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HM Treasury launches action plan for financial inclusion with £135 million of funding
Ensuring that everyone in the UK can access the financial system and manage their finances is the objective of the Action plan for financial inclusion for 2008-11, launched today by Economic Secretary to the Treasury Kitty Ussher.
Government funding of £135 million will fund initiatives to promote financial inclusion. These include:
* £12 million to fund dedicated staff to work to promote financial inclusion locally, with a focus on increasing the availability and awareness of home contents insurance for low-income people, in particular in areas affected by the recent flood events
* £76 million to fund free face-to-face money advice to financially excluded people
* £38 million to increase consumer access to affordable credit through credit unions and other third sector lenders.
Launching the plan, Kitty Ussher said:
"Exclusion from the financial system brings real costs, often borne by those who can least afford them. This is why promoting financial inclusion continues to be a key priority for the Government as part of its commitment to fairness and social justice. It is not acceptable that anyone, but particularly the most vulnerable members of our society, should face costs which could easily be avoided.
"The Action plan and funding I am announcing today sets out the Government's intentions - that everyone is able to manage their money; plan for their future; and have the information, capability and confidence to prevent and deal with financial difficulty.
"We need to help people cope with financial pressures and avoid a spiral of debt. Significant progress has been made since the Financial Inclusion Fund was first established in 2004, but we can't and won't be complacent - the initiatives outlined in the plan will make a real difference in the lives of financially excluded and low-income people."
The Action plan details a number of initiatives to advance the Government's three priority goals for financial inclusion:
* Enabling people to manage their day-to-day money;
* Planning for the future and coping with financial pressure; and
* Dealing with financial distress.
ACTION PLAN INITIATIVES:
Free face-to-face money advice
£76 million will fund free face-to-face money advice to financially excluded people as part of the Department for Business, Enterprise and Regulatory Reform (BERR) money advice initiative. BERR's face-to-face money advice projects have recruited and trained over 500 new money advisers, and have helped over 66,000 clients with their debt problems.
Financial inclusion champions promote affordable
£12 million has been allocated for the Department for Work and Pensions to establish a "financial inclusion champions" initiative, funding dedicated staff to work with local authorities, social landlords, and other key partners to promote financial inclusion locally. The champions' role will focus on working to help low-income people insure their homes - by working closely with the Association of British Insurers to promote affordable home contents insurance to low income customers, specifically targeting people in areas affected by the floods of the summer and those at living in areas at risk of flooding.
Access to banking
To help consumers manage their day to day finances, the Government will continue to work in partnership with the banking industry to promote access to and take-up of appropriate banking services by financially excluded people. Good progress is already being made to reduce by half the number of people without access to a bank account, with 800,000 adults being brought into banking between 2002-03 and 2005-06.
Increased access to affordable credit
The Action plan announces funding of £38 million to increase consumer access to affordable credit through credit unions and other third sector lenders. These lenders provide small, affordable loans (typically £500 or less) to financially excluded customers who might otherwise be dependent on expensive or illegal alternatives such as loansharks.
Building on their successful work in partnership with Government to increase take up of basic bank accounts and their support for other financial inclusion initiatives including easier access to free ATMs in low income areas, banks have also committed to support third-sector affordable credit, including actions to develop new provision in 25 high priority areas identified by the Financial Inclusion Taskforce.
Money advice for prisoners
£5 million will fund the operation of a prison-focused money advice outreach service in every region of England and Wales, run in partnership with the Legal Services Commission and the National Offender Management Service. Research shows that prison-based outreach services are especially effective at reaching financially excluded people.
Saving for Christmas
£2 million will allow the "Save Xmas" campaign run by the Office of Fair Trading to continue to operate. "Save Xmas" is an awareness campaign to help consumers understand their options when saving for Christmas and works with community groups and partners across the UK. It was set up following a review into the collapse of the Farepak Christmas hamper scheme.
Cracking down on loan sharks
The Department for Business, Enterprise and Regulatory Reform will continue to fund illegal money lending teams in every region of Great Britain for the next three years. The teams work to increase awareness of alternative legal ways to borrow money and to give victims the confidence to overcome fear and intimidation and report loan sharks.
NOTES FOR EDITORS
1. The Action plan for Financial Inclusion is available on the Treasury website see: http://www.hm-treasury.gov.uk/documents/financial_services/financial_inclusion/financial_inclusion_actionplan.cfm
2. Today's announcement builds on the £120 million of Government funding for the Financial Inclusion Fund for the 2005-08 spending period and the current financial inclusion strategy achievements.
3. The Government announced a goal, shared with the banks, in 2004, of halving the 2.8 million adults living in 1.8m households without access to a bank account. Latest data shows that the number of unbanked people in 2005-06 had fallen to 2 million adults, living in 1.3 million households - meaning that 800,000 adults had been brought into banking between 2002-03 and 2005-06.
4. Financial Inclusion - the way forward was published in March 2007 - see: http://www.hm-treasury.gov.uk./media/7/B/financial_inclusion030407.pdf .
5. Research published today by the Financial Inclusion Taskforce
identifies 25 "red alert" areas across England, Wales
and Scotland, in the most immediate need of new affordable credit
provision, and a further 56 "amber" areas next in the
6. Funding for increased access to affordable credit builds on the Government's existing Growth Fund, which has already resulted in affordable loans being made to more than 46,000 financially excluded consumers.
7. Financial inclusion is about ensuring that everyone has access to appropriate financial services, enabling them to:
* manage their money securely and confidently on a day-to-day basis,
* plan for the future and cope with financial pressure,
* deal with financial problems should events lead to financial
Financial exclusion causes extra costs and real disadvantage:
* it makes day-to-day money management more difficult and expensive, and can make it harder to find a job;
* it makes it harder for families to plan for the future and manage spending peaks and troughs; and
* if things go wrong, financial exclusion makes people more vulnerable to financial distress and a spiral of debt, poverty and hardship.
8. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by email to email@example.com.
9. This press release and other Treasury publications and information are available on the Treasury website. If you would like Treasury press releases to be sent to you automatically by email you can subscribe to this service from the press release site on the website.