The Government want to ensure that people, regardless of their background or income, have access to useful, affordable financial products and services. To tackle financial exclusion, the Government convene the Financial Inclusion Policy Forum, which brings together Ministers, regulators, industry and the third sector to provide leadership and promote collaboration. Since 2019, the Government have allocated £100 million of dormant assets funding to support Fair4All Finance’s work to improve access to affordable credit.
My Lords, does my noble friend agree that financial inclusion brings not just economic benefits to the individual but economic, social and psychological benefits to all of us? To that end, does she agree that it is high time that we revisit the question of a“have regard to” financial inclusion duty for the FCA?
My Lords, I absolutely agree with the sentiments expressed by my noble friend about the importance of financial inclusion. The Government recognise that there has been strong interest in the proposal for the FCA to be given a separate “have regard to” financial inclusion duty. However, at present the Government’s position remains that the FCA’s existing objectives and regulatory principles are already well aligned with the objectives of financial inclusion. We do not believe that a separate “have regard to” financial inclusion duty would necessarily lead to a different approach or tangible improvements over the current arrangements with regard to the aim that we all want to see: greater financial inclusion and less exclusion.
My Lords, the Government say that they are in favour of this, but they are watching as banks close in many communities. Many poor areas have no bank, at a time when those banks have seen soaring profits. When are the Government going to act to do something about this, to make sure that people have access to banking services?
My Lords, there are existing obligations, which are enforced by the Payment Systems Regulator, but noble Lords will also know that the Government are committed to legislating to protect access to cash. Those measures will be included in the forthcoming financial services Bill.
My Lords, does tangible improvement include wider social ownership of assets—wider ownership of popular capitalism? At the moment, capitalism is not very popular at all. So maybe there should be some reinforcements to spread the benefits of capital, beyond those who benefit anyway because they have capital in the first place?
I agree with the sentiments expressed by my noble friend. Access to capital is something that should be offered to the widest range of people so that they can benefit from it.
My Lords, the biggest barriers to financial inclusion are poverty and regressive taxation which robs people of disposable income. Some 14.5 million people already live in poverty. The poorest 10% of households pay 47.6% of their income in direct and indirect taxes, compared with 33.5% by the richest 10%. Can the Minister explain how and why the Government have created this shameful position of exclusion?
I say to the noble Lord that the £37 billion of financial support offered to people this year to support them with the high costs of living has been targeted at those on the lowest incomes and those least able to pay. So the Government have taken progressive measures to help protect people against rising costs of living.
My Lords, I agree that school is a very important place to start for people’s life chances, and also their financial understanding. I am pleased to say that under this Government, the achievement gap for children at school between those in the poorest households and those in the wealthiest households has narrowed. That is something that we need to continue to make progress on.
My Lords, pursuing the point on poverty that we have just heard about, is the Minister aware that the poverty premium—the extra costs that people in poverty or on low incomes pay for essential products or services—costs the average low-income household some £430 a year? That is the equivalent to some 10 weeks’ grocery bills. Could the Minister explain why she does not think that giving the Financial Conduct Authority specific powers to tackle financial inclusion, including the poverty premium, is a good idea? I just do not understand it.
My Lords, I am aware of the poverty premium: it can exist in different ways in different sectors. There is already work under way to tackle that poverty premium; for example, the other week in Questions I spoke about work in the insurance sector to ensure that those with pre-existing conditions or those who are older can access products. We are continuing to work through the Financial Inclusion Policy Forum to make sure that things such as the poverty premium are tackled.
My Lords, according to evidence from the National Centre for Financial Education, financial habits are formed at around the age of seven. It also says that only 20% of primary schoolchildren are receiving financial education, despite personal, social, health and economic education being a compulsory subject—it is probably too wide for many teachers to cover everything that is required. What is the Treasury doing to work with the Department for Education to ensure that every child gets decent financial education from primary school upwards?
Financial education is taught in schools through a number of different avenues, including the maths curriculum, citizenship education and PSHE. The Government are well aware of the importance of this topic and continue to work with the Department for Education to make sure that schools and teachers have the resources to ensure that children can learn about it.
My Lords, following on from the question asked by the noble Baroness, Lady Tyler, about the poverty premium, which sees those who can least afford it being forced to pay more for essential goods and services, what are the Government doing to work with energy providers to prevent them charging more for electricity that is accessed via a pre-payment meter?