Find out how to answer questions about setting up the family’s finances
3.2 Initial expenses
The family you support will likely arrive in the UK with minimal knowledge of the UK’s currency, benefits, or banking systems. They will also have to wait about six to eight weeks for their first benefits payment to come through. It is your responsibility to supply them with enough money to get by until their benefits kick in and help them to understand banking, budgeting, and the value of the UK’s currency.
3.2a. Confirm initial cash payment
This is another tick box question, you don’t need to elaborate, but remember that this is an obligatory part of the Sponsorship Agreement. The refugees you support will rely on benefits, at least at first, to cover all their expenses. However, you should expect at least six weeks until these payments start. You can find out more in our Introduction to Universal Credit resource. Due to the delay in receiving these, the Home Office requires a cash payment of £200 per person (including children) to be given to the family upon their arrival. Many Groups have experienced further delays and recommend providing £300 instead. This money should be made as a gift to the family you support instead of a loan.
3.2b. How will you distribute this money to the resettled family prior to the social welfare income being paid? (150 words)
The Home Office will look for you to demonstrate that you have thought through how to distribute this initial cash payment, you can consider the following:
- Giving this money through weekly payments works best
- Providing a range of notes and coins of different denominations can help the family get used to UK currency
- Some Groups have provided the initial cash payment on a pre-paid debit card – make sure you research any charges relating to using these
- Remember that everyone in the family is an individual, so give their payments to adults separately
- Be clear when explaining how long this money should last
3.2c. How will you empower the resettled family to have autonomy over their finances? (150 words)
Keep in mind that empower and autonomy are the key words in this question. Think about how you will explain benefits to the family as they might be confused about where their money is coming from. Everyone living on benefits in the UK struggles to make ends meet, so it may be helpful for the family to understand that they are no different from other British citizens who are in the same situation. By ensuring the family understands that they have a limited amount of money per month, you can help them to budget for their needs but ultimately it is up to the resettled family to determine what these needs might be.
The initial cash payment can be a great exercise in empowering the resettled family to have autonomy over their finances. It is up to your Group how you will distribute the money, and you should make it clear to the family on approximately how long this money should last.
3.2d. How will you help the resettled family become familiar with UK currency and how to budget? (100 words)
Providing the family with their initial cash payment also presents an opportunity to teach them about different currency notes and coins. By distributing the money in different currency denominations, perhaps accompanied by a picture chart that matches notes and coins to their value, the family will quickly learn about UK currency. Converting the value of UK currency to the currency of their host country will also be helpful for commonly bought items. Think about how you will explain how the family will pay for things; they may not be used to using debit cards and may not be aware that some cash machines will charge for withdrawals. Consider adding this information to your Welcome Pack!
You can also use this as an opportunity to work with the family on preparing them to live on a tight budget. It may be worth mentioning how much they will need to spend on some of the regular expenses such as electricity, gas and water and set some time aside to create a budget with the family.
3.2e. How will you support the resettled family to set up a bank account? (150 words)
In order to claim benefits, which you will need to help them to apply for within three working days of arrival, a refugee must have a bank account into which their benefits can be paid. This can be tricky as most banks require proof of address to open an account, and newly arrived refugees will not have this. Different banks on the high street will have their own requirements to open an account so it’s important to approach a few so the family has some options. Also, once the refugees you support arrive, by presenting them with choices you are empowering them in their first financial decisions in the UK. Don’t forget to consider online banks, such as Monzo, who make the registration process for refugees easy. You can find more information about opening a bank account in our bank accounts resource. Remember that these are only initial accounts you need to open, once the family has arrived and started to settle in, you can cover how bank accounts can be changed.
You may find these questions helpful when researching banks in your area to prepare you to open a bank account for the family when the time comes and to complete question 3.2e:
- What is the registration process for opening a new bank account?
- What documentation will we need to present to open a bank account?
- Would a letter from the Local Authority stating that the refugee lives at the address suffice as proof of address, if the Local Authority is happy to provide this?
- What will the bank require to open an account for multiple people in the same family?