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I’m excited to be involved in a radical financial triage foodbanks programme

I’m excited to be involved in a radical financial triage at foodbanks programme

I’m excited to be involved in a radical financial triage at foodbanks programme

A radical experiment is about to start involving the Trussell Trust and I’m delighted to be playing a part. Rather than regurgitating, here is the charity’s press release which tells you all…

"FOODBANKS TO LAUNCH RADICAL ‘FINANCIAL TRIAGE’ PROGRAMME"

Foodbank charity the Trussell Trust is to launch pilot funded by a 6-figure personal donation from Money Saving Expert Martin Lewis.

This pioneering idea is a response to the alarming increase in people being referred to foodbanks in severe financial difficulty. The scheme could revolutionise how the UK’s leading foodbank charity works and will see foodbanks partner with debt and money-management charities to provide instant financial help to people in foodbanks at the point of crisis.

The pilot is announced as new research shows that more than one in ten UK families have taken out a pay day loan to make ends meet in the last year (12%) and a quarter (24%) of UK families have fallen into debt to be able to provide for the family. Over 900,000 people received three days’ emergency food from Trussell Trust foodbanks in 2013/14 financial year, 163% more than the previous year.

David McAuley, Trussell Trust Chief Executive says: "It’s deeply concerning that the basics of dignified life in modern Britain – food, heat and electricity – can fall out of reach for so many. High prices, static incomes, problems with benefits and harsh welfare sanctioning are forcing people into extreme financial difficulty.

"When you’re facing stark choices between eviction or feeding the family, debt and high interest loans can seem to offer a short term solution, the reality is that this often forces finances to spiral out of control.

"By introducing a ‘financial triage’ service in foodbanks, where clients are able to connect with free financial and debt advice, people will be given professional help to manage tight finances, avoid pay day lenders and structure debt to prevent the situation from getting worse and to help people break out of crisis much faster."

Martin Lewis’ donation, to be supplemented by additional funds from the Trussell Trust, will enable the charity to develop the first stage of a transformative ‘more than food’ approach to foodbanks, where foodbanks in the pilot project become a ‘hub’ of local service provision.

People in need will be able to access a range of support including emergency food, debt advice and money management all in one location, removing access barriers and cutting down waiting times.

Connecting people with financial support at the point of crisis will also help reduce the workloads of already over-stretched debt and money-management charities by helping to decrease the number of people developing complex and entrenched financial problems.

Despite the evidence of economic recovery, the benefits are not yet filtering down to people living on the breadline. Life is not likely to get easier for the poorest anytime soon which is why finding innovative ways to help people living on low-incomes is urgent.

Martin Lewis says: "The hope is that this scheme will provide a financial equivalent of ‘give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime’. I’ve been campaigning for financial education in schools for years, finally that starts on the curriculum in September, but that still leaves great swathes of our society, especially some of the most needy struggling with even the basics of money management.

"Those who go to foodbanks are already open to asking for help. They’ve rightly prioritised the urgent need to feed themselves and their children. Yet if we can intervene at that point to start to get their financial lives back on track, by approachable, non-judgemental help, it will hopefully cut down the number of return visits."

The Trussell Trust runs a network of over 400 foodbanks across the UK that give emergency food and support to people in crisis and, if the pilot is successful, this could be rolled out across the UK in 2015/16.

The pilot scheme will initially be launched in six Trussell Trust foodbanks in different regions of the UK, aiming to improve the financial standing of foodbank users and to improve their household budgetary skills. The scheme will partner with national UK debt charities to offer professional debt counselling services for up to 20 hours a week per centre in each region.

The pilot will start in September 2014.

Related past blogs

Do your kids go to an academy school? I’ve a job for you

Do your kids go to an academy school? I've a job for you

Do your kids go to an academy school? I've a job for you

Yesterday, it was announced that financial education is to become part of the compulsory national curriculum within citizenship and maths. This is fantastic news, but it only binds maintained schools, which are 50% of secondary schools. Academy schools are free to opt out.

While many academies do still follow the national curriculum, it is very important parents ensure headteachers are aware they want financial education to happen (either via the curriculum route or perhaps even more than that). This is especially crucial at a time of curriculum change, such as we’re having now, so they can get it going ASAP.

You can find more detail about what to ask for in the Financial education to be added to the the national curriculum MSE News story. You could even just link to that in an email, and ask if it’ll be happening at your child’s school.

This one is over to you. Let me know, via the details below, what help we can give for you doing this. (Teaching resources are available via Pfeg). Of course wonderfully, some academy schools are already teaching financial ed – bravo to those that are.

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to Financial Education tip off

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to Financial Education tip off

Not even a mention, Mr Gove? Plus breaking the quiet carriage rules due to financial education tip off

I still can’t quite believe it. Financial education is going to be part of the national curriculum (see the MSE News story). I found out sitting on a London to Manchester train at 9.58am yesterday – 90 minutes before it happened.

I must admit I broke the quiet carriage rules with an involuntary "yessss", to receive a suitably stern look from the Spanish lady sitting opposite me.

The Department for Education gave me a call to say there’d be an announcement in the House at 11.30am (partly as it was my e-petition last year that forced the debate). 

I kept calm and asked for a statement to see what it really was. I was expecting a damp squib mention. Yet what I saw was getting on for a huge chunk of what we asked for in the APPG report (which, I’m very proud that MSE funded – not what was said, but paying for the facilities). It was at this point I yessssed.

Financial education is to be a core part of citizenship, which crucially is a compulsory part of the national curriculum – therefore every maintained school must teach it. Exactly what we’ve wanted.

Not even a mention, Mr Gove?

By the time I arrived at Radio 5 Live before my regular Thursday Consumer Panel slot, the Education Secretary Michael Gove was making his announcement in the Commons – it was all about the much-vaunted change of mind over GCSE scrapping. 

