In a partnership with lender Fair for You, the ‘Iceland Food Club’ scheme is part of the retailer’s ‘Doing it right: right now’ response to the cost of living crisis.

The scheme’s pilot has had significant social impact and been shortlisted for a Global Good Award, and the Iceland Food Club will now offer ethical credit to customers across all UK stores and online.

It is estimated that 8.4 million people in the UK are going hungry and 9 million families who receive benefits will be on average £500 worse off due to inflation this year. The Iceland Food Club originated from a taskforce of Iceland colleagues dedicated to finding a way to support children at risk of hunger, particularly when those on free school meals were at extra risk during school holidays. The initiative has been supported by HM Treasury, NESTA and Esmée Fairbairn Foundation.

Microloans will be made available on a pre-loaded card, with repayments set at £10 per week. Customers have flexibility to choose which day of the week they make the repayments and may overpay if convenient for them. During the pilot customers paid interest on loans, however, all loans will be interest-free for the national roll-out.

Customers may only take out one loan at a time, during six windows through the year which coincide with school holidays. Limiting loans to these periods ensures customers only use them to smooth out incomes, rather than relying on them year-round.

Food Club Findings

By providing micro loans of £25-£100 with a minimal amount of interest to more than 5,000 customers during the Food Club’s pilot phase, findings from the Centre for Responsible Credit showed:

• 92% of customers using food banks previously had stopped or reduced their food bank use
• 71% of customers said they were less likely to fall behind on rent, council tax or other bills
• 71% of customers said they were better able to pay for food and other essentials
• A reduction of more than 80% in the number of customers using loan sharks
• 65% of customers said their diet had improved
• 57% of customers felt less ‘stressed, anxious or depressed’ about their finances

Richard Walker, managing director of Iceland Foods, said: “More than ever, people are struggling to purchase much needed everyday items during this relentless cost of living crisis, and fresh thinking is required by business and government to find workable solutions.

“At Iceland, as part of our Doing it right: right now we’re constantly exploring new ways to help our customers with innovative solutions that deliver real impact. With Fair for You, we have rolled out Iceland Food Club to offer our customers even more support, helping them manage essential spending on their own terms.

“To those striving to worry less about how they will afford essential goods, this ethical credit scheme delivers real help when most needed and I believe it will make a valuable contribution to breaking the cycle of food poverty in this country.”

Simon Dukes, CEO of Fair for You, said: “Nobody should have to go hungry in order to feed their kids, or be forced into making impossible decisions between putting food on the table or having hot water.

“Our mission at Fair for You is to provide affordable credit to those who need it, to ensure they are not ripped off by exploitative lenders. We’re proud to be working with Iceland to operate the Iceland Food Club.

“Now that it has launched nationally, it gives plenty more families the opportunity to get the groceries they want, improve their diet and enjoy family meals together, while also getting a better handle on their finances.”

Gillian Dickson, social investment manager at the Esmée Fairbairn Foundation, said: “Having supported Fair for You since 2015 and provided grant funding that enabled the pilot of the Iceland Food Club, we’re delighted to see the scheme expand nationally.

“There is a huge demand for ethical credit and by coming together with this unique scheme, Fair for You and Iceland are creating significant social impact at what is a very tricky time for many.”

Eligible customers will receive a preloaded card with an interest-free £100 credit limit, which can be used in store and online.