PBR: £20m funding boost for Money Guidance

Chancellor Alistair Darling has announced £20m in funding for the national roll-out of the Money Guidance scheme.

The Government and the FSA will put each put in 50% to cover the cost of the service in 2010-11, according to documentation released with the PBR.

The Report also says the Government will then commit 25%, up to £100m, from funds released through the Dormant Accounts Scheme over several years to support the continuation of Money Guidance.

Today's announcement marks the strongest indication yet of the Government's long-term commitment to the scheme following a successful pilot programme earlier this year.

In Spring 2010 the service will be rolled out across the UK, with the aim of providing free financial advice to one million people by March 2011.

The initial pathfinder pilot is expected to have reached half a million people by its close next April at a cost of £12m.

Francis McGee, head of corporate affairs at Aegon, says: "It is vital Money Guidance gets stable, predictable and adequate funding.

"This is a very welcome further announcement from the Government showing its commitment to getting the service off to the best possible start."

Aegon chief executive Otto Thoresen, who devised the scheme, said last month he was delighted the Government was pressing ahead with a national roll-out.

"I based my blueprint on the fundamental insight that an independent source of guidance and information on money matters would fill a big gap for people in how to get help about all aspects of their finances," he said.

"The Pathfinders the Government and FSA have run put that blueprint to the test in the harshest financial climate imaginable, and they have clearly passed the test."

However, Anthony Coyte, head of investment steering group, AWD Chase de Vere says the UK would get a better education via speedy implementation of auto-enrollment than can ever be achieved through Money Guidance.

"Of course it is a good idea to understand financial implications resulting from various behaviours but, in the context of financial education, where is the logic in delaying Personal Accounts?

"Personal Accounts, rightly criticised by many are not perfect, but part of the logic of auto enrolment was to make private sector employees understand that in today's modern world, when it comes to a decent pension, they are largely on their own.

"Auto enrolment is an education that is largely compulsory and will reach a wider audience than Money Guidance ever will.

"In the PBR education is perhaps not the objective. Hitting employers with an addition pension bill and larger NI contribution is too much to bear politically and arguably will stall growth. The easy option is to raise NI and throw a fig leaf £20m at educating a small percentage of the population."