text: Thursday 15 November 2007
  [John Bercow in the Chair]
  [Relevant Documents: The First and Thirteenth Reports from the Treasury Committee, Session 2006-07, HC 53 and HC 504, and the Twelfth and Thirteenth Reports from the Committee, Session 2005-06, HC 848 and HC 1717 on financial inclusion; the Government and other responses, Fourth Special Report, Session 2006-07, HC 437; the Sixth Report from the Work and Pensions Committee, Session 2006-07, on the Social Fund, HC464; and the Government response, Second Special Report, Session 2006-07, HC 941.]
  Motion made, and Question proposed, That the sitting be now adjourned.—[Steve McCabe.]
  If I am out of breath, it is because five minutes ago I thought that I would show my speech to one of the officials—and discovered I had no speech. So, it is possible to get to the other side of the House and back in four minutes, despite being unfit.
  I am grateful for having caught your eye, Mr. Bercow, and for the opportunity to open this debate on financial exclusion—or inclusion. I have been asked to speak in the absence of the Chairman of the Select Committee on the Treasury, my right hon. Friend the Member for West Dunbartonshire (John McFall), who has had to return to Scotland for an urgent and unexpected engagement. The whole Committee will agree that he has shown a very strong personal commitment to financial inclusion issues, and he very much regrets his unavoidable absence from today’s debate. We are sad that he is not here.
  I am glad to see other prominent members of the Committee present, and I look forward to their catching your eye, Mr. Bercow. I also welcome the new Economic Secretary to the Treasury. Her two predecessors, the Under-Secretary of State for Health, my hon. Friend the Member for Bury, South (Mr. Lewis), and the Secretary of State for Children, Schools and Families, showed a commitment to financial inclusion issues and a readiness to respond constructively to many proposals from the Committee. We hope that she follows in their footsteps in such a promising manner.
  The subject of this debate has been identified as a priority since the early years of the Government. In 1999, the Treasury published a report estimating that 1.5 million households, and 2 million people living in low-income households, did not use any financial services. It described the adults as mostly unemployed, on benefits and living in social housing. In approaching the problem, the Committee was clear that
  “Financial exclusion blights the lives of many millions of people…increases the costs they bear for basic services…makes them vulnerable to illegal or high-costing lending”
  and “reinforces social exclusion.”
  Today, against that background, we shall debate four reports that the Committee produced on those issues and a report by the Select Committee on Work and Pensions that is noted as relevant. I do not intend to summarise those reports; instead, I intend to touch on four main themes arising from that body of work. They relate to savings, affordable credit, banking services, and a financial capability and financial inclusion strategy.
  On savings, one of the main conclusions of our financial inclusion work was that the Government’s strategy paid insufficient attention to promoting safe savings among the financially excluded. We also felt that the UK savings industry largely did not serve those lower down the income scale at all well. Saving is worth while, even—and perhaps especially—for those on low incomes. The Committee was of the opinion that even a small cushion of savings could make a great deal of difference to the personal finances of those on lower incomes. With that in mind, we were particularly attracted to the savings gateway scheme, which the Government first piloted in 2002. To the disappointment of some, including myself, the Government chose to follow that up with a wider pilot scheme in 2005, instead of running it nationally.
  The first scheme was aimed at people on lower incomes, and with the Government matching them pound for pound, it was very successful. Before the scheme started, 52 per cent. of the participants had no savings in a current account, and 25 per cent. did not even have a current account, let alone one with savings. The second pilot appears, however, to have given further useful information, especially on the matter and level of match funding, so my criticism was unjustified. I am nevertheless still anxious for the Government to spread the scheme nationally.
  We have emphasised the potential of a national savings gateway scheme to encourage and broaden savings among lower income households. A Government decision was initially trailed as being due in the pre-Budget—
  I thank my hon. Friend for giving way because I want to touch on this point before he leaves the subject. He knows that one recommendation by the Committee was that the savings gateway should focus on lower income groups. Research shows that when the Government widen the income groups that the gateway covers—up to £25,000, for example—a tremendous amount of dead weight is created. Does my hon. Friend agree that it is important for the Government to understand that recommendation and to focus on people on lower incomes?
  My hon. Friend makes a very valid point, which is borne out by examination of the two pilot schemes, and he describes just what happened when the Government extended the scheme. The figures that I have given for the scheme aimed at lower earners demonstrate that it was well taken up and well appreciated. The number of people who went to the maximum with the scheme was very encouraging.
  It is worth noting that the Institute for Public Policy Research think-tank costed a national basic scheme aimed at the lower paid at £249 million. That compares with the £2.1 billion of tax relief on personal equity plans and individual savings accounts that goes to anyone, regardless of income, who buys such products, and with the £5.3 billion of tax relief that was given to pensions in 2005-06. I still do not understand why the scheme has not been introduced as quickly as it should have been. It clearly works and it will be targeted at the desired individuals and groups. I look forward to something happening in the next Budget.
  Is not the child trust fund another initiative that is worth comparing with the savings gateway? The fund is not targeted at low incomes, but it is intended to promote a savings culture. Unfortunately, two in 10 people who walk into a bank do not even get as far as opening an account. Perhaps the Government should consider the split of resources in that area, too.
  I note with some sorrow the Liberal Democrat view on the child trust fund. I think that it is a very good initiative, although there is an argument for limiting it to certain income groups. In effect, the Government have done things the other way: giving more to lower income groups. In terms of those groups, I appreciate the initiative. It is a good idea for a young child with parents who would not normally have an opportunity to save.
  The Committee also dealt with the matter of Farepak, which caused much unhappiness and disappointment to many lower-income and other families. The Committee examined the security of Christmas hamper savings products, and we were disappointed by the delay in finalising the detail and design of trust accounts, which are the agreed method of protecting savers’ money and would have avoided the disappointment of Farepak. Our conclusion was that, provided that the operation of trust accounts proved satisfactory, regulation of the market by the Financial Services Authority would not be proportionate.
  Christmas is seen as special by many families, and some who would not save for wider purposes choose to save for Christmas. However, those who decide to opt for such savings schemes need to be aware of all the options. The Committee was underwhelmed by the evidence that we heard from the Office of Fair Trading; speaking personally, it was not the first time that I had been underwhelmed by evidence from that august body. We were collectively underwhelmed by its “Save Xmas” campaign to promote awareness of options. It seemed muddled about the use of national advertising—that is par for the course—and about whether the target was Christmas this year or next. We asked the Treasury to review the conduct of that campaign, and I hope that the Minister will assure us that she is satisfied that all is now well on track.
  Finally on this theme, we called for the Government to formulate a more ambitious target for increasing savings among lower-income households. We thought that Government plans required a target against which progress could be measured. That is a new one, is it not—someone asking for another target? We thought that we needed such a target and, equally importantly, that the promotion of entry into savings, as opposed to their availability, had not been addressed. Our report spelled out seven aims that we recommended that the Government consider in consultation with the financial inclusion taskforce. It would be good to be given an update on the progress of discussions on the strategy that the Government and the taskforce are putting together.
  The second main theme that I wish to highlight is the importance of access to affordable credit. We identified the key role that the third sector, particularly credit unions, can play in broadening community access to affordable credit. In the case of credit unions, such a role must go hand in hand with the promotion of them as saving institutions. The Government have accepted that a step change in the role of credit unions requires changes to the legislative framework, and they published a consultation document on such changes in June. We urged the Government to publish draft legislation this year. Will the Minister make clear their legislative intentions, particularly on the timing of such legislation? She could make many more friends in the credit union sector and in the House by indicating a commitment to legislate in this Session to replace the outdated Credit Unions Act 1979.
  Until the third sector’s role is significantly expanded, the social fund will continue to play a vital role as a provider of affordable loans to those on benefits. The Select Committee on Work and Pensions characterised the social fund as being
  “in limbo, pending wider Government work on financial inclusion.”
  Ministerial responsibility for the fund may reside with the Department for Work and Pensions, but the Treasury is responsible for co-ordinating financial inclusion and for public spending. The Minister might well be in a position to tell us at least when the way forward will be clearer.
  Access to banking services is a cornerstone of full financial inclusion. In December 2004, the banking industry and the Government committed to the shared objective of halving the number of adults in households without bank accounts and making significant progress in that direction within two years. The Treasury Committee’s work highlighted the fact that the performance of high street banks in providing access to basic bank accounts has been variable and showed the importance of progress on the operation of basic bank accounts. The concentration should be not simply on whether such accounts are open; equally important is whether they are used and how.
  There are some interesting figures on access in the family resources survey. The 2005-06 data showed that 2 million adults, in 1.3 million households, were without access to a basic bank account, compared with 1.9 million households in 2002-03. So, to be fair, the Government are making progress, but it reminds me of the progress towards the target of halving child poverty by 2010-11. We are making substantial progress on that, but we have set a target of halving it in that time scale and I am not certain that we will do so. Given the figures, neither am I certain that we shall reach the target of halving the number of households without a basic bank account. The Minister must have the figures. If she is willing to give them, I might be proved wrong—and not for the first time in this august hall.
  The Government promised a detailed action plan following the announcement of the 2007 comprehensive spending review—from memory, that took place earlier this month. Will the Minister tell us when the plan will be unveiled? I am also mindful of the assurance from one of her predecessors that if the voluntary method failed, legislation would not be off the table. I and the Committee look forward to hearing how the action plan is progressing and when we will be put in the picture.
  Although fully operational accounts remain the ideal for all, the Post Office card account and its successor will continue to play a crucial role for many people in receipt of benefits. Indeed, that is crucial for the economics of the post office network. It is clear that the Government did not handle the early stages of the change well. In essence, they pulled the carpet from under the Post Office and then held out the prospect of a new carpet in due course. We are still waiting. The Trade and Industry Committee highlighted concerns about the limited functionality of the successor to the Post Office card account. On the basis of the steps forward that are said to have been taken with the implementation of money laundering regulations, it remains unclear why the Government appear to have ruled out the possibility of making cash deposits into such accounts. Will the Minister explain why that is the case and whether she shares her predecessor’s confidence that the successor regime to the Post Office card account will strengthen the post office network?
  Many of us in the House—here I am not speaking for the Chairman or the Committee—are bemused by the Government on the one hand saying how important post offices are and how they must be protected and, on the other hand, taking so much important business from them. The successor to the card account is the most crucial matter of all; it has been put out to tender, and God knows what will happen to the Post Office if it loses the business. The Committee would welcome answers to the questions that I have posed on its behalf.
  Before I come to my final theme, it is appropriate to mention one success story that reflects not only the diligence of the Committee—its members are particularly diligent, when they have their microphones off—but the passion and determination of our sadly absent Chairman. That is the matter of access to non-charging cash machines.
