William Kay: To help the poor, lessons in personal finance must start in the classroom

It went almost unnoticed this week, but the Chancellor's Spending Review contained far-reaching and potentially valuable proposals to help poor people with their finances.

It went almost unnoticed this week, but the Chancellor's Spending Review contained far-reaching and potentially valuable proposals to help poor people with their finances.

Gordon Brown's first step was to loosen the rules for Social Fund Budgeting Loans, which at present can force borrowers to hand over as much as a quarter of their weekly income in repayments. This is a godsend to loan sharks which was long overdue for reform.

Beyond that, though, the banks are to have their arms twisted to give more people bank accounts and loans that charge interest rates below the scandalous 30 per cent reserved for those regarded as high risk.

Last year, Barclays piloted a promising scheme in tandem with Cattles, the doorstep lender, but it was scrapped after only six months. Conflicts of interest between the partners were cited, but Mr Brown must ensure that such squabbles do not get in the way in future.

The latest tally, in April 2003, showedthere were around 3 million households without a current account and about 1.9 mil- lion households without an account of any kind. Mr Brown said: "Those without a bank account are much more likely to use the 'alternative credit market' and pay rates of interest many times those of a standard overdraft." But it is not so much having a bank account as satisfying the banks' criteria for granting an account that makes the difference.

There is no substitute for good, free financial advice to help the poor, and Mr Brown recognises that the supply of such counsel falls far short of demand. He is calling for suggestions to increase this supply, and is setting up a Financial Inclusion Taskforce to tackle financial exclusion.

I hope this taskforce will pick up the phone to John Tiner, chief executive of the Financial Services Authority, for very similar work is already being done by the FSA's Financial Capability Steering Group. And I can assure Mr Brown that that group's Debt Working Party, on which I sit, has been looking at the problems of advice and low-cost loans. The Treasury's Ruth Kelly is a member of the Steering Group, so there is no excuse for Mr Brown not being fully informed about its investigations.

Citizens Advice welcomed the Government's initiatives in this area, along with the relaxations in the Social Fund rules. But, despite the billions of pounds being devoted in the Spending Review to improving education, strangely Mr Brown did not make the connection between better education and the need for money advice. Britain's schools are still not compelled to teach finance. Until they are, the loan sharks will continue to make a fat and largely tax-free living.

So it was cheering to see Ron Sandler, chairman of the Personal Finance Education Group, congratulating the first students to pass the Institute of Financial Service's level 3 Certificate in Financial Studies, the equivalent of an A level. This is a first step towards the Personal Finance GCSE for which The Independent has long campaigned.

As Mr Sandler pointed out, if consumers are more able to recognise when the wool is being pulled over their eyes, they will demand better value for money. And then the entire financial services industry will be prompted to move in the right direction.

But it does need the government to start that process in every classroom in the country.

* The Office of Fair Trading is at last starting to fight dirty against the blight of the doorstep seller. It has summoned Nanette Newman to front a campaign aiming to give consumers the skills to keep control of the transaction.

This chimes in very much with Gordon Brown's plans to make more affordable loans available. It is always going to be difficult to protect someone who needs a doorstep loan just to pay for food and clothing, but the power to ask questions is invaluable. Through Ms Newman, the OFT is also advising the public to guard against emotional blackmail by not getting drawn into conversation about family or personal life, and never signing for something on the spot: send the seller away while you think about it.

And above all, don't be afraid to say no. If the item is worth more than £35 you always have a week to change your mind.

A&L circus rolls into town with new account

I sometimes wonder if bank marketing executives were brought up in a circus. Barclays became notorious last year for its 0 per cent credit card deal, now withdrawn, which it was virtually impossible for anyone to qualify for. Now Alliance & Leicester dons the greasepaint and beats the drum for its Premier Plus current account.

It follows the usual pattern, concentrating hard on the headline rates, 5.5 per cent on money in the account, 0 per cent on prearranged overdrafts. Then the small print kicks in: the 5.5 per cent is only up to £2,500, and you have to pay in at least £1,000 a month. The 5.5 per cent is the guaranteed minimum until the end of next year, by which time others will probably have overtaken it because of Bank of England base rate rises. From January 2006 the new account will pay a none-too-exciting 1 per cent below base.

As for the overdrafts, we'll never know how much A&L will lend interest-free, but the maximum is £2,500 and most people will get no more than £250. Like Lloyds TSB and Halifax before it, A&L has come up with an account wrapped in so many strings it might as well be running a puppet show.

We have seen Intelligent Finance and ING start with a bang and then slip back. So will this one. The 5.5 per cent is worth about £20 a year more than you can get elsewhere, and there's free worldwide travel insurance worth about another £55.

It hardly seems worth the effort, let alone the song and dance, unless you're a first-timer.

w.kay@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
peopleReports that Brand could stand for Mayor on an 'anti-politics' ticket
News
The clocks go forward an hour at 1am on Sunday 30 March
news
Arts and Entertainment
The Doctor finds himself in a forest version of London in Doctor Who episode 'In the Forest of the Night'
TVReview: Is the Doctor ever going stop frowning? Apparently not.
News
Voluminous silk drawers were worn by Queen Victoria
newsThe silk underwear is part of a growing trade in celebrity smalls
PROMOTED VIDEO
Sport
footballMatch report: Real fight back to ruin Argentinian's debut
News
Candidates with surnames that start with an A have an electoral advantage
newsVoters are biased towards names with letters near start of alphabet
Arts and Entertainment
Isis with Lord Grantham (Hugh Bonneville)
TV
Arts and Entertainment
Jay James
TVReview: Performances were stale and cheesier than a chunk of Blue Stilton left out for a month
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?