Sadly he didn’t even mention financial education. While the fact it’s happening at all is wonderful and the most important thing; it’s slightly frustrating for those of us who’ve been campaigning for so long that the change came without even a Hansard footnote. (Strange really – it’s a no-brainer, a hugely popular change – I’m surprised he didn’t lead with it and take political capital from it.)

On the back of the announcement, sadly the media coverage has been less than I’d hoped (barring me pushing to get it out) – nothing on any main TV news bulletin, a shame for the 118,000 who signed the petition and made this happen.

So we made a quick call back to the Department to check it hadn’t changed its decision, then press-released it – to try to start the news flow.  

This will change maths too

It was while on air at Radio 5 that I found out we’d also made a dent in Maths too – which had been part of our two-pronged focus.

Now, for the first time, the term "financial mathematics" appears in key stages 3 and 4 of the maths curriculum. 

This means there is genuine recognition of the need for people to be able to calculate APRs and percentages and understand them (exactly what we pushed Education Minister Liz Truss for last week – thank you for listening).

I think that will not only be a boon for financial education, but also for maths itself – helping out with basic numerical problems. While theoretical maths puts many off the subject, talk to them about the cash in their pockets and they get it. So taught well, I hope this will make maths more appealing.

Of course this is still at proposal stage, and we’ll be submitting to that, but we’re pretty confident that now it’s in the proposal, it’ll be tough to get it out.

An important PS
. In my blog a few weeks ago on What’s happening to my £10m donation? I wrote that I wanted a chunk of the money to go towards helping financial education. This announcement has changed the game somewhat, so we need to act quicker. 

As such, I’m going to donate £100,000 of it to the charity Pfeg. I haven’t told the chief exec of the charity yet, as I know she’ll read this blog and the naughty boy in me quite likes the idea of her finding out, as she reads a PS.

Student loans will be interest free for many 2012 starters

Student loans will be interest free for many 2012 starters

Student loans will be interest free for many 2012 starters


On principle I hate the fact 2012 uni starters aren’t just going to pay for their education, but for financing it too. For the first time students will be charged ‘real’ interest rates.  This may seem a contradictory start to a blog promising interest free loans, but that’s because, yet again with student finance, principle and practice diverge.

On Monday university application figures are released. Almost certainly they’ll have dropped (though not all will be due to fee fear). One of parents’ key concerns is the interest cost. Yet in reality, a sizeable chunk of graduates in lower-earning professions will not only find their interest set near the rate of inflation, but won’t ever actually need to repay that interest.

Unless you know the system, to make this easier to understand, you’ll find it helps if you first read my detailed Student Loans 2012 myth busting guide. But even if you don’t, you should still get a rough idea from what’s below.

Student loan interest rates

For current graduates the maximum interest rate possible is the RPI measure of inflation, though the rate for most students is much lower than that (see the Should I repay my student loan? guide for details of who pays what).

That means there’s no ‘real’ cost to these loans. If you borrow an amount of cash that’d buy "a shopping trolley’s worth of goods", you repay whatever it costs to buy the same "shopping trolley’s worth of goods" in the future. In other words, borrowing the cash doesn’t alter your spending power.

The 2012 system works rather differently…

  • While studying: Interest = RPI inflation + 3% until the April after graduation when it changes to…
  • Graduates earning under £21,000: Interest = RPI inflation.
  • Graduates earning £21,000 – £41,000: Interest = Rises from RPI to RPI + 3%
  • Graduates earning £41,000+: Interest = RPI + 3%.

So the rate is certainly much higher – and as I said earlier – personally I object to ‘real’ rates on principle, yet…

The reality is some students won’t pay it

The amount 2012 starters will repay is dependent primarily on their graduate earnings – for 30 years you pay 9% of everything earned above a threshold which will be £21,000 at first, but will rise with average earnings after. That is far more important for many than the amount they originally borrow.

What that means is many graduates won’t repay what they owe in full before the debt wipes out after 30 years and, at a lower level of earnings, many won’t ever repay what they originally borrowed. I’ve plugged these numbers into www.studentfinancecalc.com where you can work out how much you’ll repay (you can see the mathematical assumptions used to calculate this there too).

Starting salary (then annually rises by RPI =3%)

3 years worth of fees and maintenance loans

Total repayment
(at today’s prices)

Real interest cost (ie, in today’s prices)

£15,000

£43,500

£0

-£43,500

£20,000

£43,500

£7,200

-£36,300

£25,000

£43,500

£24,900

-£18,600

£30,000

£43,500

£43,000

-£500

£40,000

£43,500

£79,000

£33,500

£50,000

£43,500

£67,400

£23,900

As you can see in this table, the only people who pay interest are those on starting salaries above £30,000. Though take the actual numbers with a pinch of salt as the assumptions make a big difference – it’s more the general point that the interest rate only actually impacts on the repayments of some.

Also remember the table assumes people are working for the whole 30 years before the debt wipes – many (especially women) will take some time off during that period, which reduces repayments further.

Though of course for higher earners, it shows the interest can be huge too.

If you’re wondering why those at £50,000 pay less than at £40,000, it’s simply because as they earn more, they repay more quickly, so less interest accrues.

Now of course that doesn’t make it more favourable than the current system – where many more repay all that’s borrowed, because of course the price has shifted higher – but it does mean the fear of the interest at least does need to be mitigated for many students.

Related blogs/ guides


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The financial education debate – in full

The financial education debate – in full

The financial education debate – in full

Below is a cut and paste of the Hansard transcript of last week’s debate (source: Parliament). For those wanting a quick summary see my financial education debate – who said what blog, as the transcript below came from five hours of debate.

You can also watch a video of the session.

Read the full transcript