Our latest MyBnker blog is from our CEO Guy Rigden who examines the implications of the Queens Speech 2016 on the financial wellbeing of young people.
“This week’s Queens Speech is very much welcomed by MyBnk and could be a big step forward in the forging of a financially literate and enterprise driven generation.
Long expected items were confirmed regarding the Money Advice Service and new minimum wage levels for 16-24 year olds, and commitments made on young people in care and incentives to save. Much of the programme for government is helping to shape an environment that improves the life chances of young people, though there are, as always some concerns.
Young savers torn between saving for a home or a pension were offered help to do both in the Lifetime Savings Bill. A cash bonus worth up to £1,000 a year will be added to every £4,000 saved into a Lifetime Isa.
We are pleased that it will be available to those aged 18 years and up, unlike other schemes such as the new National Living Wage, where young adults have to wait until they are 25. Furthermore the scheme specifically benefits those on low incomes who would not receive a tax benefit when saving through a pensions scheme. The ‘locked in’ savings feature penalises those taking cash out before they are 60 or wish to buy a home, but should support more beneficial, long term goals.
Almost half of UK adults have less than £500 set aside for emergencies. The new Help to Save initiative allows young people on Universal Credit to put aside £50 a month and have it matched by the state. For many, this has the potential to be a lifeline and MyBnk welcomes any incentive to save. For these new schemes to be successful, we still need to ensure young people know how and are motivated to save and understand the reasons for and consequences of financial decisions.
A new “Care Leavers Covenant” will make sure local authorities set out clearly the entitlements for care leavers – including housing, jobs and healthcare. This should include a ‘right to effective financial education’. We have been helping thousands of young people in Leaving Care Units through our award winning Money Works programme. An upcoming Children’s Society report, assisted by MyBnk, will reveal the challenges local authorities face in helping young people make a sustainable transition to independent living. There are also similarities here regarding our work for vulnerable young people and the new prison reform agenda.
The merging of the Pension Advisory Service, Pension Wise and Money Advice Service into a single body was confirmed. This is very welcome but we question why an additional ‘new money guidance body’ is required; this important function could be incorporated into the merged body. Saying that, transitioning to commissioning services and backing ‘what works’ could see more young people receiving effective financial education services.
We are also pleased at the expansion of the National Citizens Service, where MyBnk provides workshops through partners such as the Big Creative. This summer we will be out in fields and youth clubs bringing money, tax and government spending to life through our revamped Sporty Money Twist programme.
On the academisation front, we acknowledge the drive for higher standards, though note that this means more secondary level outfits can to opt out of the national curriculum, where financial education is statutory up to GCSE level.
To maximise the impact of these proposals, financial literacy for young people needs to have a strong presence. MyBnk will ensure its role and purpose is centrally placed in upcoming consultations and inquiries.”
Guy Rigden, CEO MyBnk.