FTAdviser.com

Advertising

Increasingly it is becoming clearer and clearer that the key to tackling inter-generational poverty is through education and the creation of more opportunities.

This is the proven route out of poverty, no matter how it is measured, relative to the overall prosperity in society or in absolute terms measured against a basket of goods and services.

But are we measuring the right things? In real terms, even when measured against other G7 countries, Britain has an unparalleled system of social benefits, even if the measly 7 per cent of GDP spent on social welfare benefits needs reviewing.

Part of the problem is that whether working or not, on benefits or living off our savings, there is a widespread perception that we are entitled to every electronic gadget, the latest vehicle, the trendiest clothes, eating in the most exclusive restaurants and dancing at the most exclusive nightspots as a right and duty.

To deny anyone these 'benefits' is to deny them their human rights, according to this perverse reasoning.

Which brings us nicely to one of the major gridlocks facing policymakers and the issues of benefits and welfare provisions.

No matter how much we talk about money guidance, financial literacy and protection, the reality is that most people will not do anything about these until they are forced to through some shock event such as unemployment or the death of a breadwinner.

Which is why one vital tool in the fight against financial illiteracy must be compulsory money guidance and debt counselling at the point of need.

Compelling people to sit down for a couple hours of guidance when they sign on for jobseekers allowance or any other form of state benefits should be an essential part of the compact between claimant and the state.

During that session they would be told how to manage their benefits, clear their debts, save for a rainy day and prepare themselves with the necessary training needs for the next step up.

Those people graduating from this stage will be in the market for basic saving and protection advice and, hopefully in time, will join the ranks of the mass affluent.