Memorandum submitted by HM Treasury
The Chairman of the Treasury Select Committee
has asked the Economic Secretary to the Treasury for written evidence
covering three particular points:
A response to the recommendations
in paragraphs 68 and 69 of the Committee's First Report of the
current Session on Financial inclusion: the roles of the Government
and the FSA; and financial capability.
A summary of the information available
to the Treasury on the second round of Saving Gateway pilots,
together with any indication about the precise timetable for decisions
on next steps.
An update on the progress in the
implementation of the agreement that had been secured from the
hamper industry to establish an industry-led scheme to ensure
that consumers' interests are fully protected through the establishment
of secure, ring-fenced accounts.
Paragraph 68: We welcome the establishment
of the Financial Inclusion Taskforce and its progress during the
first 18 months of work. It has brought a much needed focus to
the issue of financial inclusion and ensured wide consultation
with those throughout the financial services industry and voluntary
sectors who have a role to play in promoting financial inclusion.
The Taskforce has made much progress in its work programme under
the chairmanship of Brian Pomeroy. We believe its remit should
be expanded to include access to savings and insurance. The Treasury
should ensure that additional resources are provided to the Taskforce
so that the expansion of its remit does not limit the ability
of the Taskforce to complete its substantial programme of current
1. The Government recognises that savings
and insurance products, as well as affordable credit, are important
tools for helping people to plan for the future and cope with
financial pressures. The Government's new financial inclusion
strategy document, Financial inclusion: the way forward, published
in March, sets out the Government's goal that affordable credit,
savings accounts and simple insurance products should be available
to all who need them.
2. To work towards this goal, the new strategy
announces that the Government will work with the Financial Inclusion
Taskforce and the Association of British Insurers to address key
questions around how to take forward insurance within the financial
inclusion strategy. A new member from the insurance industry,
Bridget MacIntyre (UK CEO of Royal and SunAlliance plc), has been
appointed to the Taskforce to provide an expert perspective on
its insurance work.
3. The Government agrees with the Committee
that it is important to consider inclusion issues that relate
to saving and that is why the remit of the Government's financial
inclusion strategy has been extended to include saving. In this
context, the Government has been using the Saving Gateway to explore
ways to encourage saving among lower-income households and promote
engagement with mainstream financial services. Evidence from the
Saving Gateway pilots will inform policy decisions on the Government's
approach in this area and any potential involvement of the Taskforce
in saving issues going forward.
4. HM Treasury will continue to work with
the Taskforce Chair to ensure that the Taskforce is adequately
resourced to carry out all of its responsibilities effectively.
Paragraph 69: While we recognise the need
to keep the Financial Inclusion Taskforce at a workable size,
the Taskforce needs to engage with other partners that can help
promote financial inclusion, such as the Post Office and housing
5. The Government agrees that the Financial
Inclusion Taskforce should engage with a wide range of stakeholders,
including organisations outside the mainstream financial services
industry. The Government is confident that the Taskforce is carrying
out their responsibilities in this way, and that it has responded
to this effect in its own response to the Committee's recommendations.
6. The second Saving Gateway pilot was announced
at PBR 2004. The pilot started in March 2005 and an interim report
was published in July 2006.
The final evaluation of the second pilot is published today.
Both documents are available publicly on the HM Treasury website.
7. The first and second Saving Gateway pilots
have provided useful information on which to base policy decisions
about the Government's approach to promoting saving among lower-income
households. The Government now encourages external stakeholders
to contribute to the debate over the coming months and will make
further announcements on the next steps for the roll out of the
Saving Gateway in the Pre-Budget Report.
8. The Department of Trade and Industry
has been working closely with the hamper companies to ensure the
industry-led scheme to establish trust accounts are put in place
as quickly as possible. The scheme is designed to protect customers
by ring-fencing payments made into accounts controlled by independent
trustees. Good progress is being made. The companies are in the
process of restructuring their businesses to accommodate the new
trust arrangements and hope to identify suitable independent trustees
shortly to administer the accounts.
9. A new trade bodythe Christmas
Pre-payments Authority (CPA)will take over the role of
monitoring the establishment of these accounts as soon as it is
operational. The Minister for Trade, Investment and Foreign Affairs
announced on 17 May that Derek Walpole, deputy Chief Executive
of the Family Fund, and Suzy Hall, founder of the Unfairpak campaign,
have agreed to take on the roles of Chairman and Director of Consumer
Affairs in the CPA respectively.
15 Interim Evaluation of Saving Gateway 2, Institute
of Fiscal Studies and Ipsos Mori, July 2006. Back
Final Evaluation of the Saving Gateway 2 Pilot: Main Report,
Institute of Fiscal Studies and Ipsos Mori, May 2007. Back