Best Bits: Martin’s “Money-festo” Tell Us Special.

0:00BBC Sounds. Music, radio, podcasts. Hello, I'm Martin Lewis and this is the cunningly named The Martin Lewis Podcast. I do wonder what that's going to be about. Now, we decided that what you really wanted during the summer was a whole host of best of podcasts. Subtext, I'm taking a few weeks off and we didn't want to leave you without a podcast, so we've decided to pick a few of the best bits to show you while I'm taking a little bit of a break and resting these vocal cords. When you talk as quickly as I do, that's quite important. This one's from before the election. Nihal and I were joined by policy guru Polly McKenzie.

0:34to look at some of your suggested ideas to improve the country and whether they could work in practice or not. We called it our Money Festo. Play the theme tune.

1:02Welcome to a Tellers special. It's called The Money Festo. So what I wanted to know is if you could change a law or regulation to improve consumer finance or personal finance products or that the way the system operates, what would it be? And I have someone to help me, which I'm very excited about, not something I often do. Joining me is Polly McKenzie, who used to be head of policy for the Lib Dems and was then embedded in number 10 during the coalition government. She's a proper policy wonk. And then what I would say the highlight of her career definitely was when she was the first chief executive of the money and mental health policy institute charity that i set up and chair so she got to work with me i mean lucky lucky lucky person that polly is then she went on to head up the cross-party think tank demos polly nihil i'm going to scare you by what i say now polly is the person who i feel intimidated by her mega brain okay she i i am always polly is are you with us polly hopefully i'm here i'm here Did you like the build-up?

2:06So it's super awkward for you, Polly, to hear all of that, I can imagine. I think it's nice. And I've known Polly, and she's great. And what I really wanted help with is I can talk about the good and bad, but why some of these things aren't made into law, why they're not regulations, how difficult it would be. And I'm hoping Polly will bring her immense expertise to that. Great to have you here, Polly. All right, well, we have questions, don't we, Martin? Lots and lots of questions. Well, it's suggestions, yes. These are the suggestions from people for what should go in our money festo. What should we be campaigning on going forward?

2:40And I know you've got lots of them. Oh, so many of them. Let's start with Purple Chewbacca on social media. For companies to have to offer the ability to cancel a contract subscription via the same mediums that you can sign up with. If I can sign up to a phone contract online, I shouldn't have to phone them and have to go round it with umpteen people to cancel. Look, I mean, it makes absolute logical sense. If you can sign up online, you should be able to cancel online. If you can sign up on the phone, you should be able to cancel on the phone. If you can sign up by post, you should be able to cancel by post.

3:14If you can sign up in person, you should be able to cancel in person. The fact that you can't is deliberately often put in place to make it bureaucratically more difficult to cancel. And that should not exist. I think you've a second one, haven't you, that's on a similar process? Yeah, there's a second part of it. Matt says, mandate a clear link to the cancellation procedure on the landing page of any recurring payment service, phone contracts, broadband, etc. Too many companies try to make it so difficult that you give up and keep paying. I mean, again, these are both no-brainers. Now, what's interesting is in the Digital Markets Competition on Consumer Bill, which is in the final stages of Parliament, there is a provision that would mean if you enter into a contract online, you should be able to cancel online.

3:57So it doesn't go to all the different accessibility levels, but it does look at online and it says online cancellation processes should be easy to find. But what I wanted to, I mean, so look, clearly this is absolutely right. I can't see many consumers who are going to disagree with this. But Polly, I wanted to know from you, why does it take this long for something that's bleeding obviously sensible to actually get into a bill and it's still not in there now? Why does nobody spot these things earlier? Well, I think people do spot them. I mean, obviously, consumers spot them. Actually, I'm sure you remember, Martin, we did some work on this at the Money Mental Health Policy Institute, because it's clear that people with mental health problems are even more likely to struggle with either the faff or the stress or the difficulty of finding the thing, of making the phone call, of being able to afford the phone call.

