major reason for the decline in the number of pawnbrokers.

“The industry is highly regulated, much needed as evidenced by the SMF and we are working with UK Finance, the banks, FCA and HM Treasury to change perceptions especially when the need for small sum borrowing is growing due to the inflationary pressures on food and energy costs.”

Peter Kenyon, Chief Executive of the pawnbrokers Ramsdens Holdings PLC commented: We welcome the findings of the Social Market Foundation’s report, which clearly demonstrate the important role that pawnbrokers bring to high streets across the UK by providing access to this responsible, asset-backed and customer-friendly form of lending that has been around for hundreds of years.

“Due to misconceptions around pawnbroking, many consumers use other, more expensive borrowing options instead.  Pawnbroking is a simple to understand product and those that use pawnbroking are highly satisfied with the service offered.  Pawnbroking needs to be given greater awareness as a borrowing solution for customers and hopefully this will reduce the numbers of consumers, estimated at over 1 million, using illegal money lenders. 

“At Ramsdens we are proud to have offered professional pawnbroking services to customers for decades, and will continue to do so as the need for these services will invariably become more important than ever as the cost of living continues to rise and the need for responsible forms of lending increases.”

It comes as new research from The Food Foundation shows more and more families are struggling to pay for food through the cost of living crisis.

“The situation is rapidly turning from an economic crisis to a health crisis,” said Anna Taylor, executive director of The Food Foundation. “Food banks cannot possibly be expected to solve this.  The government needs to realise the boat is sinking for many families and it needs to be fixed.”

Advertisement

Become a Big Issue member

3.8 million people in the UK live in extreme poverty. Turn your anger into action - become a Big Issue member and give us the power to take poverty to zero.

Recommended for you

View all
Scrapping two-child benefit cap 'single most cost-effective policy' to reduce child poverty
Stock image of a baby being held by its mother
Child poverty

Scrapping two-child benefit cap 'single most cost-effective policy' to reduce child poverty

Olympic BMX star Kieran Reilly: 'I'm so proud of the North – hopefully one day people won't have to move'
Kieran Reilly at the Paris games
Sport

Olympic BMX star Kieran Reilly: 'I'm so proud of the North – hopefully one day people won't have to move'

My brother died because drug dealers took advantage of his autism. He was told he wasn't disabled enough
Child holding onto adult's hands
Care experience

My brother died because drug dealers took advantage of his autism. He was told he wasn't disabled enough

Black History Month: 12 forgotten Black heroes who defined and redefined modern Britain
Black History Month

Black History Month: 12 forgotten Black heroes who defined and redefined modern Britain

Most Popular

Read All
Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits
Renters: A mortgage lender's window advertising buy-to-let products
1.

Renters pay their landlords' buy-to-let mortgages, so they should get a share of the profits

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal
Pound coins on a piece of paper with disability living allowancve
2.

Exclusive: Disabled people are 'set up to fail' by the DWP in target-driven disability benefits system, whistleblowers reveal

Cost of living payment 2024: Where to get help now the scheme is over
next dwp cost of living payment 2023
3.

Cost of living payment 2024: Where to get help now the scheme is over

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know
4.

Strike dates 2023: From train drivers to NHS doctors, here are the dates to know