Credit, Collections & Insolvency News
The chancellor Jeremy Hunt delivered his Autumn Statement yesterday (Thursday 17th November) in which he announced £30 billion in spending cuts and £25 billion in tax rises.
Responding to the Autumn Statement, David Postings, Chief Executive of UK Finance, said “These are challenging times for the country and the chancellor has had to take some tough decisions in his Autumn Statement. A strong and internationally competitive banking and finance sector has a key role to play in supporting the economy through the current challenges. Lenders are here to help customers with tailored support for anyone in difficulty. We are also continuing to work closely with the government to deliver the jobs and investment needed to create economic growth in the future.”
Fiona Anderson, Managing Director of Cards at Vanquis said “A turbulent few weeks for the UK economy has left households still feeling the bite of the cost of living crisis. This is causing immense pressure on people’s budgets. Our data shows credit card enquiries were up 43% from September 2021 to September 2022, suggesting an increase in people borrowing to support their day-to-day living. As tax rises, we expect this to grow even further. Worryingly the use of Buy Now Pay Later has also increased and our research has found 14%* of young people are planning to use it to pay for Christmas.”
“Today provides some clarity for UK households. The announcement of a new cost of living payment, combined with a rise in universal credit payments, is a positive step forward to help the people that need it most. That being said, more needs to be done to help those who aren’t eligible for these payments but are still struggling to cope with rising bills – to stop them spiralling into huge levels of debt.”
Joanna Elson CBE, chief executive of the Money Advice Trust said “This Autumn Statement will provide relief for some of the households who are among the hardest hit by the cost of living and energy crisis – but serious challenges remain for millions across the country.”
“The Chancellor is right to have listened to widespread calls to increase benefits with inflation – and additional targeted payments for the most vulnerable are also welcome. But rising daily costs, higher rents and mortgage payments will now be joined by significant hikes in Council Tax and energy bills in April – which will take an enormous toll on the nation’s personal finances.”
“The government needs to do more to protect households at the sharp end of this crisis – including making sure that no one is pushed into hardship by unaffordable debt repayments, suspending the forced installation of energy pre-payment meters and increasing funding for Council Tax Support schemes for those unable to pay.”
Richard Lane, Director of External Affairs at StepChange Debt Charity, said “After weeks of uncertainty, confirmation from the Chancellor today that benefits will be uprated in line with inflation, and cost of living support will continue beyond April will be welcomed by millions of households facing a difficult winter. With the news that inflation has now reached 11%, this support will soften the impact, particularly as the current cap on typical household energy bills is due to be lifted from the spring. The rise in the living wage will also go some way to offset soaring inflation which tends to affect those on the lowest incomes most acutely.”
“While the government’s announcements are welcome, it’s far from clear that the support offered will be enough to prevent rising financial difficulty and hardship this winter. Those who receive means-tested benefits are facing the biggest fall in real income and will be exposed to hardship and destitution. The Government can ease pressures on these households by stopping unaffordable deductions from Universal Credit for government debts like historic tax credit overpayments.”
“While we support a targeted approach, many low to middle income households will also be left vulnerable to problem debt as the energy price cap increases without further Government support.”
“With Council Tax one of the most prevalent debts that StepChange clients struggle with, a possible rise in Council Tax is concerning. Councils are often quick to escalate Council Tax debts to enforcement action, without considering whether this is appropriate. Among our clients those with additional vulnerabilities are more likely to be referred to bailiffs than those without. When increasing the ease with which councils can raise Council Tax, the Government must consider affordability and how they are going to reduce harm for financially vulnerable households.”
Jayadeep Nair, Chief Product & Marketing Officer, Equifax UK, said “The Chancellor opened his Autumn Statement saying that inflation is the enemy of stability, and backed this up with a range of fiscal measures designed to soften the impact of price rises on the most vulnerable in society. Inflation-linked increases to Universal Credit and pensions were accompanied by the biggest increase to the National Living Wage since it was introduced, and a decoupling of rents from inflation in the social rental sector. However, even if inflation comes down to the OBR’s forecast of 7.4% next year, millions will still be left wondering how they will make ends meet.”
“The announcement of cuts to government borrowing will impact every corner of Britain, especially those reliant on government and local support. Alongside the announcement of substantial tax increases, this means today’s announcement is going to leave many feeling worried. It will come as little comfort that despite some wage rises this year, pay growth is in the doldrums, the UK is already in a recession, and consumers must brace for a difficult year.”
“Consumers will be prioritising essential spending, especially those whose debts have been impacted by recent interest rate rises. The credit sector must continue to ensure that all lending is carefully considered and takes care of those that may find themselves vulnerable in the current financial situation.”