4:46and actually I remember that when back when Theresa May was the prime minister we did end up talking to the business department about this and it found its way into a draft consumer's green paper and the consumer's green paper then got delayed and then it got delayed and then eventually multiple years later we're at the point where because the idea was then held some civil servant junior sort of person it's sort of made its way up to the surface to get into a piece of legislation but it's really hard to get legislation in front of the house of commons um especially on sensible things because sensible things are not exciting news breaking kind of they don't shift the political needle i always think this is fascinating politicians politicians right now look and people i get very good feedback ratings we know that on the type of stuff i do because i look at practical small issues that can actually quickly make an impact on people's lives politicians seem to be too keen to deal with legacy rather than actually doing the things they really could make a difference on like this and you could do it quite quickly it doesn't make sense to me that they're not a little bit more savvy at realizing some of this stuff is what really counts to people some are to be fair there are lots of politicians that try very hard to get these things through but i think polly you put the system yeah they don't get it through but polly points to the issue at hand which is well politics uh gets in the way and media cycles get in the way polly can i also ask you a question though based on this which is that i think often when you speak to people uh they sense that a lot of this doesn't happen just simply because of the amount of lobbying that's done by businesses that's that's definitely a part of it you know and and we've seen around uh the question of prevention of fraud and deceit online you know banks or big internet providers like they really they have put shed loads of money into lobbying and influence but it's i i don't want people to think that there's a sort of big conspiracy really because actually um you will often find that something as soon as you say that that means everyone will believe there's a big conspiracy no there is too low a level of competence for there to be a conspiracy.

7:01Wow. So, I agree. I always find, I have to say, totally agree when people say it's conspiracy, and I'm like, people aren't clever enough to do these conspiracies. It's generally incompetence over conspiracy. Most times you see what's going on. Most times people suggest it. It's incompetence. Big business sometimes deliberately uses confusion marketing, but in the political system it's so difficult and diffuse. I agree. It tends to be lack of competence more than anything else. Sorry, Polly. Go on. Back to your point. I mean, when you're trying to set a Queen's speech or no, it's a King's speech these days.

7:33It feels like something weird has happened. But you have a limited number of days in Parliament. Most of Parliament is taken up with, you know, prime minister's questions and all sorts of kind of finagling. So there's not that much time around for legislation. And you will get all of the departments put forward their ideas for sensible things, taxi regulation or an update to airport regulation or consumer stuff. And it just it gets crowded out by, oh, we need to do another another law on immigration or another thing to declare some new thing to be illegal. I used to work on home office policy and, you know, that they'd usually be two or three home office bills every single session in parliament.

8:15And people just think of consumer policy as sort of niche, which is completely stupid because it's the exact opposite. It's the one thing that affects everyone. OK, so we've now lost Nihal. We're into podcast-only territory. It's me and Polly taking the calls and reading through your MoneyFesto ideas. We have a caller on the line, Ruth. Hello, Ruth. Hello, Martin. Hi. So what is your idea to go into the MoneyFesto? My idea is to remove the earnings restriction on carers' allowance. OK. Tell me more. So at the moment, if I as a carer for my disabled husband can earn£8.90 per week caring for him because he's eligible for personal independence payments.

9:07But I am capped if I want to work as earning no more than£151 a week. Otherwise, I lose my carer's allowance, which equates to about 13 hours at minimum wage. So there's not going to be a lot of employers who actually want to offer such little hours. The administration involved the inflexibility. I myself had a part-time job in claimed carers, and I was constantly being asked if I could do overtime or extra shifts. I said, no, I can't because it would affect my carer's allowance. and it's been in the news as well quite a lot. And it's a cliff edge, isn't it, Ruth? So if you go over it, you lose everything.