  Following a series of proposals made in the Committee and a debate in this Chamber, a working party was set up, chaired by my right hon. Friend the Member for West Dunbartonshire. Thanks to his energetic and forceful chairmanship—those are not mere words, as he has put his heart and soul into the chairmanship, made the issue personal and pursued the banks and operating companies with a vengeance—the banks and other operators have agreed to place 600 non-charging machines in targeted lower-income areas. As of June, 471 of those machines had either been installed, or were being installed at identified sites. That is an excellent example of something practical that helps to combat financial exclusion. In future, anyone who uses one of those free machines should realise that they are using a McFall.
  I am sure that the Chairman will be heartened by my hon. Friend’s comments, and I endorse everything that my hon. Friend has said. In my constituency, we have been allocated six such machines. In a community in which the average takeout from a cash machine is £15 to £20, not being charged to take out money makes an enormous difference to people’s finances.
  One benefit of the Committee’s hearings and robust examination of witnesses was that people who did not realise that they were being charged when they used machines became aware of that insidious practice. Thanks to the Committee, people are now told whether a machine is free before they use it. That is an enormous step forward.
  The expansion of the number of cash machines that do not charge is very welcome. The money that is withdrawn from those machines has an immediate impact when it is spent in a local community. However, in many communities, particularly in rural areas, the post office is the closest place at which people can access their money. Does the hon. Gentleman agree that the ability to withdraw money from some bank accounts free of charge at post offices is welcome, and that other banks should be encouraged to let their account holders do the same?
  I strongly support any move to ensure that the closure of post offices that serve communities well should be a last resort. I know that there are financial cases where only a dozen people use a post office, for example, but I have heard of a second wave of proposals in my constituency to close popular and well-used post offices. That would be a grave mistake.
  The Chairman and the Committee have done a great job of forcing banks to put the free machines in—I am not sure whether I have made this point clear, so I shall use specific wording—specifically chosen locations.
  I shall conclude with some remarks on the financial capability and financial inclusion strategy. Financial inclusion is not just about income. People’s capacity to use financial services depends on their education and awareness, but the FSA’s baseline studies show that financial capability is worryingly low. That problem needs to be tackled through the school curriculum and adult learning, as well as public awareness campaigns. I am certain that the appointment of the previous Economic Secretary as the Secretary of State for Children, Schools and Families will help to ensure that the Qualifications and Curriculum Authority, in particular, is properly seized of the importance of this issue.
  I pay tribute to the Government on this issue, which is another that has been pushed by the Chairman and backed by the Committee. Both the issue and relevant long-term beneficial effects have been drawn to the Treasury’s attention and, to be fair to the Treasury and the Chancellor, the money that has been invested as a result is doing good work and is very much appreciated. I see from the pre-Budget report that that is to continue, so thanks and congratulations are in order.
  Financial education is just one area of financial inclusion in which action by a range of Departments is required. The Government have promised much in this area. They have established a ministerial working group and indicated that an action plan will be published before the end of this year, but are they delivering? How often has the ministerial working group met and what has it achieved? Will the Minister confirm that the action plan is on track for publication this year? Her reply on this matter and others that I have raised will help to indicate whether financial inclusion is at the heart of her work, as it has been at the heart of the Treasury Committee’s work.
  I hope that you will agree, Mr. Bercow, that we are indebted to the hon. Member for Leeds, East (Mr. Mudie) for introducing the debate. There are many reports before us, and it is a tribute to your assiduity that probably only you, Mr. Bercow, will have read them all in detail. I hope, therefore, that you will excuse me if I do not touch on every aspect of every report.
  The subject that we are debating is a key issue, and it is right that the Treasury Committee should have spent so much time on it. Indeed, the more time that we devoted to it, the clearer it became to us that it was an area of public policy failure in several respects. First, it is far too easy to get into debt. There has been a high demand for credit, possibly because of low inflation or relatively low interest rates, and its price has dropped accordingly. We have an innovative, competitive, financial service industry. I have no criticism of that, but because the demand and market for credit has expanded, we have been flooded, as we are all familiar, with various offers for credit cards, credit card checks and the rest. It has been far too easy to get into debt.
  Secondly, because it has been too easy to get into debt, the most vulnerable people have suffered the most. There has been careless lending and a lack of data-sharing, and although vulnerable people have not been specifically targeted, they have been the victims. We know from our constituency casework that those who get into trouble financially might have other problems or addictions to drugs or alcohol which mean that they get into a spiral of decline.
  Thirdly, as the hon. Gentleman illustrated, financial capability is appallingly low. There is a lack of numeracy in our schools and we simply do not understand that to be innumerate as a citizen is just as great a handicap as to be illiterate. Innumeracy leads to poor decision making, which, if repeated, leads further and further into debt.
  Fourthly, I do not want to moralise, but I think that there has been a change in the culture of credit. It used to be frowned on—certainly, where I was brought up in Scotland—but is no longer seen as wrong or dangerous. Indeed, it is not even perceived to be morally neutral; it is presented as being wholly legitimate and beneficial—almost democratic in allowing an entry point to an increasingly materialistic society. That change has contributed to the failure of public policy.
  Finally, there has been an almost total collapse of our savings culture. The blame for the first four factors cannot necessarily be laid wholly at the door of the Labour Government, but blame for the collapse of the savings ratio can firmly be laid at their door. We simply are not saving enough as a habit, and we are not saving enough to deal with sudden emergencies. As a country, we are not saving enough to see us through an increasingly longer old age, or to help members of our families who get into difficulties.
  How do we tackle those issues? I have several suggestions to put to the Minister and to my hon. Friend the Member for Fareham (Mr. Hoban) in his preparation for the next Conservative Government. First, we must continue to tackle the doorstep home credit market. I do not want the industry that offers non-standardised products to be wiped out by excessive regulation, capping of interest rates and so on. On the contrary, we need to keep that non-standard market open and honest. More transparency is needed, particularly in respect of the guidelines that apply to agents. We need better data sharing, and we need constantly to ensure that the home credit market is adequately regulated and that it continues to offer those who rely on it products that are easily understood.
  Secondly, we need to do something about credit unions, which have a remarkably small share of take-up. I believe that it is only 1 per cent. It is much higher in other advanced democracies, such as the United States, Australia, New Zealand and Canada. We need to go further in this area. I applaud the commitment of the Economic Secretary, which was expressed in her 25 October announcement. A commitment to greater competition, more flexible membership qualifications and the use of electronic communications is extremely helpful, but I urge her to go further in liberalising the market in which credit unions operate. I do not understand, for example, why they should not be allowed in the fullness of time to determine their own common bond. Do we need a minimum age requirement? Why should they not pay interest on savings? Why should they not be allowed to deal with organisations in the same way as they deal with individuals? This seems to be an area, if the Economic Secretary is taking an interest in it, in which it is possible to do a great deal more, and I look forward to hearing further from her.
  Thirdly, there are the banking practices to which the hon. Member for Leeds, East referred. The Select Committee has done useful work in that area. As a result, we now see clear information on our credit card statements about the actual cost of interest, and there are clearer warnings about repayment. However, lenders should understand that we will not hesitate to return to the subject if we see further obfuscation or delay in ensuring that that aspect of banking practice is as open and transparent as it should be.
  Fourthly, as I have said before, too many individual voluntary arrangements have been concluded, and probably too rapidly. There is a danger in that, because once an IVA is concluded, it inhibits the debtor’s future ability to access credit products. I suspect that as the credit markets tighten, a sub-class of people will be created who will never again be allowed to access credit markets in the way that they did because their IVA will stand for ever on the public record. I suggest to the Economic Secretary that there may be some scope for introducing more independent advice before arrangements are signed and sealed.
  Fifthly, there is the role of education, which no Government have got right. Much good work on financial education is being done, but it is all over the place. Some is being done in the City, some by the Financial Services Authority, some by the Department for Education and Skills—or the Department for Children, Schools and Families, as it is now called—and some has been promoted by the Treasury. The more that members of the Select Committee considered the matter, the more we came to the conclusion that it was a mess. There needs to be clear guidance from the centre—one Department in charge—and a firm programme. I am no fan of targets, but perhaps this is one area for which there ought to be a target. We need urgently to improve the work that is being done in respect of financial education and to ensure that it is better focused.
  Finally, we ought to do more to help the agencies that deal with debt. Sevenoaks has an active Christian counselling service that works extremely hard, but of course it depends entirely on volunteers. It receives no help from anybody. Why should a service such as that not be able to access some of the funding streams that are available? More controversially, there is the role of our citizens advice bureaux. Every Member of Parliament knows that they carry a large work load. The Government support the work of the bureaux. I note that last year they gave £40 million to the National Association of Citizens Advice Bureaux, now called Citizens Advice. However, a large chunk of the funds never in fact reach the bureaux in our constituencies. Much of it is spent centrally. I note that some £3 million is spent centrally on “influencing policy makers”. Nationally, Citizens Advice has a wage bill of more than £15 million and employs more than 400 staff. Eight directors are paid more than MPs. The 3,000 bureaux in our constituencies are not able to access the money that the Government make available because it is filtered through the national association. Indeed, things are actually the other way around. A citizens advice bureau must subscribe to the national association and pay a membership fee.
  The Government have provided some useful individual, selected funding streams to Citizens Advice. I urge them to consider again how the central grants are given and to ensure that more of the money gets through. Otherwise, the burden falls on our local authorities, hard-pressed as they now are. My council, which has to cut another £1 million from the services that it operates, obviously has less scope to make the grants that it used to make to the Sevenoaks and Swanley citizens advice bureaux. Therefore, there is a case for looking again at the £40 million and seeing whether more of it could be channelled into local offices.
  I have some sympathy with the hon. Gentleman’s argument, but does he accept that the CAB needs a central organisation in order to maintain the highest standards in offices around the country? Does he accept that a central organisation is needed for high standards of IT, which makes the job of local offices much easier? Therefore, while I understand the criticisms that he is making, there is a strong justification for a central organisation.
  I certainly accept that there must be a central organisation, and that many grants are made for improving IT in individual bureaux. My point is simply that a balance must be struck. If the Government allocate £40 million to such work, I would like to see more of it pushed out to the bureaux themselves. It may simply be a question of redressing the balance.
  Other colleagues wish to speak in this important debate. I know that the Government have already accepted several of the themes and have made commitments in respect of them. I very much look forward to the Government’s response and to the response of my hon. Friend the Member for Fareham.
  I welcome you to the Chair, Mr. Bercow. I cannot do so without a tinge of regret, as I believe that your talents are much better used on the Floor of the Chamber.
  I also welcome the Economic Secretary. She takes a great deal of interest in this subject, and I look forward to her contribution. I apologise to her because I shall raise quite a number of questions—some have already been covered, but there are others—and I hope that she will at least be able to touch on them.
  This is an important debate. To put the matter at its simplest: poor people pay more. I can give hundreds of examples of that, but let us take the case of the utilities. Paying by direct debit is incredibly cheaper than paying by cash. That goes through our whole economic system, which is becoming much more focused. Therefore, there is a need for financial inclusion, which will allow people on low incomes to help themselves. We need to deal with such matters, and the reports touch on many of them. Although all the issues raised in our reports are important, the critical factor is that people should have a bank account. Bank accounts are a gateway into the financial services system and the first key to reducing financial exclusion.
