Chief Secretary announces funding to help the financially excluded

The Chief Secretary to the Treasury, Des Browne, today announced that money from the Financial Inclusion Fund would be made available to support a new Financial Inclusion Taskforce campaign.

The campaign will address the barriers to accessing both mainstream banking products and sources of affordable credit. It will raise awareness of the problem of financial exclusion amongst intermediary organisations such as charities and housing associations. It will also provide them with tools and training both to assist their clients to open bank accounts and to enable them to access affordable borrowing alternatives.

Once these organisations are equipped to provide appropriate support, the campaign will raise awareness of the benefits of financial inclusion amongst excluded people themselves, and will point them to sources of information and advice.

At today’s Financial Inclusion Taskforce Conference, Des Browne said:

“Financial exclusion imposes real costs on individuals and their families – often the most vulnerable people in our society. That is why I am delighted to announce that funds will be made available so that these individuals can be supported by trusted intermediary organisations as they make important decisions about their finances.”

The Economic Secretary to the Treasury, Ivan Lewis said:

“The Financial Inclusion Taskforce continues to make a valuable contribution to financial inclusion work, ensuring that momentum is maintained and progress is achieved. The Taskforce’s proposal for a campaign to stimulate demand for appropriate banking and affordable credit amongst financially excluded people themselves will form an important part of our ongoing strategy to tackle financial exclusion.”

Brian Pomeroy, chairman of the Financial Inclusion Taskforce, said:

“As the number of unbanked people decreases, those who remain are ever more challenging to reach. The Taskforce believes it is important to engage intermediaries who are in regular contact with, and trusted by, financially excluded people in order to stimulate demand for banking services and give them the support and assistance they need to help them access financial products.”

Notes to editors

1. Promoting financial inclusion, published alongside the 2004 Pre-Budget Report set out next steps for tackling financial exclusion in three priority areas: access to banking, access to affordable credit and access to money advice.

2. The Financial Inclusion Taskforce was established to monitor progress towards financial inclusion objectives and to report to Government on scope for additional activity.

3. PBR 2004 also established a Financial Inclusion Fund of £120 million over three years to support initiatives to tackle financial exclusion:

£45 million will be used to support an increase in the provision of face-to-face money advice and will be administered by the Department of Trade and Industry;
£6 million will be used by the Legal Services Commission to pilot mechanisms of money advice outreach aimed at those who do not normally present themselves to debt advisors;
£3 million will be provided to The Financial Inclusion Taskforce with which to pursue their objectives, including improving the knowledge base of financial exclusion issues;
£10 million will be available to provide the necessary support to administer the scheme whereby, under certain circumstances, lenders could apply for repayment to be made by deduction from benefit where normal repayment arrangements have broken down, and the administration of the growth fund for third sector lenders; and
£36 million will be made available for a growth fund to support the coverage, capacity and sustainability of third sector lenders. The growth fund will be administered by the Department for Work and Pensions.

4. Budget 2006 announced that the unallocated £20 million of the Financial Inclusion Fund would be made available for broader financial inclusion objectives, including stimulating demand for mainstream financial services.

5. The campaign has been developed by the Financial Inclusion Taskforce to complement measures announced in Promoting financial inclusion, which will see an increase in the supply of appropriate banking and affordable credit products.

6. Media enquiries should be addressed to Tom Youldon at the Treasury press office on 020 7270 4420.

7. Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk.