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Financial Inclusion

Volume 468: debated on Thursday 6 December 2007

The Government are today publishing “Financial Inclusion: an Action Plan for 2008-11”, setting out commitments by the Government and key partners to achieve further progress in promoting financial inclusion. This document has been deposited in the Libraries of both Houses and is available on the Treasury's website (www.hm-treasury. gov.uk)

The Government has three goals for financial inclusion:

that everyone should be able to manage their money effectively and securely, through having access to a bank account, and the confidence and capability to get the most from it;

that everyone should be able to plan for the future with a reasonable degree of security. Therefore, affordable credit, saving accounts and simple insurance products should be available to all who need them; and

that everyone should have the information, support and confidence they need to prevent avoidable financial difficulty, and to know where to turn if they do find themselves in financial distress.

Financial inclusion: an action plan for 2008-11” affirms the Government’s commitment to promoting financial inclusion in the next spending period. As announced in the comprehensive spending review, from 2008-11, financial inclusion policy will be supported through a new £130 million financial inclusion fund. The fund will be augmented with significant contributions from other Government Departments.

Initiatives that will be supported in the next spending period include:

£76 million (including £2 million from BERR) 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;

£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;

£2 million funding to the OFT to continue its “Save Xmas” campaign, promoting access to saving opportunities, particularly in credit unions;

£5 million (including £3 million from MoJ) to operate prison-focused outreach in every region of England and Wales; and

a continuation of projects to tackle illegal lending in every region of Great Britain, which will be funded by BERR.

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, the 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.

The taskforce, which has been extended until 2011, will continue to monitor these initiatives and advise the Government on financial inclusion developments.

The Treasury Committee conducted an inquiry into financial inclusion and savings in the spring of 2007, and published a report detailing its findings in October 2007. The Government have sent their response to the inquiry to the Treasury Committee today.