  I start by echoing something that my hon. Friend the Member for Leeds, East (Mr. Mudie) said. When we first looked at the subject, we agreed with the Government that we should reject going down the legislative avenue. Indeed, we did so even though we had been to the United States and been mildly impressed by how the Community Reinvestment Act was working, although we recognised that the American system was different from ours. However, we felt that we needed to give voluntary endeavour an opportunity and to see whether it was working. Now that we have had time to see how things have developed, is the Minister still convinced that voluntary action by everyone in the financial services sector is delivering what the Government want?
  My hon. Friend mentioned four areas, but I shall telescope them into three, and they were covered in the reports that we issued some time ago: access to banking, affordable credit, and financial capability and education. Let me start with access to banking and the basic bank account, although I shall touch on the Post Office card account and its replacement. In 2004—round about when we started our inquiry—about 2.8 million individuals did not have a bank account. The Government and the banking sector agreed that we should have a target of halving that number going forward, but the Committee’s investigation showed that there were several difficulties in the way of achieving that. Many customers have problems setting up basic bank accounts or, indeed, any bank account. The money laundering regulations are regularly mentioned in the House, and we found many instances of banks asking for high levels of information before bank accounts could be set up, and there was some concern about that. There were also concerns about whether bank accounts performed useful functions once they had been opened for customers.
  We did not find great enthusiasm in the banking community for dealing with such things; indeed, many banks privately accused each other of not doing enough, while saying that they themselves were doing a great deal. There was therefore just a little legitimate concern about whether they were fully committed to a programme of ensuring that everyone had a basic bank account. Of course, there was some resistance from customers themselves, many of whom opened accounts only to extract the money almost immediately without making any use of the account, which is a difficulty. Furthermore, many Post Office card account holders have shied away from involvement with the banking sector, and there are issues that need to be addressed in that respect. However, as was said, we could not get real-time figures for how the banking industry was doing on basic bank accounts. We know that many accounts have been set up, but it was difficult to form a view. I therefore wonder whether the Minister has been able to elicit information from the banks on how well we are doing on achieving the target that was mutually agreed by the Government and the banks.
  I want to touch briefly on a number of other issues relating to basic bank accounts. The basic bank account arose out of research carried out by the social exclusion unit, but much of the evidence that we took suggested that it was not designed effectively enough for those for whom it was intended. Let me give just two examples to highlight that. First, it takes ages for money to get into people’s accounts when they cash a cheque—an absolutely crucial point for people on low incomes. The British banking system has a pretty appalling record on getting money into people’s accounts, but the situation was even worse for basic bank account holders. Is anything being done about that? Secondly, small buffer overdrafts would give people confidence when dealing with their account, and quite a number of banks already have them, but most do not, and that is really important. In this regard, I could also mention parity of esteem because many people with basic bank accounts cannot use the bank itself—they cannot go in and cash a cheque because they are not allowed to do so, even though ordinary bank account holders are. My question, however, is whether we are achieving the objectives and targets that we have set ourselves for basic bank accounts.
  We know that the Post Office is critical, and 24 million customers go through its network every week. The Post Office card account has just under 4 million members, 1.2 million of whom are on benefits, so it is a critical part of the lower-income sector. We know that there are major problems with getting people to migrate to an ordinary bank account or a basic bank account, and no one underestimates those problems; indeed, that was part of the inspiration behind the introduction by the Department for Work and Pensions of the procurement process that was mentioned. As we have been informed, there is now talk of a Post Office card account No. 2, and I have a number of questions about that. There is the issue of functionality and of whether people can save with the new account. We need to take decisions and to give considerable thought to how we can make the account more attractive to customers. We need to think about how we can make it more relevant, rather than trying to put people off, which will not succeed. What progress is being made? What discussions is the Minister having with the DWP on the subject? Of course, such discussions will feed into the Treasury’s targets for basic bank accounts and for ending financial exclusion.
  I must mention two other issues. Free ATMs were mentioned, and most of the ATMs in post offices are free. However, some—interestingly, they are mainly in deprived communities—are not because, the Post Office tells us, they would not be viable if they were free. While researching our report, therefore, the Committee asked the Post Office whether it was ensuring that customers who used post offices knew that those machines were not free, and it is important that we get some reassurance that that is the case.
  The other issue relates to bank accounts. Many people with bank accounts—not basic bank accounts, funnily enough—cannot use the post office because the Post Office and certain banks have failed to reach agreement. I understand that commercial sensitivities and difficulties will be involved, but that does not help the customer base—the people whom we want to ensure can use post office services—and I wonder whether there is any discussion of those matters.
  Both previous speakers mentioned affordable credit. I shall start with the social fund, although I do not intend to deal with it at length, because it is not part of the Minister’s responsibilities. However, the Committee asked for the fund to be reviewed, expanded and improved, and that is tenor of the report by the Select Committee on Work and Pensions, which is part of our discussions. Is the Minister talking to her opposite numbers in the DWP? Is consideration being given to expanding the social fund? Many people, including members of the Treasury Committee, believe that that could have a major impact on addressing the problem of affordable credit in the sector of the economy that we are discussing.
  I certainly endorse several of the Government’s actions. I strongly welcome the action on illegal lending and the work being done in Birmingham and Glasgow, which is now being expanded to other cities. That is excellent. I welcome the work that is being done on home credit. The hon. Member for Sevenoaks (Mr. Fallon) mentioned home credit, and of course there was a super-complaint. The Competition Commission has reported on that, and data sharing was one of the issues that it touched on, as well as competition matters. We welcome those moves. Credit card charges have been among the concerns of the Chairman of the Select Committee, and we must be ever-vigilant about that.
  My question about affordable credit relates to third sector lenders. Originally, community development financial institutions were funded through the Phoenix fund. When it was decided that that should be removed, we set up the growth fund, which provides £36 million. I know that the Government have announced that they will not continue the tax relief for deprived areas, and there is some concern in the third sector that if, as it appears, the Government are moving towards removing support from the third sector, it will not be able to respond to need. I seek some reassurance from the Minister that the third sector is still very much in your sights and that support will continue.
  I shall not go into the Credit Unions Act 1979, except to say that credit unions can and should play a much more important role. They are very marginal to our considerations of affordable credit, but they could be more central. For that to happen, they would need to be further deregulated, by an Act of Parliament, as a matter of urgency. I understand that the Minister has indicated that the Government will publish a Bill in the next week or two and we welcome that.
  They are not publishing it. I was told that it was likely that a Bill would be published as a consultation document. Perhaps the Minister could enlighten us about where things stand.
  The final thing that I want to say about affordable credit is that we hope that the unfair credit relationship test in the Consumer Credit Act 2006 will allow those who are provided with unreasonable credit to take legal action. That course was not really available to such people under the Consumer Credit Act 1974. However—and the Minister will be aware of the responsible lending campaign that is under way inside and outside Parliament—there is some concern about that matter. I strongly support the Act and I believe, and all the evidence suggests, that we should not introduce a cap; I believe in the Government’s approach. However, it is also important to try to ensure that bodies that can lend money do so responsibly. I should like the Government to run an advertising campaign to provide information in that context. It is not just a case of “buyer beware” for the consumer. There should be some responsibility on lenders to lend responsibly.
  On financial capability, financial education and the problems connected with upwards of 15 to 20 per cent. of society being functionally illiterate and innumerate are an educational challenge. I understand that there is movement towards more financial education in the curriculum. Indeed, the GCSE maths curriculum has been expanded to include it. I wonder what discussions the Minister is having about carrying that forward. The Financial Services Authority is doing some sterling work on that with its national strategy for financial capability, and the Government should give whatever support they can across the board. The primary responsibility lies not with the Treasury but probably with the Department for Children, Schools and Families. However, it would help enormously if Treasury Ministers would talk to the DCSF about the importance of financial education.
  I finish with a few words about generic financial advice. The important thing to recognise in this context is that the description “generic” means that there is no product recommendation at the end of the advice, ensuring that the advice need not be regulated. There is concern about the line between regulated and non-regulated advice. The Government could help to resolve that and ensure that it is possible to know exactly which is which. I welcome the setting up by the Government of the Thoresen review. I understand that the interim report has now been issued, and pilots have been set up to study the different types of platform from which the advice could be provided. It has been suggested that provision should be independent and impartial, based on a national model, which I think everyone accepts, and that it should be built on existing structures; that is also probably accepted across the industry. We know the advantages: there will be major advantages for the industry if consumers are better informed and there will be advantages for the Government, not least connected with the new accounts that will be set up under the Pensions Act 2007, and the new agency will have a critical role in ensuring that people understand the benefits of that.
  There are several issues that I wanted to raise with you—I am sure that I will not get an answer today, but I shall raise them anyway—
  Order. I am genuinely loth to interrupt the hon. Gentleman. It has been a fairly seamless progression, but he has used the word “you” several times. I am not a participant in the debate, and I am sure that the hon. Gentleman has the Minister in mind, but debate flows through the Chair.
  I apologise for getting somewhat carried away in my enthusiasm. I shall try to maintain the formal way in which we address each other in the House.
  There are two issues on which I hope the Minister will be able to give me some reassurance in connection with Thoresen review and the final report, which will come out early next year. First, I should like some conclusions about funding. Will there be a mixture of funding and will the industry contribute as well as the Government? Secondly, the Treasury Committee recommendation was that the advice should be focused on people on lower incomes. Yet Thoresen has suggested that all consumers should be able to approach the new organisation. I accept that decision in principle, but one might be concerned to ensure that the people on whom the initiative is primarily focused—those on lower incomes, who need the support more, I suspect, than people further up the income scale, who are better prepared, and more involved in the financial services sector—should not be excluded as a result. There are many examples—Sure Start is the perfect one—of initiatives that were intended entirely to be focused on those on low incomes and those who are excluded, but which have in many ways been much better used by people further up the scale. Perhaps the Minister could provide some reassurance on those two points.
  The Treasury Committee very much supports the Government’s strategy on this matter, and we want to help their work in whatever way we can. We consider the matter to be one of some urgency, and if we can work together, and the Minister can continue with the work so ably carried out by her predecessors, we can begin to have a real impact on financial exclusion.
  It is a pleasure to make a contribution to this important debate. It is a pity that it is on a Thursday afternoon, but that is always the case for such debates. I do not apologise that I shall discuss many issues that have already been covered. They are the main areas of the body of work that the Treasury Committee has done, on which it should be congratulated. There has been some very good work. There have been many other contributions, however, and in the past few months a large number of reports have come in the post or been slapped on our desks. It is not just MPs, or the Treasury Committee, who are concerned about financial inclusion or exclusion. Some young people, as well as middle-aged and older people, face fundamental problems in managing their money and taking control of their financial affairs.
