PRESS RELEASE 21 June 2001

WFTC improves credit rating of low income families

The Low Pay Unit today urged banks and building societies to follow the Royal Bank of Scotland decision to accept Working Family Tax Credit as income when assessing personal loan, overdraft and mortgage applications. The Royal Bank of Scotland reassessed their guidelines to include the WFTC payment when considering the affordability of borrowing, following a letter from the Low Pay Unit.

Low Pay Unit research on the impact of WFTC on low-income families, found that it had improved the credit rating of low paid workers. As a result some bank branches were offering access to overdraft facilities and loans to low paid workers, but there was no consistent position. We believe the Royal Bank of Scotland is the first to issue guidelines that treat WFTC income consistently.

Bharti Patel, director of the Low Pay Unit, said:
"This decision by the RBS is excellent news for the 1.2 million families currently in receipt of WFT. We urge other banks to follow this lead as an important step towards ending financial exclusion.
"WFTC is a fixed guaranteed income for low paid families. For a family of four with one earner on the national minimum wage it will add over £5200 per annum to net earnings".

Fred Goodwin, Group Chief Executive, The Royal Bank of Scotland said:
"We are delighted to have the opportunity to support this initiative which builds on our early commitment to basic bank accounts in both Royal Bank of Scotland and NatWest to encourage greater access to financial services for the low paid."

For further information call:
Bharti Patel at Low Pay Unit on 020 7435 4268 or 07887 567 494
Howard Moody at Royal Bank of Scotland on 0131 523 2056

Notes to editor.

• WFTC is paid to 1.168 million families, the average award is £80.74 per week.
• One and a half million households lack even the most basic of financial products.
• 4.4 million households are on the margins of financial services with little more than a bank or building society account that is not much used.
• The Unit is writing to other high street banks and building societies asking them to follow the Royal Bank of Scotland.
• The research is sponsored by Public and Commercial Services Union (PCS).