National Savings and Investments (NS&I) is going to stop providing accounts via the Post Office. From 28 November 2011 Easy Access savings accounts and Investment accounts will no longer be available. Jane Platt, chief executive of NS&I commented that long term they would like their customers to deal with them directly. “Since 2007 we have been working to simplify and modernise our range of savings and to encourage our customers to invest with us directly. Were very proud of the service we deliver to savers by post, online and, in particular, via our UK call centres”.

The NS&I was originally set up to encourage ordinary wage earners to provide for themselves and save. I believe Gladstone boasted of  a savings bank within a one hour walk and delivery with a human touch. Moving away from the Post Office runs counter to NS&I’s ‘easy access for the common man’ traditions which is particularly disappointing at a time when mainstream commercial banking has been shown to not serve the needs of poorer consumers’

Their move away from using the Post Office also runs counter to Government encouragement for it’s agencies to do more business with the Post Office in order to serve people better. How can smaller Departments and Local Government be expected do business through the Post Office when the Treasury is going in the opposite direction. Looked at narrowly this is simply NS&I looking after their own best interests, and by reducing their own silo costs ignoring the wider picture. Wouldn’t it be better if the Treasury encouraged its agency NS&I to  look at the wider public interest.

But, looking for a silver lining….. all the more reason to support the need for weekly budgeting at the Post Office – to fill the increasingly large gap in the market left by most other financial organisations, like NS&I, who only want to chase the more affluent middle market via the cheapest channels.

There was an interesting debate on the 24th May introduced by Sarah Newton, the transcript is available at http://www.publications.parliament.uk/pa/cm201011/cmhansrd/chan163.pdf.

During the debate speakers from all parties advocated expansions to POCA including the acceptance of income from sources other than benefit and direct debit like payments.

Steve Webb was quite right to argue in response that POCA customers should have a choice whether they have the additional facilities. Which is one reason why we haven’t argued for the expansion of POCA, a DWP contract, but the reuse of the POCA infrastructure. This is both legally acceptable and makes the account available to non POCA users, whilst enabling it to look like a single account to those POCA users who choose the new facilities.

Although the existing POCA contract expires in 2015, we shouldn’t wait until then to put in place a budgeting account that meets the needs of the poor and vulnerable. As the debate showed, delaying will also increase the threat of Post Offices closing due to uncertainties about future income from POCA.

The Financial Inclusion team at the Treasury commissioned Social Finance to produce a report on the possibility for a commercially viable new product to meet the needs of the financially excluded. Their report is available for download at http://www.socialfinance.org.uk/resources/new-approach-banking-extending-use-jam-jar-accounts-uk

SfP have reviewed the report and concluded that the report provides a valuable analysis of the problems faced by those who behave as if unbanked. We also welcome the confirmation that if the sort of ‘Jam Jar’ account originally proposed by SfP and latterly by Consumer Focus was available it would benefit consumers, service providers and society in general.

Unfortunately, we at SfP believe, there are flaws in the report that fatally weaken the Social Finance vision of a ‘Jam Jar’ account. Our response  http://www.savingfrompoverty.org.uk/documents/SfPresponsetoSFreportonJamJaraccounts-24May2011_000.pdf was submitted in the hope that the flaws can be addressed. The key points raised were:

• The size and shape of the target market identified focuses too much on those already in mainstream banking and too little on the more financially excluded

combined with…..

• Too little work having been done on the Service Provider market and potential revenues.

has resulted in…..

• A focus on small scale / competition instead of large scale / lower cost

And a failure to appreciate the

• Impact of consumer charging and the need for ‘honest broking’

Resulting in a report that

• Convincingly argues for ‘Jam Jar’ accounts whilst making them unviable

We were also surprised to see recommendations that the Government is best placed to negotiate fees with Service Providers and that further research into credit scoring as the best way to assess who should be eligible.

It’s good to see that the Government is encouraging the Post Office to play a central role in delivering Credit Union services.

Quoting Mark Lyonette, Chief Executive of ABCUL – the Association of British Credit Unions ”We are delighted to learn that the Government is going to make up to £73 million available to continue the expansion and modernisation of credit unions over the next four years. We also welcome the Government’s commitment to providing access to credit union accounts through the Post Office network.

Wouldn’t it be great if the Government would be equally positive to supporting Saving from Poverty in offering weekly budgeting delivered through the Post Office.

This time last year we got together at the Transact National Conference 2010 to face the challenges and opportunities for financial inclusion.

One year on, with all the energy of a new and different form of Government, are the challenges any different?, or the opportunities realised? Sadly, ‘No’  to both questions.

I asked the question, “What will persuade someone who is financially excluded to become included”, and we seem as far from agreement on an answer. Saving from Poverty is designed to provide a self sustaining answer to the question, but everyone has been deflected from examining it. First by the Postbank study and then by a Treasury study into the business model for a pale imitation that is based on existing banking delivery rather than using  the Post Office.