9:55And the scandal recently is there have been people who are being asked for back payments on this who might have only earned a couple of quid over but being asked for thousands of pounds back because there were a couple of quid over and they didn't know that because minimum wage had changed they'd gone over the threshold. I mean, the idea... So there's a couple of separate ideas here. First of all, remove the earnings restrictions. That's a bit more difficult because it's meant to be means tested. But I think the idea it's a cliff edge so that instantly you go over the earnings threshold, you lose everything rather than it tapering down.

10:28That seems very unfair. I mean, Polly, carers policy is a massive one. It's not the only... Debs Pollard said pay unpaid carers the minimum wage. Many have given up their jobs to carry out a full-time caring role, which is often 24-7 and are saving the government billions. They are saving the government billions. So why is so little done to help carers? It's heartbreaking. And you're right, the scandals that have been around those overpayments are just unbearable almost to read. This is a really old benefit and it's predicated on just a different model, really, of what life is like and a different understanding of what a carer might do.

11:10the idea of the earnings restriction is that you have to be caring for 35 hours a week so which is equivalent to a full-time job so a sort of sense that you couldn't possibly be doing more than a little hobby job on the side or you're not really a full-time carer actually what lots of carers will tell you is and whether they're working or claiming carers allowance is that they really are doing this full-time job on top of a full-time job people may be caring 70 hours a week because you know looking after an elderly relative a disabled child a disabled adult can be so intense the problem here is is i mean it's just a money one because it is so many billions of pounds are being saved for the state but the state hasn't got the billions of pounds to pay them out it would be billions to really deal with this situation for carers because there There are so many people who are doing that caring on top of full time jobs.

12:09And suddenly you basically have to extend carers allowance to to those people. And no one really wants to face up to the cost of that, just as they don't want to face up to the costs of formal social care either. It's one of the biggest scandals we have as a country. So, yeah, Deb's Pollard's suggestion to make care pay carers the minimum wage. Well, just to put that in context, carers allowance is£81.90 a week. someone full-time saying 35 hours on minimum wage would be roughly£400 a week. So it's a five-fold increase to the state. What about the idea, though? I mean, let me ask Ruth first. If we push back and we said we're trying to be responsible here, we're trying to do what's necessary, and we said, all right, we won't get rid of the earnings allowance, but we will stop it being a cliff edge so it will be tapered down.

12:57And so, you know, let's say for every pound above the£135 a week you earn, you would lose 20p of carer's allowance. So it's a five to one type taper. Would that help or is that just not enough as well? I think that would be a much fairer system. And I think that's quite similar to the tax credit system where it's not an all or nothing. I mean, obviously, everybody wants to encourage people to go to work. You know, you've got the cost may be offset by the increasing taxes paid by these carers, being able to work more hours, the benefits to them for their health and well-being, as well as their financial status in the current cost of living crisis.

13:50You know, saving, I think it's£162 billion a year, unpaid carers aren't being recognised and supported effectively. play. No, I mean, carers are absolutely the backbone of this country, not recognised enough. I mean, just a couple of tips for me before I go back to Polly. Obviously, if you're caring less than 35 hours a week, there's carer's credit that can boost your national insurance to help people getting a state pension. Also, if you're caring for someone, it's worth looking at whether they're entitled to attendance allowance, which is obviously not a payment to the carer, but likely if somebody needs that care, they may qualify for attendance allowance, which is, you know, It's quite a meaty payment of up to£5 ,000 a year, and it's not means tested, which is very helpful.

14:39So that's worth looking at too. Polly, where are you on the tapering idea, if we just tweaked it to tapering rather than the cliffhedge? I mean, every other benefit works like this, and it seems to me just an essential improvement. And I would hope that you would claw some of the savings, some of the cost back, because people would work more. And we know that one of the biggest problems we're facing at the moment is just the number of people, particularly older people, who are falling out of the labour market. And that means they're not paying taxes, they're not contributing to the economy. And often, particularly for people over 50, it's because of caring.

