Supplementary memorandum submitted by
Elaine Kempson (SF 41A)
I promised to send some additional material
to you on:
Insurance with rent schemes run by
local authorities and RSLs to provide affordable home contents
insurance to the types of people who would be eligible to apply
to the social fund.
Mutual savings and loans schemes
run by ethnic minority communities.
As I said yesterday, insurance with rent schemes
are now quite widely available and their provision is currently
being promoted by the Treasury along with the Association of British
Insurers and the Housing Corporation. I have enclosed a copy of
a summary of our report C Whyley, J McCormick and E Kempson, Paying
for peace of mind: access to home contents insurance for low-income
households Policy Studies Institute 1998 and the manuscript from
an article "Insured with rent schemes" published in
Insurance Trends 23 (1999) pp1-13, which up-dates the earlier
As regards, ethnic minority rotating savings
and loans schemes, the situation is more complex than emerged
during yesterday's hearing. Most (but not all) minority ethnic
groups have a variant on the rotating savings and loans scheme.
But there are some subtle differences between them. If we take
the Muslim communities first, where members have a strong incentive
to belong because of Islamic teaching. The largest-scale schemes
are those run by Pakistani communities where there are some better-off
members so that the sum of money available can be quite large.
Consequently, use of the Social Fund is much lower by Pakistanis.
Other Muslim communities (such as Somalis) have similar schemes,
but in the absence of better-off members the sums of money saved
each week are small. So here we see the Social Fund being used
alongside them. Yet others (Bangladeshis being the main example)
have no rotating savings and loans schemes and so use of the Social
Fund is higher still. There are also schemes within non-Muslim
communities (African and African Caribbean in particular) but
there tend to be like the Somali schemes as people who are better-off
migrate to mainstream commercial credit. To expand on this I have
enclosed a copy of the pages dealing with such schemes, taken
from E Kempson, Saving in ethnic minority households. Personal
Investment Authority, 1998.
I hope that this is helpful. The more I think
about the whole issue of the Social Fund, with the benefit of
yesterday's hindsight, the more I realise that it is almost impossible
to separate it from the plethora of initiatives designed to make
it easier for the poorest people to make ends meet. I really look
forward to seeing your report.
8 February 2001
6 Not printed. Back