Select Committee on Social Security Minutes of Evidence

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 report.[6]

  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.

Elaine Kempson

8 February 2001

6   Not printed. Back

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