Markets are failing the poorest. It’s time to act.

How well markets operate has a huge impact on the lives, and the pockets, of the poor. It’s time they were included in the debate, says Julia Unwin

It is hugely welcome that Mark Carney has asked the question that has been too frequently dismissed in the years since the global financial crisis in 2008. Recognising the widespread anger at the behaviour of the financial markets, he said that markets have been "tainted" by scandals to an extent that the public now question their integrity.

We all rely on effective markets to access essentials like energy, food and housing. How well these markets operate makes a particularly big difference to the lives of people who are poor, yet their needs are very rarely considered as part of the debate.

When it comes to buying these basic essentials, the poor pay more. A low-income household charging up a prepayment card for electricity is paying more than a wealthier household meeting bills through direct debit. There is a higher cost in buying food if you live in one of the food deserts of the UK, and are forced to shop in an expensive local shop because of a lack of transport. And for many low-income households, the costs of borrowing are both eye-watering and unavoidable.

Of course, markets have an impact on incomes as well as outgoings. The labour market, particularly in the service industries of care, retail and hospitality, is structured to offer flexibility, insecurity and unreliability. This contributes to the vicious economic cycle through which poorer households spend little in the very local markets which need their cash, which can push up prices and leave them with even less to spend.

And of course the housing market, regularly described as dysfunctional, pushes more than 3 million people into poverty every year through the high cost of housing.

Fixing markets so that they work for households on low incomes is possible. Free enterprise across the world is the engine of wealth creation, and has brought creativity and ingenuity to the resolution of some of the most intractable problems. Over the last 50 years, the housing market has worked with Government and voluntary organisations to develop housing which offers stability at a reasonable price, severing the historic link between poverty and squalor. Serious attention to the nature of productivity in the service economy could result in good, properly paid jobs, with the prospect of progression. Access to heating, borrowing, insurance and transport at costs that people can afford are not beyond the capability and inventiveness of our market systems.

Access to the internet is arguably as important for people in this century as literacy was in the nineteenth century. Care for older people, mentally ill people and for children are as central to a recovering economy as transport. Training for both young people and those at later stages in their working lives are vital in a fast moving economy.

As Mr Carney says, if the benefits of the free market are not felt by poorer households, trust evaporates and engagement disappears. Successful markets can help to avoid people being left behind. Poorly structured, ineffectual markets lock some people deeper into poverty, and so prevent their contribution.