HM Treasury launches
action plan for financial inclusion with £135 million of funding
HM TREASURY News
Release (140/07) issued by The Government News Network on 6 December 2007
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
* £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
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
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
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