Today at the Assembly (27 January 2015), the Minister for Communities and Tackling Poverty will be making a statement on ‘refreshing the financial inclusion agenda’. Those involved in this area of work will be listening very carefully to what Lesley Griffiths AM has to say.
According to the Welsh Government, a financially inclusive country is one where everybody has access to an appropriate range of financial products and services, which in turn allows them to effectively manage their money regardless of their level of income, social status or ability. For financial inclusion to be achieved, people also need to be supported to have some basic financial skills, product knowledge and understanding.
Financial inclusion has emerged as a prominent issue on the Assembly’s radar over recent months. In particular, during the autumn, a Bill proposed by Bethan Jenkins AM was scrutinised by the Children, Young People and Education Committee. This Bill sought to strengthen financial education within the school curriculum and improve the way in which local authorities delivered financial inclusion initiatives.
Although it refused to directly support the need for new legislation, the Welsh Government responded to the Bill’s proposals with many undertakings. Among them was a commitment to refresh its current Financial Inclusion Strategy and develop the action plan that accompanies it.
Many may feel that this is timely. The Welsh Government’s first ever Financial Inclusion Strategy was published in June 2009, and despite agreeing new priorities for the period between 2011 and 2013, no similar updates have been announced since. Neither have there been substantive Welsh Government reviews or annual reports on the Financial Inclusion Strategy since the inaugural one in December 2010.
The Financial Inclusion Strategy’s original aim was to facilitate a joint-agency response to financial inclusion in Wales. It attempted to set out action that both the Welsh Government and various partners could take to:
- Improve access for people to mainstream financial services;
- Provide affordable credit and similar services;
- Improve access to money and debt advice;
- Increase people’s financial capability and literacy;
- Help people maximize their income.
A team of Financial Inclusion Champions was set up to develop partnerships between organisations working on this agenda. Such organisations can include local authorities, housing associations, banks, money advice providers (such as the Money Advice Service and Citizens Advice), community organisations and charities.
Since 2009, the Welsh Government has also taken steps to support credit unions in Wales and to review how advice services are delivered across the county. This is in addition to initiatives such as its strategic framework for improving digital inclusion and its Tackling Poverty Action Plan.
However, not everybody would agree that the Welsh Government’s response to tackle financial exclusion has been sufficient.
For instance, the Assembly’s Communities and Culture Committee conducted an inquiry to this end in 2010 and concluded that people still had to learn how to manage their money the hard way and through painful experience. Moreover, in 2012, Community Housing Cymru told the Assembly’s Communities, Equality and Local Government Committee that the Welsh Government’s Financial Inclusion Strategy had failed and that it lacked ambition.
Critics also argue that changes to the financial landscape, including the UK Government’s austerity measures and the switch to Universal Credit, mean that people need more help than ever to manage their money more effectively. Coupled with growth in payday lenders, loan sharks and cold calling activities, many see this as a very pressing issue.
Some of these matters were discussed in detail during the Children, Young People and Education Committee’s recent work scrutinising Bethan Jenkins AM’s Bill. Amongst the Committee’s recommendations was that the Welsh Government should take action at a national level to improve financial inclusion, such as through updating its national Financial Inclusion Strategy.
How the Welsh Government proposes to respond is likely to be revealed in the announcement today.
Article by Rhys Iorwerth, National Assembly for Wales Research Service.