  That set me thinking about what banking was like when I left school and joined the Midland bank 43 years ago in 1964. A bank account was a privilege, and was certainly not enjoyed by the vast majority of people. There was a multiplicity of banks, not only the ones that we know today, but others with strange names such as Williams and Glyn’s, District, the old National Provincial and so on. Flourishing regional Trustee Savings banks operated effectively in all parts of the country, and there were many post offices where people had Post Office savings accounts. People had multiple opportunities to move money about, but banking was the preserve of the wealthy, not hoi polloi.
  There has been a huge change in 40 years. There used to be a culture of saving for a rainy day or to buy something, but credit now proliferates. The other day, I asked some young people what they thought about savings, and it became clear that their savings or their emergency fund was the difference between the balance on their credit account and its limit. That provided them with the ability to meet unexpected bills, and the idea of having money saved in some sort of savings account had not occurred to them. They seemed to think that that was a quaint relic of a bygone age. I shall say more about that in a moment.
  Bank accounts have changed enormously. They are no longer a privilege, but are essential, and it is almost impossible to operate without them today. So many payments, including salaries, go directly into bank accounts, and everyone wants people to use bank accounts, standing orders and direct debits. They are a necessity for everyone, but a significant number of people still find it extremely difficult to obtain a bank account, even today.
  Some banks use rules designed to prevent money laundering to deter people from having bank accounts and to restrict such accounts, which is wrong. I have had to help someone who was having difficulty in opening a bank account, and I urge the banks to recognise that such accounts are no longer a privilege on which they can make a decision, but are a necessity and that they must respond accordingly.
  Before going too far on ATMs, I applaud the fact that a free one was installed in my constituency some time ago. I was privileged to open it and to take out not my money but the bank’s money, and to give it to a charity. All ATMs should be free, because they were introduced not as a service for bank customers, but to reduce the banks’ costs at the counter and the necessity for them to increase the size of their branches, and to keep some branches open. ATMs have made a massive contribution to banks’ profits and it is obscene to charge for the use of them, because they were intended not as a service for us, but as a means of reducing costs.
  We must exert continual pressure and ensure that basic bank accounts are available to everyone who needs them. I mourn the loss of Girobank. What would the Post Office give today to have the Girobank mechanism available to it? I do not know how much it was sold for, but I believe that it was about £50 million. It was probably the worst ever decision because of its effect on financial exclusion.
  On savings, there has been a cultural shift since the bygone age when people put money aside for a rainy day, unexpected emergencies and bills, or an expensive purchase. People now rely almost completely on credit, and we must restore the savings ethos. The hon. Member for Sevenoaks (Mr. Fallon) rightly pointed out that the savings ratio is now so low as to be almost insignificant. The banks have contributed to that because, as they have relied less and less on retail deposits, they have been able to reduce interest rates. The margin between their interest rates on deposits and those at which they lend money has increased significantly, and because of the huge increase in wholesale deposits they have not valued their customers’ deposit or savings accounts.
  We all know that banks have concentrated on the more lucrative end of credit. The way in which that has been promoted and sold is a problem, and young people are targeted. Only a year or so ago, my son received from his building society a wonderful offer of an extra £10,000 on his mortgage with a reduction in his monthly payments. He thought that it was a good deal to pay less every month and to receive an extra £10,000. I asked him what he wanted an extra £10,000 for, and he said that he would find something to spend it on. I then asked him whether it had occurred to him to wonder how the building society could lend him another £10,000 and reduce the monthly repayments. It did not take long to work out from the very fine print that the term of the mortgage would be extended, and that the total amount of interest that he would ultimately pay would be hugely more. In his rather ignorant way, he thought that the building society was giving him £10,000, but he would have had to pay significantly for it. Such marketing and use of credit is not helpful, to say the least.
  The hon. Member for Leeds, East (Mr. Mudie) chided the Liberal Democrats’ view of child trust funds, and I have some sympathy with his views, but a limited amount of money is available and a balance must be struck. I hope that the Government will introduce a culture of saving, but that is yet to be proved. People should start saving early and continue saving throughout life. At a number of forums at which I have spoken I have suggested that people should try to have at least one month’s salary somewhere. We have all had people come to our surgeries in desperate need of a relatively small sum. They may need to use their car to go to work. If it does not pass its MOT, they may need suddenly to find £300 to keep it going, but have only £25 and do not know where they can find £300. It is amazing that relatively small amounts can knock people sideways.
  We should encourage low-cost savings and investment products for low amounts so that people have easy access to simple accounts to save relatively small amounts of money, and a cushion for emergencies. That requires a basic advice regime. I wondered what that was, and page 40 in volume 1 of the 12th report describes it as
  “a short, simplified form of savings and investment advice. Consumers are taken through a series of pre-scripted questions to identify their financial priorities and determine whether a product from within the range of low-cost regulated saving and investment stakeholder products is suitable for the customer.”
  I thought that that was an excellent idea, but I have not heard much about it, which is not surprising because paragraph 94 states that the magazine, Which?,
  “saw ‘no evidence that the basic advice regime is encouraging retail insurance firms to actively target consumers on lower median incomes’. Mr. Tiner”—
  of the Financial Services Authority—
  “admitted that ‘very, very few financial institutions’ had signed up to offer products under the basic advice regime. The FSA submitted a list of the 46 organisations that had signed up to offer the basic advice regime. Of these, there was only one major insurance company and no major high street banks, with the overwhelming majority made up of small Independent Financial Advisers.”
  It would help if the Government gave some recognition to the section of the report that deals with the subject of basic, simple advice to save, and perhaps the FSA ought to get on with conducting its full review of the basic advice regime and report to Parliament at some stage. Savings must be given the same priority as credit, borrowing, or access to financial services in any financial inclusion strategy. Indeed, savings must be at the heart of any such strategy. Even those who find life difficult need to understand that saving a small amount over a long period may help them to begin to climb out of their difficulties.
  Much of what I wished to say has been said, but I shall say a few words on credit unions. Credit unions do a good job, but at a low level. There are around 550 credit unions in England, Wales and Scotland. Their objectives of thrift, control, savings, providing fair interest on credit and helping people manage their financial affairs are good—absolutely wonderful. The unions have been growing more strongly, but they are still at a low base—they have only around 500,000 adult customers, which is a small number against the number that they ought to have. That is partly because they are not easily recognised for what they are. The phrase “credit union” does not express the nature of such organisations. For a long time I have said that I should like the sector to be greatly enhanced, perhaps by unions joining together and marketing themselves as community banks. The community banking network—the not-for-profit sector—in America is particularly strong and makes up a huge part of the total number of financial services organisations. We ought to rebrand credit unions as community banks. I should go so far as to say that if the credit unions in my part of the world in Cornwall grouped together and called themselves the “Cornwall Community Bank”, the community interest and support and the range of people who would become interested would be significant. Such an organisation would do a lot more work among the financially excluded.
  I hope that we move towards a more liberal regime for credit unions, as the hon. Member for Sevenoaks said, and in particular enable them to be more market oriented. Calling the unions a community banking network is about ensuring that an organisation does what it says on the tin—the unions are not about credit; they are about savings. I do not know what a union of credit is and I do not believe that the phrase “credit union” gels.
  On financial education, I wish to pay tribute to the Personal Finance Education Group. It has sent people to see me and I have attended two conferences in my part of the world, both of which were well attended by a range of people, which demonstrates that many people are interested in the subject and the group’s work in schools. I pay tribute also to HSBC, which might ultimately pay my pension, for its support for financial education. There is a lot of work to be done and I believe that schools ought to grasp the issue. Schools have a lot to do, but financial education is too low key. It has become almost a tick-box exercise. Schools provide financial education in the sense that they mention it in a personal or social health or citizenship class or some such, and so are able to tick a box six months later. That does not provide what we need. Financial education needs to be more structured and mainstream. Teaching staff need to understand exactly what they must do. Those things will happen—they must—but the sooner the better.
  I am always struck by the fact that, in Japan, there are only about 180,000 of what we know as chartered accountants, which is not a lot compared to our country. The reason is that everyone studies accounts in Japan’s mainstream education system—it is part of the curriculum—and has a basic understanding of budgeting, accounts, spreadsheets and so on. We must go in that direction and have more people take personal finance examinations, perhaps instead of general studies. An A-level in personal finance would educate people and provide them with a qualification that could help their future careers.
  Once again, I applaud citizens advice bureaux. Without them, my service to my constituents would not be what it is and my surgeries would not function as well as they do. Many bureaux rely on local government support, but that is being squeezed all over the place and a number of bureaux are finding things difficult at a time when they need more resources. They are being squeezed from two sides: more people are coming through their doors with more needs, but it is difficult for local government to continue to provide the generous funding that it has provided for a long period. There ought to be some recognition of the tremendous number of volunteers. They undertake a great deal of training and understand some of the legislation on pensions and benefits better than people in Department for Work and Pensions’ offices, yet they work for nothing. We ought to value their work and recognise that they need support.
  In summary, first, we need a greater emphasis on savings as opposed to debt. Secondly, we need to create a community banking network to tackle financial exclusion on a more formal basis. Thirdly, we need more education, not only for young people but for everybody. We need to provide basic advice and information to enable people better to control their affairs. We will be a healthier society for it.
  I come to the debate as a new member of the Treasury Committee and I was not present for the evidence-taking sittings from which the reports were compiled. I have therefore read them cold, as it were, but I have found aspects of what the Committee deliberations brought out to be revealing. I approach the issue from the perspective of the rural constituency that I represent. I am chairman of the rural services all-party group, which has looked at the impact of the closure of post offices on the provision of financial services in rural areas. I have also taken on the role of secretary of the post offices all-party group, and I shall focus on financial inclusion in rural areas wearing those hats.
  Contrary to popular belief, many rural areas, including Ludlow, have substantial pockets of deprivation. Average incomes are significantly lower than average incomes nationwide. Many people have limited access to financial products or services, not only because of the geography—there is a relatively small number of bank branches or post offices within an accessible distance—but because technology, which is the focus of the delivery of services in both the private and public sector, is, to a large extent, not as readily available in remote rural areas as in towns. For example, broadband is more or less universally accessible now in towns, but in remote areas the topography and distances are such that the BT lines that deliver broadband are not equipped to deliver it to households, so it is not good enough to say that individuals can access services online, because they do not have an online service that will receive the technological feed.
  That brings me to my first point. The Government are increasingly looking to technology to solve many of the problems of financial exclusion. I accept that they need to put the technology in place, but for the most vulnerable in our community, many of whom are of an age at which there is no realistic prospect of their being able to access technology to receive services or product delivery—[Interruption.] I apologise, Mr. Bercow; I thought that I had turned my mobile phone off.