15:17And if you could just make it, it should always be sensible to take the overtime, right? Like, if people are turning down overtime because it will cost them money to work harder, that's just, that's bad for them, but it's also bad for the exchequer. We have similar issues on Universal Credit as well. Ruth, thank you so much for giving us a call. We appreciate it. No problem. Thank you for everything you do, Martin. That's very kind of you. Thank you. I'm going to read out one from Kristen Supermare. Stop a free trial becoming a paid subscription automatically if you forget to cancel. You should have to actively sign up after the free trial ends.

15:55She says, I always try to set myself reminders to cancel, but sometimes life gets in the way. I thought this was quite interesting because I understand the frustration, but I think it would probably kill all free trials. Instead, I would move towards that they have to remind you. And again, in the Digital Markets Competition on Consumer Bill, which is in its final stages in Parliament, there is a provision included that would require traders to send a final reminder before they take a first renewal payment or a first payment in the case of this. In the early stages of the bill Labour put forward a proposal from memory that consumers could opt out of their subscription renewing at the end of a contract period but it was voted down.

16:36So it's certainly one being thought about and that we're getting more and more of these subscription services and the law is not yet fully in place to manage them. Polly have you ever looked at this? Yeah, it's one of those things where the more vulnerable you are, the more likely you are to get sucked into these things and end up with just huge amounts of cost. Or, you know, again, money and mental health. We looked at some, you know, some incredibly difficult stories of people who'd ended up with, you know, like hundreds of pounds worth of credits that they could supposedly cash in for fitness wear.

17:14They just didn't want, couldn't get a refund. And so it's that sense of what happens is the people who are most likely to struggle with the unfairness that happens. All these bills are people who are more likely to be old or vulnerable or with a mental health problem, with learning disabilities. And I think that what we probably need is particular protections for people with those vulnerabilities who might be able to have more rights to actually claim back when they've got sucked into it. because the alternative, as you say, of just eliminating the sort of the opt out option is I think free trials would go.

17:51And that that does limit consumer choice and consumer opportunity. And I suppose when you try things out, people have to understand that in a way there's a cross subsidy going on here. For all the people who take the free trial and then cancel as a way of getting a getting a freebie on top, because that incentivizes firms to offer those type of what incentivizes firms to offer those type of offerings is the fact that other people will forget and they will pay. And yes, there is probably a fact that it is the more vulnerable who are those who will forget and pay and are therefore cross-subsidising those who get the free trials.

18:21So if we tighten up the rules on this, which we probably should, at least with a notification-type ruling, then it will probably diminish the number of free trials and some people will be annoyed by that. But then again, it's a protective law and we get that friction quite a lot, don't we? I mean, do you, the big one that's talked about all the time is about the loyalty penalty. If you end the loyalty penalty, if you end the fact that new customers get cheaper deals than existing customers, as has sort of happened within car and home insurance, then by definition, those who ride and ramp the market to get the cheapest deals each time will be losing out in order to help those who tend not to be as active in the marketplace and getting the cheapest deals.

19:05And there is that trade-off, isn't there? I mean, it's in every area of consumer policy, you know, bank accounts. Should people who end up paying lots of overdraft fees be subsidizing me to have a free bank account? Same with utilities. It's across everything. I think it is better to have choice and competition in consumer markets because the alternative is worse, really. If there's just only one place to go, you end up with just shoddy service. But you have to then build in those protections for the people who are most likely to be screwed over. So there is a subsidy, but it's not an exploitative subsidy.

19:44Next one, Jennifer Howes, make childcare tax deductible. Now, you mentioned childcare earlier in the show, Polly. I think it's worth me saying there is the scheme called tax free childcare, which enables parents to save towards childcare. And then the state will add 20 percent on top. My biggest problem with that scheme is the name. Tax-free childcare is both unattractive and is an inaccurate description and puts people off, which is one of the reasons many people haven't signed up to it who should be signing up to it. If I were in charge, I would call it childcare help to pay, which I think is a much more sensible name.