On a day that had some of the best brains were working on the challenges, it’s interesting to remember that the single most unifying recommendation was to make more use of the POCA infrastructure, as SavingFromPoverty have been advocating. Memo to Ed Davey and George Osborne. “Lets do something about it this year”!

I’ve just returned from a most interesting NEA Fuel Poverty (a time for change) seminar in the West Midlands. Although fuel poverty isn’t the only measure of deprivation it seems to be becoming a useful proxy. Some interesting statistics I gleaned were:

• 5.4m households are in fuel poverty
• 2.5m households in debt to their energy supplier
• PPM’s increasingly being used for debt recovery (63k out of 73k installed in Q2)

I also learnt that DECC are working closely with DWP to maximise income (which implies benefits) for the vulnerable. Unfortunately spending cuts are resulting in the third sector and local government cutting down on their advisers, which will have the opposite effect.

And if that isn’t all; changes in Government policy will result in there being no government funded support for the first time in 30 years. Instead the Energy Bill currently going through parliament includes an Energy Company Obligation (ECO) to fund initiatives for the poor and vulnerable. This is funded by a levy on energy customers, which will rise from £88 a year now to a predicted £160.

Saving from Poverty isn’t specifically designed for those in fuel poverty, although as those in fuel poverty increasingly comprise the poor and vulnerable it could be a major help. When I’ve time I’ll draft a paper explaining how SfP helps reduce fuel poverty (although its benefits are, of course, much wider).

Low income families are paying even more than wealthier families for basic goods and services, for more information see http://www.savethechildren.org.uk/en/50_UK-poverty-rip-off.htm.

Everyday necessities such as bills and insurance are costly for everyone – but for too long those on lower incomes have had to pay extra for the same energy bills, credit, cookers and other goods than wealthier families. This is often because they do not have access to the best deals which go to those who use bank accounts.

Weekly budgeting, as proposed by Saving from Poverty, reduces the poor premium by enabling those on low incomes to receive the same discounts as richer consumers. Go to our main website http://www.savingfrompoverty.org.uk/ for more information.

We wish all readers a Merry Christmas and a Happy new Year.

Let’s hope that 2011 is take-off year for Saving from Poverty.

The Independent have highlighted the extent to which poverty is increasing by reporting that food parcels may be re-introduced here in the UK http://www.independent.co.uk/news/uk/home-news/life-on-the-poverty-line-breadline-britain-2158111.html.

The article highlights that there are “3.7 million children live in poverty in Britain with a record 2.1 million working families now below the breadline. The situation will get worse in coming months as food prices rise, VAT increases to 20 per cent, and job losses due to public sector cuts mount”. And contrary to received wisdom “Traditionally, the homeless have been the main beneficiaries of free food parcels. But organisers say they are increasingly helping families and working people.”

A recent report from The Rowntree Foundation “Monitoring poverty and social exclusion 2010” http://www.jrf.org.uk/publications/monitoring-poverty-2010 also highlighted the increase in poverty and it’s prevalence in working families. Saying “Despite the recession, the number of children in poverty in workless families fell in 2008/09, to 1.6m, the lowest since 1984, but those in working families rose slightly to 2.1m, the highest on record.”

With more people in poverty, and clear evidence that the problem is not simply one of being out of work, there is an urgent need for help. And while food parcels are necessary they are not what is needed to rescue those in debt related poverty. At Saving from Poverty we see weekly budgeting designed to suit the needs of those on low incomes as a key enabler to escaping poverty. We are also convinced that the benefits are needed by all those on low incomes whether working or not.

The Energy and Climate Change Committee will hold a one-off oral evidence session with the “Big Six” energy companies on Tuesday 7 December 2010 in Committee Room 15 at the Palace of Westminster.

We expect the members of the committee to ask the energy companies “what efforts are you making to help those in fuel poverty?”.

In response we expect to hear “we could do more to target the right people if Government was more joined up“. What we would like to hear is that “Government and the Utilities will together support an initiative to help those in debt related poverty“.

There is a real danger that committee will miss the point. That those on low incomes and in danger of falling into debt related poverty need help, and one consequence of not getting it will be that they can’t afford to heat their homes. Weekly Budgeting, as proposed by Saving from Poverty, is designed to help them so what does it take to get Government to join up, and join in?

The utility companies could argue “A weekly budgeting bill payment mechanism would enable us to offer targeted discounts . There is a special purpose social enterprise, SavingFromPoverty, ready to provide it, if you can give them a green light.” And in doing so support Post Offices, who will be handling much of its delivery.

The real question to the Department of Energy and Climate Change (DECC)  is “What are you doing to support the Saving from Poverty initiative?“