  The Government’s programme for service transformation led by Sir David Varney has undertaken a lot of work bringing together technological advances to deliver services, but the track record in the most simple stage of using contemporary technology—it is really the technology of the 20th century, because it uses telephone contact centres to deliver services, which was piloted initially by the financial services industry—has been poor, to put it charitably.
  Let us consider the experience of the Inland Revenue. It has taken the Inland Revenue some 10 years to get its call centres into a condition whereby there is a better-than-evens chance of getting through if someone is seeking to contact Her Majesty’s Revenue and Customs. That happened only last year. Before then, 75 per cent. of callers did not get through when they tried to place a call. The relevance of that is that it is unrealistic to assume, as the Government are finding out, that access to financial services products in the private sector, which has been far more efficient than the public sector in introducing that new technology, can be achieved simply through the use of technology. There has to be physical capacity for individuals, particularly the elderly, but also the more vulnerable groups in society, to gain access to basic financial services and products. We must recognise that when we consider the infrastructure in this country that is in place to support the delivery of financial services products, and the most logical aspect of the infrastructure that the Government have influence over is clearly the Post Office, which I shall come to in a few moments.
  I should like to touch on some of the points raised by other hon. Members which I think are entirely appropriate in this context. The first is financial education. I agree with the hon. Member for South-East Cornwall (Mr. Breed) thatthe content of financial awareness education in the curriculum needs to be beefed up. In this country, someone needs a GCSE in maths to be able to complete a self-assessment tax return. I regret to say that less than half of school leavers today achieve that level of financial sophistication, and those are the people who are concentrating on maths. A large swathe of the population does not take maths to that level, and one assumes that they will be the vulnerable groups of tomorrow. They need some form of basic financial education to get on in contemporary society—not just to be able to read a spreadsheet, as the hon. Gentleman mentioned, but to be able to cope with the increasing delivery of services through technology. A combination of information technology skills and basic financial education is required.
  The second issue is advice given through citizens advice bureaux. Until there is better education in our system and our citizens are educated to be able to carry out their own self-assessment, for example, there is a very significant role for the voluntary sector in providing advice to those who need it most. The squeeze on the budgets of local authorities, to which the hon. Gentleman also referred, is very evident in my area, where they are the primary providers of funding to citizens advice bureaux. They are increasingly looking to that as an area of saving, placing citizens advice bureaux in a much more precarious financial situation. I urge the Minister to say whether any help will be available for citizens advice bureaux to keep those services going.
  The report covers access to the range of financial products. In relation to banking services, the era of the building societies and the banks competing to have an expanded presence on our high streets is clearly long gone. The proliferation of banks and building societies that we saw on local high streets over recent decades is now a thing of the past. There are fewer and fewer building societies left functioning in this country, and following the Northern Rock debacle of the summer, I suspect that that trend will go in one direction only.
  Banks are looking at combining branches as a means of cutting down on their cost base. The anecdotal evidence in my area, where that has been tried, is that there is considerable suspicion about it, particularly on the part of some of the more elderly people in our society. If someone goes into a bank and provides their information to the clerk, they establish a relationship with that bank. If the branch is providing services for another bank, there is a natural suspicion that somehow the information about one’s own circumstances could be more widely disseminated. I think that that is a completely misplaced conception, but I have been told by bank managers who have tried to co-locate within individual branches that it has a significant deterrent effect on customers. There is a fear that in some way other banks, and therefore potentially even other bank customers, might gain access to their information. That view is clearly misguided, but that has been the experience, as I understand it, along the Welsh borders, so it has not proved a particularly successful model. If banks decide that they cannot co-locate and operate effectively, they will decide to close their branches once they cease to be economically viable because of the decreasing frequency of face-to-face contact within their customer base. That is resulting in an increasing reliance on the post office as the only remaining alternative place for individuals to gain access to financial services.
  Access to insurance is another issue touched on in the report. The Government response to the insurance with rent schemes was pretty feeble. It is on page 18 of the Government response under the heading “Access to insurance”. Their response to the Committee’s recommendation that insurance with rent schemes are very appropriate schemes to extend to low-income groups was, “Well, we are reducing the targets on local authorities. Therefore local authorities will have either more funding or more time to devote to other things and they will be able to look at extending those schemes.” That is clearly complete obfuscation and does not address the point at all. I ask the Minister to consider a rather more robust response in her closing remarks with regard to how she will consider extending such schemes, in particular to registered social landlords and arm’s length management organisations for housing association tenants.
  The relevance of that issue has been much more widely recognised this summer as a result of the extensive flood damage that has affected large parts of the country, including my constituency. Those households without insurance found themselves, in many cases, without household possessions and were reduced to seeking help from voluntary organisations, furniture schemes and the like to provide themselves with essential household furnishings that, had they possessed an insurance with rent policy, they could have secured in that way.
  That brings me to the Government’s response to the savings gateway pilots. As my hon. Friend the Member for Sevenoaks (Mr. Fallon), the Committee vice-Chairman, said, the savings ratio is now at a record low. It has been declining steadily for at least as long as I have been a Member of Parliament. Whenever hon. Members raise the issue with the Government, the stock response has been, “You don’t need to worry about that, because the savings ratio has an inverse relationship to the growth of the economy. The economy is growing, so it does not matter whether the savings ratio declines.” That excuse has run out, as the Chancellor has acknowledged that the economy is now declining. How does the Minister reconcile that with the declining savings ratio?
  I am loth to intervene before my allotted time, due to protocol, but I am afraid that I must do so on this point. How does the hon. Gentleman reconcile his statement that the economy is declining with the Treasury’s forecast and international forecasts that the economy will continue to grow in the foreseeable future?
  The economic growth rate is declining, as the Chancellor acknowledged in his pre-Budget report. It has declined by roughly 50 per cent. from last year. As a consequence, the savings ratio should, by the Government’s admission, be affected. There is no direct correlation, but a lower savings ratio is a result of an increasing economy. By the Government’s logic, as the economy increases more slowly, the savings ratio should start to increase, but it is not increasing. It is now at a record low. The Minister’s intervention does not address my point.
  For several years under this Government, as a result of the incompetent introduction of means testing to pension credit, we in this country were in an extraordinary situation in which the majority of the population—those other than very high earners—were financially disadvantaged in saving for their pensions. For every extra £1 of savings that they put into their pension, the pension would be reduced by £1 when they reached retirement age. That was what I charitably assume to have been an unintended consequence of the Government’s introduction of pension credit, but it created an extraordinary climate in which saving was not worth while. In fact, people who sought advice from financial advisers or the Government would have to have been advised not to save, or financial mis-selling would have occurred. That was one of the reasons why the savings ratio declined so much.
  The Government’s savings gateway pilots for the financially excluded initially looked quite promising. However, the second pilot in 2001 introduced a level of complexity to the savings gateway that, commentators who reviewed the first pilot warned the Government, would make it so complicated that it would not work. Paragraph 108 on page 45 of the 12th report quotes Professor Kempson as saying that he was
  “concerned that the saving gateway may, like ISAs and stakeholder pensions, fail to attract people on low incomes.”
  That is precisely what appears to have happened, because the Government chose to make the whole system so complicated that it has become too difficult for people to participate in it. I urge the Minister to give us some clue about what the Government intend to do, if they persist with the project, to make the savings gateway more accessible to people on low incomes—or, if they are going to scrap it, to tell us what they will put in its place. Given the Government’s propensity to seek inspiration from elsewhere, a lifetime savings account might be something for her to consider in more detail.
  That brings me to my final comments about the relevance of the post office network and the products that it provides, particularly to those on low incomes. I am pleased to say—if one can take any satisfaction out of that wretched programme—that the closure programme, which is regrettably under way, is now to be shared equally between rural and deprived urban areas. That is some comfort to those of us who represent rural areas, which otherwise would have borne the brunt of the entire programme.
  The Government have got themselves into a complete mess over the post office network by ignoring their own advice to undertake joined-up thinking when it comes to the provision of services and allowing individual Departments and agencies to whittle away gradually at the services that they provide through the Post Office, without anybody paying sufficient attention to the impact that that loss of business would have on Royal Mail. That is well known and has been well argued in this and other Chambers. The Government received advice from all sorts of quarters about things that they could do to shore up business within post offices. Regrettably, very little of it has been taken into account.
  I shall give the Government a few pointers on how they could provide a consistent level of business in post offices to ensure their survival. We have the current closure programme, but no real confidence that the Government know how to arrest the decline in business going through post offices. What is needed from them to avoid yet another round of closures in a few years’ time is a clear strategy about what the post office is for and how it can be used—particularly, as I said, to provide a physical, face-to-face opportunity for the financially excluded to access financial services. That access could occur in two forms. It could include services from the public purse, such as the payment of income from benefits and pensions, and individuals’ payments to the Government for various services; and it could include private-sector payments using the Post Office and its product range, including the card account, to ensure a sufficient volume of business to give the Post Office some prospect of economic viability without increasing levels of subsidy, which I recognise is at the heart of the reasons for the closure programme.
  My first suggestion is that the Government remove some of the barriers to expanding the revenue sources available to the Post Office. The Whip, the hon. Member for Watford (Claire Ward), might have missed the introduction to my remarks, but I am seeking to give Ministers an opportunity to salvage income sources for the Post Office and some pointers on how it could be used to provide services to the financially excluded. Currently, the Post Office, not unreasonably, must compete with other payment systems to access Government contracts. Such contracts have been withdrawn, in some cases unilaterally, after the Government decided to deliver services electronically or through other technologies, withdrawing the Post Office’s ability to tender without giving it a minimum notice period. That seems unfair on the Post Office. It should be given an equal opportunity to bid for contracts.
  Post Offices should also be given the opportunity to offer local authority services. In some cases, there is an increasing use of Government-owned businesses sharing facilities. Worcestershire has some particularly good examples, with several tiers of local government combining together. In Evesham, or Pershaw, the local police and Jobcentre Plus use the same building, sharing the front counter and delivering services from there. Some post office premises could be encouraged to share in that fashion.
  The Government have announced the introduction of free ATMs, something that was mentioned by other hon. Members. The move is most welcome, but I urge Ministers to focus on the deployment of ATMs in remote rural areas. As we heard from the hon. Member for Leeds, East (Mr. Mudie), the Committee’s work has led to the introduction of free ATMs, and the lack of charges for using them is clearly welcome throughout the country. However, their availability is very much skewed to urban areas and population centres. Given the absence of access to premises for financial services in rural areas, the ATM is the logical way to provide remote communities with access to cash—particularly those communities that have no realistic access to public transport. A case can be made for giving priority to free ATMs in rural post offices. I hope that the Government will consider that.
  The Government missed a trick when awarding the lottery licence for 2009. Although we should not encourage those who are financially excluded to spend their limited resources on the lottery, having lottery terminals in post offices would have provided a level of footfall that could have allowed them a more viable future. It was regrettable that the Government did not take up the suggestion of our cross-party group that those awarding the lottery licences should have been compelled to include post offices.
