Financial Inclusion Commission response to Autumn Statement 2023

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The Chancellor’s Autumn Statement on 22 November 2023 contained some significant announcements for personal finances. However, the Financial Inclusion Commission is disappointed that the statement did not go further in promoting greater fairness and accessibility for personal finances.

The Commission welcomes the publication of the Future of Payments Review, released alongside the Autumn Statement. The report, which the Commission was pleased to have contributed to, provides a number of recommendations to help successfully deliver a world leading, and timely, National Vision and Strategy for Payments.

In particular, the Commission approves of the announcement that the Government plans to investigate whether digital exclusion leads to financial exclusion and will consider how digitally excluded individuals can be given access to the best financial products and the most convenient payment methods. The Commission urges the Government to act on the recommendations of the Review to leverage digital solutions to tackle financial exclusion.

The Chancellor’s announcement of a new consultation for a ‘pot for life’ pensions model also appears to be a step in the right direction for making pension savings more accessible. By consolidating pension pots, savers will have a clearer and more comprehensive picture of where their savings stand and will make saving for retirement easier to track.

However, it is critical that any consultation on the ‘one pot’ pension model gives serious thought to the implementation of the scheme, given the major ‘rewiring’ the pensions industry and employers would experience. It is important that the Government ensures savers do not get trapped in underperforming schemes and that compliance regimes, ensuring pension schemes are acceptable, are also strengthened.

While the Chancellor’s proposed pension reforms, the Mansion House proposals, intended to encourage pension funds to invest in more ‘productive’ assets is commendable, many of these assets – including unlisted – are inevitably riskier.This could have negative ramifications for savers, especially those with smaller pension pots who can ill-afford to take risks. High risk investments will also mean higher fees, which for those with small pensions, will seem unattractive.   

The Commission is concerned that the changes to the Workplace Capability Assessment (WCA), introducing tougher sanctions and mandatory work placements for those receiving Universal Credit, will mean many vulnerable people facing debt, or in precarious financial circumstances, will be forced into work which they may struggle to hold down, or risk having their benefits cut. The most effective way in which the Chancellor could help people into sustainable employment would be to promote increased financial inclusion and capability.

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