20:21Do you think that was done for political reasons, tax-free childcare, Polly? Do you know? Oh, totally. So I was in the room when we agreed this policy, actually. And it was really fascinating. And so David Cameron wanted tax free childcare. The name. As a concept, actually, but was persuaded for the reasons we were talking about earlier that actually it's kind of unfair because higher earning taxpayers get more of a subsidy than lower earning taxpayers and they need it less. And of course, if you're earning very little, you may even not be able to get the tax off because you aren't paying any tax.

21:03it was really fascinating there was this moment right when he said why do we still have child care tax credits which pay you know 70 80 percent of child care costs and this new thing's only going to pay 20 percent and it was only in that moment that he realized that that's because if you're earning 10 pounds an hour not that you can many more but still child care costs of five pounds an hour or a bigger chunk of your hourly pay than if you're earning£20,£30 an hour. And so to make work pay, you have to pay more for the lowest earning people. That's why we do have a different system in universal credit than we do for everyone else.

21:47Though, again, also, this is one of those ones with a perverse threshold. If you earn£100 ,001, you lose£6 ,000 of this tax-free childcare benefit. So all of this is just, it's like stupid policymaking. Although on that£100 ,000, that is also part of the consultation of childcare benefit to move that to a dual earners threshold, which may be looked at because, again, that's a single earner over£100 ,000. So you do have that system where two neighbours, a couple living in a house both earning£95 ,000 could get it and their neighbour where one earns£100 ,000 and one earns nothing couldn't get it and it's another cliffhanger.

22:25So it's fascinating for me. So I'm guessing that what Cameron wanted to do is he had in his head, we want tax-free childcare. We're not doing tax-free childcare, but we'll call it tax-free childcare anyway. Basically, yeah. And you've got multiple different childcare systems all bolted together. You've got free hours, you've got tax credits or universal credit, you've got tax-free childcare and actually still some legacy vouchers of the childcare vouchers that came before, because no one ever really wants the losers that come from tidying up the whole system. So you end up with old systems grandfathered in, protected, and then the new systems led on top.

23:09And if you are a consumer or a mum or a dad trying to understand this, you know, well, you end up having to spend a lot of time getting consumer advice from people like you to figure out what to do. Well, just to the listeners, don't tell anybody listening but on my list of campaigns to do in the next six months is to get the name of tax-free child care changed because I think it's incredibly unhelpful and puts people off and my working title is child care help to pay but if you have any better ideas I would welcome them I don't think it's the best idea but what do you think Polly child care help to pay better than tax-free child care yeah I like it um I'm I'm a policy geek though so I mostly want to tidy up the the cliff edges and the mess in the system, you can be in charge of the name.

23:52Well, the name is more important. It isn't just sophistry. I mean, the fact one of you tell people tax-free childcare and they don't understand it. Tax-free childcare does not exactly say you have to pay in a savings account and we will add some on top and then use that to pay childcare out. So it doesn't give you a descriptor of what it does that means people are put off it and don't understand what they're talking about. Now, another caller. It's very exciting to be doing call us in the podcast only bit. Harry's on the line. Hello, Harry. Hi, I'm asking you, OK. Good, thank you. What's your money-festo suggestion?

24:25So, personally, I think that kids aren't educated properly at schools around personal finances and how to make their money work for them. Potentially, they're given the transferable skills, sort of through maths and maybe business studies, but not quite given them in a practical sense. So some kind of educational reform around the curriculum, I think would be amazing. So, well, I'm very averse on this because I led the campaign to get financial education in the national curriculum in 2014. And I always say now it was a Pyrrhic victory. We thought we'd won at the time, but in some ways we lost.

24:58Because what happened is it was put on the national curriculum, which meant many of the people who'd been funding financial education when it was extracurricular pulled their funding out. And pretty soon after it got on the national curriculum, This is in England, senior schools. Pretty soon after it got on the curriculum, the rules were changed so that we then had free schools and academy schools that didn't have to follow the national curriculum, which actually means currently less than 50 % of schools follow the national curriculum. And the teaching of finance education, even though it's split across maths and citizenship classes, is still pretty poor in this country.