  The Post Office should be allowed to reach commercial arrangements with other bill payments mechanism networks. That should be encouraged, particularly in rural areas. I appreciate the commercial sensitivity of allowing other bill payment networks access to post offices if there are plenty of alternatives—if there is competition. However, in those rural areas that do not have extensive alternative networks, post offices are precluded from entering into arrangements with alternative networks. That seems to disadvantage the financially excluded in rural areas. I urge the Minister to consider that.
  I turn briefly to two other aspects of the Post Office’s work. The first is the Post Office card account, which has been mentioned. Usage of the card account is obviously declining, given last year’s publicity about its demise. The Government belatedly, and it seems reluctantly, agreed to allow the Post Office to bid for a replacement for the card in March 2010. I understand that there are now fewer than 4 million users of the card account, but it is an invaluable tool for those who are financially excluded as it allows them to gain access to cash through post offices. In my view, it is vital that the Post Office should have a realistic prospect of replacing that card with its own, rather than a competitor winning the card contract. If a competitor were to secure it, it would merely hasten the decline of the viability of the remaining post office network. Its demise would be extremely regrettable.
  Other hon. Members have referred to Post Office savings schemes and to the collapse of Farepak. I was pleased to learn that the Post Office intends to introduce a Christmas club savings scheme from Christmas 2008. That is a good example of an innovative product meeting the needs of the financially excluded. I am sure that it will be welcomed, and it should be encouraged. It will help to fill the gap identified by Brian Pomeroy in the Treasury’s review that resulted from the Farepak collapse. That is a good example of the Post Office proving its worth in helping the Government achieve their objectives.
  I hope that the Minister will recognise the vital role that post offices play in delivering financial services to those who otherwise would be excluded, and that she will work with her colleagues in the Government to produce a durable solution for maintaining a viable post office network in our rural areas.
  It is a pleasure, Mr. Bercow, to serve under your chairmanship. It is also a pleasure to participate in this debate. The Treasury Committee has done some important work in identifying the problems of financial exclusion, and it has made fruitful progress towards tackling some of them. It is a pleasure to learn about the subject and to hear about those successes.
  The reports make clear how desirable it is to improve the take-up of bank accounts. They highlight the extra costs involved for those without access to a bank account; for example, they cannot take advantage of the savings to be gained through paying by direct debit. They also highlight the difficulties faced by the financially excluded in opening a bank account and in having to prove their identity.
  Another telling factor is the scale of the problem. I estimate that nearly 2 million households do not have access to a bank account, which is a significant number. We should bear in mind who those people are. Many will be old, and many will have all kinds of interaction with the state. It is important that the Government take a cross-cutting approach when tackling these issues.
  The report of the Work and Pensions Committee highlights some of the difficulties involving the social fund, such as the problem of getting telephone calls answered. The hon. Member for Ludlow (Mr. Dunne) mentioned some of the difficulties with telephone contact centres. Unfortunately, the social fund is the classic example of a complete system failure. The social fund commissioner’s annual report shows that he did some cold calling. His office made 500 calls to eight of the new social fund call centres. One office answered one in five calls; the other seven offices answered three calls between them. The social fund is the last line of defence in the welfare system. The bottom line is that those who are most likely to be financially excluded are being failed. In approaching this issue, the Government need to consider the sort of impact that they can have on improving confidence in banking.
  Another example that springs to mind is bank charges, where the debate is about the impact that those charges can have on people’s confidence in banking. I know of several cases in my constituency in which individuals have racked up huge sums in charges in a very short time because direct debits have bounced. People are worried about being exposed to such risks should things go wrong. In many cases, the charges could be the result of a tax credit payment having been stopped because of an overpayment. The Government need to decide how to interact with the banking system and what they can do to help to restore confidence in that system.
  I am listening carefully to the hon. Lady’s argument. Is it not the case that while banks charge what they consider to be a punitive rate, what is required is that they should charge something approaching the cost to them of those who do not meet the requirements of their bank accounts?
  The hon. Gentleman makes a valuable point. The concern expressed by people who come to me with such problems is that despite all the talk about a free banking system, that system is actually more expensive for them than a fixed payment system. That brings us back to the question of who meets the cost. Should the burden fall on those with the lowest incomes, who are most vulnerable, or on those who are more financially secure?
  I took part in yesterday’s Treasury and economy debate on the Queen’s Speech, and that set me thinking about some of the legislation that we will be considering during this Session and its possible interaction with what we are discussing. Legislation was proposed in the Queen’s Speech to try to tackle the aftermath of Northern Rock, which is having an impact on people’s confidence in savings, but I wondered why there was no counterbalancing proposal in relation to all those people who have had similar knocks to their confidence, such as through the Farepak incident last year.
  That is why I am pleased that the Post Office has produced a very innovative proposal, which the hon. Member for Ludlow mentioned. It is a great proposal because it seeks to create a pathway to financial inclusion. There is much talk from the Government about barriers to financial inclusion, but one would almost think that there was a big step to take, whereas what is actually needed is to present people with things with which they are familiar and comfortable, and then to introduce new aspects. In that way, they can make progress towards having a bank account.
  On the payment of pension credit and many other benefits—next year, housing benefit will be paid directly into people’s bank accounts—people often feel that they are not given any alternative. There is an impression that it will be difficult for the payment authorities to do anything for them unless they accept direct payment of benefits into their bank. The Government’s approach should be that the journey to financial inclusion is just that: a journey, rather than simply a barrier that must be removed. The Post Office’s innovation is welcome, because the Post Office is a familiar organisation for all people with a Post Office card account—one through which they tend to access their benefits. The proposal will make people feel more comfortable. That is another reason why organisations such as credit unions need to be supported and extended.
  I have been looking at a Select Committee report—not a Treasury Committee report, but one that was brought to my attention by the Joseph Rowntree Foundation. Through the personal finance research centre, the foundation invited a “community select committee” to look at financial inclusion. One finding was that committee members preferred to deal with local organisations, partly because of easier access. The hon. Member for Ludlow mentioned ease of access to post offices. As someone who represents a rural constituency, I know that many people find it a lot easier to access a post office than a bank. However, they also prefer to deal with local organisations because they mistrust the involvement of financial service providers and the Government.
  All these issues must be tackled, but it is very important to help people along the journey by ensuring that their environment is familiar. A lot of work remains for the Government through considering how services are provided from the point of view of the customer, rather than the state.
  Let me give an example involving some of my constituents, because it illustrates how the push for people to use bank accounts can have very negative effects. An elderly couple have seen me on a number of occasions about all kinds of different issues. They visited my surgery on this occasion because they had a problem with their rent. Their housing benefit was being paid directly to their landlord, and some kind of mistake had occurred whereby there was an overpayment, which was trying to be recovered.
  One would think that setting up a system in which housing benefit was paid directly to their bank would actually assist them, but they did not have a bank account and they were worried about how to get one, since they did not have passports and so on. I wrote to the local council to ask whether it would be possible for the housing benefit to be paid to their Post Office card account, and the response said:
  “We will be unable to make Housing Benefit payments direct to Post Office Card Cash Accounts as this facility is specifically for HM Revenues and Customs and Department of Works and Pensions only. As Mr. and Mrs. Adams are existing benefit recipients we will be able to continue to make future payments direct to their landlord”.
  For recipients of housing benefit, it does not really matter whether they receive the benefit through HMRC, through a tax credit, through the Department for Work and Pensions or through their local council, and nor should it make any difference. We should simplify the system so that we can tell people that all their benefits, including housing benefit, will be paid into a Post Office card account, and then look towards moving them on to a bank account. That would be much more sensible because it would mean offering people something familiar, rather than giving them no other option than to set up a bank account themselves. The issue is all about ease of access to services and about easing people along the way, and the post office network and Post Office card accounts are an important aspect of that. Will the Minister therefore be clearer about the criteria for the new Post Office card account tender process, and will she say whether there will be greater functionality that will provide support to such groups of people?
  Each of the preceding speakers has touched on the key issue of financial education and advice. Like my hon. Friend the Member for South-East Cornwall (Mr. Breed), I very much support the work of the Personal Finance Education Group in trying to support teachers in incorporating financial education in the curriculum. I also congratulate the Institute of Financial Services on its work in providing courses. It provides further education courses in my constituency, and I have been amazed to talk to 16 and 17-year-olds who have learned about the meaning of APR. They did so not as part of an academic exercise during a maths lesson, but at the point when they were actually thinking of taking out their first credit card. Young people’s financial education should be relevant, not cornered off into a maths lesson in which they might not want to engage.
  There has been talk of the child trust fund. My party’s concerns about that hark back to issues that have been mentioned in the debate, such as the extent to which resources are being well targeted at particular schemes. The intention behind the fund is laudable: to encourage a savings culture and to encourage parents to save for their children. However, the swathes of research on the fund that I obtained under a Freedom of Information Act request to the Treasury show the gap between the groups of people who take full advantage of the scheme and those who do not take out a fund, but let the Government invest the money for them and do not make any additional contributions. The latter group are the people on the lowest incomes.
  We will not know for some time what young people will choose to do with the fund money when they can access it at 18. A key point will be whether they treat it as savings to be protected and grown, or part of their income. We need to recognise that attitudes have changed. My grandparents were mortified at the thought that my parents were going to take out a mortgage to buy a house, but one of the first things that I did when I went to university was to look at the size of the overdraft that I should secure and how I could take out my student loans, which I am still paying back. People now start their adult lives with debt if they go to university, which is why it is so important to start financial education earlier.
  We should make sure that there are good networks that provide independent, generic advice. The Government should look at existing, trusted networks such as the citizens advice bureaux. They should also examine their legislative programme as a whole to ensure that people will have good access to advice on financial issues such as pensions. We shall have a pensions Bill in the next year, which will introduce personal accounts, but it will not be worth while for some people to invest in a pension if they have debts that need paying off on which they are incurring a high rate of interest.
  A whole range of issues goes beyond the principles of whether to have a bank account or to use direct debits and an understanding of how those things work. People will be engaging with Government Departments on those long-term issues. Significant investment will be needed. The question has been raised of how much reliance can be put on voluntary contributions, and I would appreciate the Minister’s further comments on that.
  To conclude on the financially excluded, there has been a lot of talk and press coverage about the growing personal debt mountain, but a lot of the people about whom we are talking do not fall into that category. They work in a cash economy and budget really well. We must recognise the qualities of many of those people, who may have very low incomes and no access to a bank account, but who might in fact be a lot better at managing their resources than those on higher incomes. Wider education issues relate to more than just the financially excluded.
  We must ensure that we are not just providing such people with a hurdle to jump, but offering a pathway of support to financial inclusion. We need to recognise the value of the structures and organisations that are already in place and trusted locally, such as the CAB, credit unions and post offices. Also, the Government must get their own house in order to ensure that they are not undermining confidence in, or adding to worries that people might have about, the banking system, through their interaction with individuals and their finances. Above all, however, that needs to be backed up with financial education and high-quality, locally available, generic advice.
