BUDGET 2017: Government confirms crackdown on subscription traps

9th March 2017

The Citizens Advice has given its response to the budget announcement. Gillian Guy, Chief Executive of Citizens Advice, said “The Chancellor has set out good intentions for helping ordinary working families – the test will be if the government delivers on boosting income security and tackling failing consumer markets. We’ve repeatedly called for more support for those who work for themselves so the consultation on parental benefits for self-employed people is welcome news. The government should look to go further and make it easier for people in this group to save into a pension. More also needs to be done to stop unscrupulous bosses forcing people into bogus self-employment – our evidence shows there are 460,000 people in this position, where they are denied employee status and basic rights like sick pay, pensions and holiday pay.

“The Chancellor’s announced crackdown on subscription traps which trick consumers into paying membership fees is welcome news. Bad business practices that rip customers off and exploit their loyalty are rife across sectors and jeopardise household finances. The Chancellor was right to say more needs to be done to intervene in markets that let consumers down.

“Our evidence shows some of the poorest pensioners and families are paying £141 a year over the odds for their energy.  Heating and lighting your home is not a luxury – they are basic essentials. The Government could help those struggling with their energy bills by extending the prepayment meter cap to customers on the standard variable tariff – initially this could be done for low income pensioners and families on the Warm Home Discount. Consumer loyalty is taken advantage of in other markets – like mobile phones, broadband and insurance – where customers pay more for using the same provider. Our research shows wider consumer problems cost people an average of £450 a year – the government must use its upcoming consumer green paper to address shoddy business practices and help protect household finances.”

The Chancellor reiterated the government’s commitment to reducing the taper rate in Universal Credit. Guy added: “The government must also ensure it helps families by fixing implementation problems with Universal Credit before it is rolled out further and think about restoring the work allowance – it should also reconsider changes to Personal Independence Payments so that everyone who needs it gets it.”