25:32I absolutely I mean I've campaigned on it and some people know I put 360 ,000 free financial education textbooks in schools you can download it from the charity the young money website you can download a copy to teach your teenagers about money and that's curriculum mapped and we have a version for each of the UK nations curriculums so I'm constantly passionate about it and constantly frustrated about the fact that it still is not done properly and when you poll parents and this is my setup for politics When you poll parents on this, about 98 % agree. So, Polly, why are we so bad at doing something that even when I talk to politicians, they always agree with me?

26:12It's a complete no-brainer that we do this right across the population. You know, the huge majority of people think we should do it, but we still don't do it properly. What's wrong with the system that means we don't do it properly? well there's one good argument um which is that most campaigns ask for things to be put in the national curriculum you know it's almost a sort of go-to thing it's you know we should have um cpr in the national curriculum and we should have swimming in the national curriculum when you're thinking about how to fix a problem that the country faces you people go oh let's teach it in schools and it's a reasonable thing for a teacher or head teacher's perspective it's like well what would you like me to take out in order to make space because there's only a limited number of hours in the day things that we can do it's a question of prioritization um i think we should have a national curriculum i think it should include financial education but it does need to be part of a more a more slimmed down and coherent kind of focused set of things that we're teaching we can't just expect teachers to solve every social problem partly because if you want to solve it for everyone it's a really slow process to only teach it in schools right like actually there's plenty of people in their 40s and 50s and 80s who need help with financial education um but the weird the reason we you ended up with that pyrrhic victory is because again so often one individual policy will get sort of subsumed by a different set of sort of ideological moves at that time during the coalition and and moving on from then that attempt to bring in academization and free schools was part of a movement to basically take away the national curriculum and it was considered more important to do that than it was to actually sort out what was in the national curriculum and I remember actually talking to Michael Gove about it at the time and saying he was very really focused on getting a linear narrative version of English history into the curriculum as well, even though with his other hand, he was trying to abolish the compulsion to teach the national curriculum.

28:22And I said, why, why, why? And he just needed the trust of those people leading the free schools and academies movement. And he said, they will not believe me if I say it will be a slimmed down national curriculum. And so that just, you know, keeping those people on board was more important. Well, which is why when we were originally negotiating where it went in the curriculum on the back of what you said, while it would have been lovely to say, let's have personal finance lessons, of course, that would be great. We worked very hard on where it fit in the curriculum. And I remember sitting with Liz Truss when she was working in the education ministry, and I sat and negotiated with Liz Truss exactly what would be enough for me to be able to say, and for me to agree to say, you have given us financial education as campaigning for.

29:08And the original offer wasn't good enough. And I said, if you do that, I'm just going to say you haven't done it. And what got it over the line for me is that it had to be taught in maths and it had to be with contemporaneous examples. So now, interestingly, all the data that we had when we were campaigning for financial education was that when you take maths teachers originally were somewhat sceptical. But when we did the research and it showed that by teaching these real examples of things that where children who aren't that interested in maths for its own sake, but can understand the benefit to them of understanding it, it actually improved engagement of maths itself, as well as increasing knowledge of financial education.

29:47And it went there. Harry, you can see the difficulty. What would you do? I completely agree. It's all down to prioritisation and, you know, what do we remove? But I'm not too familiar with the history of when the last time the curriculum was fully reviewed. But what are the priorities for the government when it comes to education? Surely money and financial literacy should be one of them. Your ability to read, your ability to write, your ability to count, your ability to look after yourself in later life. It was also said that, you know, 40, 50, 80 year olds also need some help. which is true, but had they had the education 20, 30, 40, 50 years ago, potentially they might have set themselves up a little bit better where they don't need as much help these days and are better equipped to make better financial decisions, thinking about retirement and pensions and compound interests and everything that would have benefited them by the time they are 50, 60, 80 years old.