  I congratulate the hon. Member for Leeds, East (Mr. Mudie) on the way in which he opened the debate in the absence of the right hon. Member for West Dunbartonshire (John McFall). This is the first time, in the almost two years in which I have performed this role, that there has been a debate in the House on financial inclusion. I am grateful, therefore, to have this opportunity to discuss the report prepared by the Treasury Committee. It is a long-overdue debate about the way in which the Government are responding to the challenges of financial exclusion, and the way in which other partners are working together on this subject. The number of reports being debated indicates the scale of the challenge that we face. That came out in a number of this afternoon’s contributions dealing with the different aspects of financial exclusion that we need to tackle.
  Before making more substantive remarks, I shall comment on some of the speeches made this afternoon. In his opening remarks, the hon. Member for Leeds, East mentioned the importance of those even on low incomes saving small amounts of money. When I visited the Portsmouth Savers Credit Union, of which I am a member, and spoke to its manager, I was struck by the number of people who had their benefits paid into their account, but at the end of the week left a little bit in there as a reserve, so that when there was an unexpected expense, rather than having to borrow money from a credit union, or from the home credit market, they had some money of their own to draw upon. That is a practical way in which to use instruments that are available already to help build up those reserves.
  My hon. Friend the Member for Sevenoaks (Mr. Fallon) rightly highlighted the cultural change in the approach to savings and credit. That point was made by the hon. Member for South-East Cornwall (Mr. Breed) and is hugely important. It is complacent of the Government to say that the former savings ratio was a response to the economic conditions of the time. I think that the problem is deeper than that. A survey produced in September by the International Longevity Centre showed that, over the course of the last 10 years, the amounts of money being saved by young people have declined. A cultural change is happening partly because, as the hon. Member for Falmouth and Camborne (Julia Goldsworthy) said, people begin their adult lives already encumbered with debt from taking out student loans and expect to buy a house, so credit is no longer socially unacceptable. Taking out more credit is seen as a reasonable step, but that has long-term consequences.
  That underpins the need for better financial education, which the hon. Member for South-East Cornwall mentioned in the context of the Personal Finance Education Group and the IFS School of Finance. The latter provides qualifications in personal finance to GCSE, AS and A2-levels. Some of the evaluations done of that work so far indicate that it gives young people the capability to manage and control their own finances in a way that impresses those who see the courses in action, and has a knock-on affect upon the families of the children concerned.
  I agree with much of what the hon. Member for Edmonton (Mr. Love) said. He commented on the generic financial model that Otto Thoresen is developing and the targeting of that. From my constituency experience and meetings on financial exclusion, indebtedness and credit problems, I get the message that it is not just those on lower incomes who need generic financial advice. People on moderate incomes need it as well. Often now people do not trust banks and find that local independent financial advisers, to whom they might have turned in the past, do not want to see people on moderate incomes because they do not believe that the money that those people could save would be sufficient to pay their fees. It is important, therefore, that a broader section of society is served by that model, if we are not to extend financial exclusion across a range of income scales wider than has traditionally been the case.
  My hon. Friend the Member for Ludlow (Mr. Dunne) spoke for many people on his concerns about the Post Office. It is difficult to see how we can use the Post Office as a tool to deal with financial exclusion when we are seeing the degradation of the network and, in my own constituency, proposals to close four post offices, which will have an impact on the ability of people to access financial services through those outlets.
  I think that there is a wide-ranging political consensus on the importance of tackling financial exclusion. My right hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith) produced a powerful report over the summer, entitled “Breakthrough Britain”, which identified poverty as being driven, in part, by financial exclusion and debt. I think that that shows the depth of the consensus across the House.
  This is a shared endeavour. Tackling financial exclusion is a social responsibility. We have talked so far about the role that the Government have played in tackling it, but we should recognise also that businesses, the voluntary sector and individuals have a responsibility as well. It is only by working together, in partnership, that we will resolve these issues fully. I sensed from Labour Members on the Select Committee an enormous reach towards using a legislative big stick. I am not sure about the message that that would send to the financial services industry, which has contributed significant sums of money already to tackling financial exclusion. I think that we would work better in partnership on a voluntary basis than by resorting to legislation as a means of dealing with these issues.
  One challenge that we might face over the next few years is that banks, as they respond to pressures in the marketplace and calls for responsible lending, will start to turn away customers, reject current card application forms and say no to personal loans. Those people will still want credit and will look for alternative sources, some of which might be more expensive than those currently available through banks. We need to accept that there will be greater reliance not just on credit unions, but on the home credit market.
  For credit unions and community development financial institutions to become viable, which they must do if they are to expand their role into more communities, we need to recognise that they too will have to say no to some potential borrowers. It will be in their long-term viability interests to turn down bad credit risks. If they give to lots of high credit risks, they will inhibit their future opportunities to help others who are financially excluded. We need, therefore, to recognise the important role of home credit providers in this arena. They are often on the end of quite sharp criticism over the high rates that they charge, but we need to recognise that they offer a flexible service and collect on a weekly basis from people’s homes, and that they are prepared to lend small sums of money, in a way in which many mainstream members are unable to do. The Joseph Rowntree Foundation is working to see whether there is a third sector home credit solution out there, how it works in practice and whether it is viable. If such a solution develops, it will provide a challenge to the home credit market.
  It is right for the Competition Commission in its report to require home credit companies to share data with credit reference agencies. That will give those companies’ customers the opportunity to move away from home credit to more mainstream lenders and to demonstrate, through their credit histories, a track record of making payments regularly on time, which will open the doors for them to the forms of credit that we take for granted.
  For alternative lenders to prosper, we need to consider the liberalisation of the legislation on credit unions, and I welcome the Government’s consulting on this matter. However, that is not the only step that needs to be taken. We need to ensure that, where money is coming from the growth fund to fund the development of credit unions, it is used in a way that builds sustainability into their business model. We need more credit unions to merge and to consider extending the common bond, in the same way that Portsmouth Savers Credit Union has done to cover not just Portsmouth, but my borough of Fareham and other neighbouring areas. That will give them the strength to develop in future.
  My hon. Friend the Member for Sevenoaks mentioned an important issue in respect of liberalisation, which is whether credit unions are enabled to accept deposits from institutions or organisations. A lot of charities, voluntary groups and church bodies would want to put money with credit unions, in recognition of the fact that not only can they earn interest on those deposits, but they will be able to lend that money to others in the community who need support.
  Absolutely. We need to investigate that positive model. I hope that such an approach will form part of the remit of the Government’s review and the way in which they develop credit unions.
  It is also important to mention the third sector not only in respect of lending, but in terms of the advice that it provides through, for example, the Money Advice Trust and the Consumer Credit Counselling Service, which performs an excellent role in providing support to those in debt.
  Hon. Members have commented on the positive role played by the citizens advice bureaux. I know, from my experience in Fareham, about the work that the local CAB does to help people work through their debt problems. I also share the concerns about the funding of the citizens advice bureaux. I am president of the Friends of Fareham Citizens Advice Bureau, which has been set up to help raise money to help Fareham Citizens Advice Bureau develop its services to reach a wider range of people, put some investment into the organisation and, perhaps, to provide some outreach work.
  There is an important role for the third sector. I hope that, in the development of financial exclusion initiatives, we continue to cherish it and do not seek to freeze it out. I am grateful that, in his interim report, Otto Thoresen recognised the importance of the third sector in meeting generic financial advice needs.
  My final point is about prioritisation and ensuring that organisations are clearly aware of the importance that the Government place on various initiatives. This point has been made to me by the British Bankers’ Association, which worked with financial institutions to look at the support that can be given to financial inclusion, and worked closely on this matter with the various taskforces set up by the Government, and with the Government themselves.
  It is worth bearing in mind what private sector organisations provide. HSBC is funding the “What money means” campaign to give financial education in primary schools; the Royal Bank of Scotland launched its MoneySense website and will be doing a roadshow in conjunction with Tesco; and Prudential is providing curriculum material for secondary schools as well as support for citizens advice bureaux. So a lot of private sector organisations are stepping up to the plate and being supportive of initiatives. They are also contributing through a levy for the financial capability work that the Financial Services Authority is doing. The Government expect them to fund part of the generic financial advice model. The list regarding the role that the private sector is playing could go on for far longer than we have this afternoon.
  We need to be focused about what we are asking the private sector to do, because there is a huge range of initiatives. I have chaired two meetings over the past year on financial exclusion and financial education. We are awash with initiatives and we need some sense of prioritisation and direction. When a new initiative, such as the generic financial advice proposals, is advanced we need to understand where it fits in the Government’s programme and what priority should be accorded to its funding by banks and financial institutions. It is important to give the private sector a clear steer on what and how much it is expected to do.
  This has been a useful debate in that it is keeping financial inclusion on the agenda. I hope that the Treasury Committee members who are present will push their Chairman to look again, in a year’s time, at where these initiatives are heading. There is so much happening that someone needs to have an overview and oversight of it and how effective initiatives are, otherwise we are in danger of having a torrent of ideas, but no proper evaluation.
  It is clear to all hon. Members, in whatever capacity they speak in this debate, that we should tackle financial exclusion to further our constituents’ economic well-being and social justice.
  It is a privilege to serve under your chairmanship, Mr. Bercow. It would be even more of a privilege if you were also a Labour member of the Speaker’s Panel, but we have not yet given up hope. [Interruption.] I note that you shake your head.
  I congratulate the Treasury Committee on the volume and helpfulness of the work that it has been doing in this area over the years. The Committee has been shining a bright spotlight on us and this policy area. I say sincerely, as a Minister, that its work is useful and I hope that it will guide us towards making the right decisions in due course.
  I congratulate my hon. Friend the Member for Leeds, East (Mr. Mudie) on his contribution in opening this debate, particularly for filling at short notice the big shoes of my right hon. Friend the Member for West Dunbartonshire (John McFall), who has played a significant role in leading the Committee and has led in this policy area. I put on the record my thanks to him for contacting my office to explain why he is not here today, for reasons that I understand. I do not know that he should have a reward in having the network of free ATMs named after him as a result of his sterling work, but I shall always bear that in mind when I use a free ATM in my constituency.
  My hon. Friend the Member for Leeds, East ended his remarks by urging that financial inclusion should be at the heart of our work at the Treasury and, certainly, in my work as Economic Secretary. I should like to start where he left off by saying that that is absolutely at the heart of my work. It is an important area and there is more that we can do. I hope that we will be able to demonstrate that in the weeks and months that follow.
  This has been a useful debate. Many hon. Members have raised similar issues, so I shall address some of the main ones that have emerged during the last couple of hours, starting, as my hon. Friend suggested I should, with financial inclusion. In the comprehensive spending review a couple of weeks ago it was announced that the financial inclusion fund would be raised to £130 million in the next spending period. We have not yet decided exactly how that should be spent, but we will decide in the next few weeks and we are committed to publishing the financial inclusion action plan by the end of this year. I can say that it will have at least two important components. The first will be the continuation of the growth fund for credit unions and the second will be a continuation of the programme providing debt advice throughout the country, including the important work carried out through citizens advice bureaux. I share the view of the hon. Member for South-East Cornwall (Mr. Breed), who said that he would not be able effectively to perform his advice surgeries without the back-up of the citizens advice bureaux, which do fantastic work.
  In response to the question about how often the financial inclusion ministerial working group has met, there has been one full meeting since I became Economic Secretary about four months ago. We have also discussed issues by correspondence during that time, and I expect another meeting shortly.
  On financial inclusion and the un-banked, as many Members know, we have with the banking sector a shared target of halving the number of un-banked people. We are already 60 per cent. of the way towards meeting that shared target. We are encouraged by that and believe that further progress can be made without the need for legislation. Indeed, a mystery shopping exercise by the Banking Code Standards Board recently showed that banks are making progress in reducing the very real barriers that have existed, so we are confident that we will be able to make further progress in the months and years ahead. We do not see the need for a dramatic change in policy at this stage.
  My hon. Friend the Member for Edmonton (Mr. Love) mentioned the social fund, which is administered in conjunction with my colleagues at the Department for Work and Pensions. We completely accept that social fund budgeting loans play an important part in providing affordable credit to the most vulnerable people in society, which is why in April 2006 we provided a further £210 million for the scheme, alongside an important reform package to help make it simpler and more accessible. I am perfectly aware that there is a debate about whether further reform is required, and I am happy to discuss with Committee members and others whether it would be appropriate in the context of the Government’s financial inclusion plans generally.
  I turn to general policies on savings and assets. I agree with my hon. Friend the Member for Leeds, East and others about the importance of promoting safe savings, and various savings gateway pilots were mentioned. It was essential to pilot different ways of working. I welcome the Committee’s emphasis on that policy, which is helping us to come to the right conclusions. The savings gateway pilots have explored the idea of incentivising people on lower incomes to save by matching saving with a Government contribution, and I agree with the comments that we should focus our efforts on people on lower rather than middle incomes so far as that policy is concerned. The results have been positive, and the pilots have shown that matching works as a targeted incentive for people on low incomes to save, that it kick-starts a savings habit, with people choosing to continue to save even after their savings gateway accounts have closed, and that such an approach can help to tackle financial exclusion by bringing people into contact with financial institutions for the first time. Ideally, having obtained the savings habit, people should move into more mainstream saving products, and there is evidence that that is a realistic prospect.
  For those reasons, last month we announced that we are conducting feasibility work to enable the national roll-out of a savings gateway and assessing how it could operate in practice. Further announcements have spending implications, so it is appropriate that they should be made in the Budget, but that is only a few months away, so I encourage Committee members to be a little more patient.
  I agree with all the comments about credit unions. They play a crucial role in encouraging not only access to affordable credit, but the savings habit within communities. I accept what some Opposition Members have said about the importance of offering standard financial lending products in a community. Personally, I would much rather an individual borrowed through a credit union at an affordable rate than through the admittedly regulated alternative doorstep-lending sector. That is why there is a social imperative, if no other, to enable credit unions to expand.
  When I visited a credit union in east Manchester a couple of weeks ago, I announced that we could do some things without legislation. For example, the FSA has the power to reform the common bond, and we are also trying to ensure that credit unions, along with other parts of the co-operative sector, can undertake electronic transactions, which should reduce their operating expenses. We are also considering the responses to a consultation document about the future of the co-operative and credit union sector. We will make our deliberations known before the Christmas recess, and we are considering the need for legislation as a part of that. Rather obviously, legislation will not be included in this Session because, unfortunately, it was not included in the Queen’s Speech, and we do not know what we are going to do or how and when we are going to do it. However, we are considering what is required and whether it will require legislation. Again, I ask for a few weeks’ patience, then all will become clear.
  My hon. Friend the Member for Edmonton asked whether community investment tax relief needed to be extended to enable banks to invest more in communities and credit unions. The honest truth is that we have considered it and we are not totally convinced that it is the best way to support the sector. However, I am happy to engage in further dialogue, and if more information becomes available we can revisit the matter, if appropriate.
  We have had a few comments about the savings ratio, and it is honestly my view that there is a sense of consumer confidence, which means that people are not undertaking precautionary saving throughout the macro-economy. At lower income levels, the best way to avoid financial distress is to save for that eventuality, and we heard that everyone should have a month’s salary stashed away, but if we consider the macro-economic indicator, in recent years the household savings ratio has been at about 1960s levels. Since 1997 the ratio has been lower than it was in the early 1990s, but it was inflated during that time as households retrenched and saved for precautionary reasons; they believed that unemployment was more likely.
  I am not unhappy with that number—let me put it like that. That is my view. We have a stable economy, people feel that there is no need to tuck all their money away, they are confident and they are spending. Overall net wealth has risen hugely and total household assets are now worth £7.5 trillion. It has increased by more than 70 per cent. in real terms since 1997.
  The hon. Gentleman raised the issue and I have responded to it. The crucial issue is the quality of people’s debt, and we are nowhere near the situation in the United States.
  Several Members mentioned Farepak, and particularly the consumer awareness campaign that the Office of Fair Trading has been given funds to undertake. It was launched this summer and very much aimed at affecting decisions in the run-up to this Christmas. It aims to give consumers an informed choice about where they save their money for Christmas. We have launched the campaign through the media in Scotland, Northern Ireland, and north-east and north-west England, with Wales and the midlands to come. There will be a national advertising campaign highlighting the issue through the media in the coming months. The sessions are under way and I am told that the results are encouraging, so in response to the question about whether the campaign has started, it absolutely has.
  On the wider response to the Farepak issue, we are pleased that the new trade body, the Christmas Pre-payments Association, is monitoring the initiative of companies in improving security for consumers’ money, which is held in trust accounts under the control of individual trustees. The Companies Act 1985 investigation is expected to be completed by the end of this year. Depending on the findings, it could lead to prosecution or disqualification, or indeed both. However, we do not know, because the work has not concluded, and often it is not published. However, appropriate action is always taken as a result of such work. Once we have the outcome of the Companies Act investigation, we will consider whether further regulation is needed.
  On financial capability and education, I too have seen the benefit of an IFS course on financial literacy in my constituency. I have listened to 15 and 16-year-olds at Burnley college explaining with great maturity how they would decide what type of credit card to have, if any, and how they would make various judgments about what savings and pension schemes they would put their investments into. I found listening to them an empowering and liberating experience, and I commend the IFS for its work and the Personal Finance Education Group, which has a huge impact up and down the country.
  My colleague the Secretary of State for Children, Schools and Families recently made an announcement about entrenching financial education in the curriculum. Some £11.5 million has been earmarked for that. It is exciting that the first cohort of children with child trust funds are now entering the school system, because that provides a peg on which to hang the discussion of financial issues. They may not be able to go into what an APR is at the age of seven but, as they migrate through the school system, having their own child trust fund will help them to understand the real choices that they will face, regardless of gender, background or anything else.
  The Minister’s predecessor made a great deal of the fact that seven-year-olds would be standing in the playground talking about the relative benefits that their parents’ investments in their child trust funds had brought. Perhaps her predecessor might have done that, but does she really think that seven-year-olds will be doing it?
  No, of course I do not, but I visited a primary school in a deprived part of north London with my predecessor and we saw the innovative curriculum that teachers had developed to start to teach basic awareness of financial literacy. Yes, at that age it is just about counting up money, how much an omelette costs and so on, but I could see that children of all ability streams were able to engage with it. When translated across the board and at all levels, such imagination will make a real difference.
  We need to do more to encourage additional top-up contributions to child trust funds, but we are definitely making progress. Members of Parliament can make a difference through how they talk about the matter in their constituencies, and every single child will have a trust fund opened for them. It is certainly not the case that some will and some will not. The challenge is to ensure that, as early as possible, family members and friends engage with the process so that the asset can be as high as possible. Small contributions made at an early stage can have a huge effect when a child reaches 16 or 18.
  The Committee is well aware that we commissioned Otto Thoresen to provide advice to the Government on the prospect and implementation of a generic financial advice service. I do not have answers to the specific questions that have been asked, because we are still waiting for the final version of that report, which will be received in the spring. We hope to incorporate our response to it in the financial capability action plan, which a separate cross-governmental ministerial group is currently putting together. I was asked about funding. We have always said that any generic financial advice service should be jointly funded by Government and industry. We do not yet know how or by how much, because we have not yet had the final report. We hope to have the answers for the Budget timetable because, again, there are spending implications.
  On post offices, I am conscious that I may need to bid to be a Minister in another Department to answer in great detail. I congratulate the hon. Member for Ludlow (Mr. Dunne) on becoming secretary of the all-party group on post offices. He made some important points on the rural economy and I share his view. All that can be said at the moment is that the current Post Office card account contract does not end until March 2010, and we have decided that there will be a new service after that. It will be available nationally and customers will receive a set of services similar to those currently provided. We must tender competitively for it, and Members will have seen the Official Journal of the European Union notice that was placed a while back, a copy of which is in the Library.
  It is important to say that existing customers do not need to take any action at the moment. They can continue to be paid, and new Post Office card accounts can still be opened. The contract has not yet been awarded, and I take on board all the points that have been made about the functionality that it should have. That matter is currently part of the negotiations with the various potential consortiums that have tendered, so I am not in a position at this stage to say what the precise arrangements will be. We hope to announce the conclusion of the procurement process in the summer of 2008, so I need to appeal again for a little patience.
  I assume that Ministers are well aware of both the sensitivity of the client group of the Post Office card account and their worries about what is coming. May I make a plea to her and her colleagues in other Departments that, at the earliest possible opportunity, time be taken to explain what is coming and consult on it? Otherwise, we will further exclude a group that is already partially excluded.
  I am grateful for that contribution, and I certainly agree with my hon. Friend. We are currently in contractual negotiations, which will come to a conclusion shortly. That will leave a huge amount of time to explain things and make transitional arrangements in so far as they are required. I do not even know at this stage what major differences there will be, but I thank my hon. Friend for his advice and contribution.
  The Government are absolutely committed to ensuring that financial inclusion concerns are at the heart of our policy and our policy making process. We want to make it easier for people to manage their money more effectively, plan for the future and deal with financial difficulties as they arise, and we completely accept that the best way to deal with financial difficulties is to have some savings tucked away. It is an exciting time for those of us involved in this area of policy. A number of decisions will be made imminently, in the next few weeks and months, so the debate is timely. I am grateful to the Committee for the work that it has put into the matter, and I look forward to its continuing advice and scrutiny in the weeks and months ahead.
  Question put and agreed to.
  Adjourned accordingly at seven minutes past Five o’clock.