Past Articles for March, 2007

Under terms laid out in last week’s Budget announcement, the average amount being paid in council taxes will rise by a full 4.3 per cent over the course of the coming 12 months, the Communities and Local Government department has explained.

And for those living in what are termed band D residences, this increases the annual council tax bill by £58 pounds to £1,321, which could prove problematic for some of those looking to avoid bankruptcy in England.

Reviewing local government operations recently, Sir Michael Lyons remarked: “Council tax is not ‘broken’ but is seen as unfair and has been put under too much pressure.”

Elsewhere in the same report, Sir Michael called for a greater degree of cooperation between all parts of government to strengthen the effectiveness of the relationship between local and national authorities.

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With the slight increase in inflation seen in recent weeks, the Alliance Trust Research Centre has claimed that low earners, who could already be searching for a debt management plan, are hit 34 per cent harder by such rises than the rest of the population.

Spending what money they have on basic goods – where prices have increased relatively sharply – has led to low-income families most vulnerable to variable inflation rates, the study concludes.

Shona Dobbie, head of the Alliance Trust Research Centre said: “Our two-year study has shown consistently that the UK’s lowest income groups are facing an inflation rate which is substantially higher than the average headline inflation rate.”

“This is a direct result of this income group’s shopping basket,” she added.

Research published by the Consumer Credit Counselling Services recently suggested that the burden of debt management woes in the UK is shifting towards elder sectors of society.

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With debt management problems continuing to rise nationwide, the DWP is keen to see increased support for parents looking to secure a working wage to support their children.

In all, a full £150 million is to be diverted to aid efforts designed to assist those looking for a job and who currently find themselves and their families facing poverty, the DWP has revealed.

Secretary of state for work and pensions John Hutton remarked: “We have made considerable progress against our historic goal to end child poverty in the UK, with 600,000 children helped out of poverty since 1997.”

“But we need to go further towards what is a very tough goal to reach,” he added.

Charitable organisation Citizens Advice raised fears recently that the chancellor Gordon Brown’s child and working tax reforms would not help thousands of people facing debt management concerns as a result of reclaimed tax credit overpayments.

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Statistics from the CCCS’ so-called yearbook reveal that of those people approaching the organisation for advice on becoming debt free close to 50 per cent were aged over 40.

In addition, it was revealed that around half of those advised to file for bankruptcy by the CCCS did not do so and that a third of these people cited the stigma associated with doing do as the reason why.

Chairman of the CCCS Malcolm Hurlston commented: “The increasing levels of debt among the over-60s has been a marked trend for the past 18 months and shows every sign of increasing.”

Last month, the accountancy firm KPMG reported its own expectation that the number of Individual Voluntary Arrangements applied for in the UK would surpass the number of bankruptcies arranged during 2007.

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Finance website Fool.co.uk claims that the increasing popularity of fixed-rate mortgage deals suggests people are worried about the prospect of another rise in the cost of borrowing in the coming months.

And any increase in the base rate would add to the financial pressures already being felt by the many thousands of British consumers currently facing debt management problems and aiming to avoid bankruptcy.

Highlighting some of the issues, David Kuo, head of personal finance at Fool.co.uk, said: “Currently, interest rates are expected to rise 0.25 per cent within the next two months and a further 0.25 per cent six months after that.

“This means homeowners may need to find an extra £83 a month or £996 a year in higher interest payments on a £200,000 loan.”

Earlier this month, the Consumer Credit Counselling Service suggested that financial pressures would see British homeowners “on the rack” throughout 2007.

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Leeds City Council aimed to assist those people in the local area who are looking for a debt solution in partnership with public, private and voluntary organisations.

And as a result of its endeavours, the government has awarded the council Beacon status by way of commendation for its success in limiting the extent of exclusion from basic financial services, such as bank accounts and low-interest loans.

Councillor Andrew Carter, council leader and executive board member for development, said: “It is vital that we help people gain control of their finances while also teaching children and young people about the value of taking care of your money.”

The government recently announced plans to transfer funds from bank accounts left dormant for a number of years to social improvement projects, including aid for those people still facing financial exclusion.

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With many thousands of Brits facing credit card debt problems, there should be more card holder perks available than is currently the case, the personal finance expert asserted.

And Ms Hogg’s claims were backed up by statistics from Goldfish’s own research which demonstrates that more than half (52 per cent) of credit cards offer “no benefits at all”.

“If customers hold a card that doesn’t reward their spending then they should investigate what other cards might be better suited to their spending patterns,” commented MS Hogg.

“We have found that an increasing number of our customers are using their credit cards for everyday purchases such as groceries and petrol, realising that they can reap rewards for all the regular purchases they make anyway,” she added.

A spokesperson from the Finance and Leasing Association suggested recently that for many Brits debt management issues, including those associated with credit cards, are becoming a “way of life”.

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While opting for a debt consolidation loan can prove to be a shrewd financial move for many people, an individual must avoid slipping behind on subsequent repayments, Helen Saxon, spokesperson for the Finance and Leasing Association (FLA) suggests.

“They [debt consolidation loans] can be a positive move, because personal loans generally have lower interest rates than credit cards,” commented Ms Saxon.

“But you do have to be careful if you are consolidating that you don’t run up the debt again and that you can pay off any loan that you take out,” she continued.

Last month, figures released by MoneyExpert.com revealed that in excess of six million people in the UK have taken out a debt consolidation loan over the course of the last three years.

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This apprehension among borrowers is reflected in the finding that the number of people across the country who opted for a five-year fixed-rate mortgage deal increased by a full 11 per cent last month.

And if the perception of fresh rate rises in the pipeline proves to be accurate, the pressure on the finances of those looking to find a debt solution will intensify.

“Borrowers are wary of two-year fixed-rate deals that will not safeguard them sufficiently against this anticipated long-term rise in rates,” remarked Steve Cox, operations director of SFS.

The cost of borrowing was raised in August and November of 2006, as well as in January this year, which has seen the financial pressures increase on the thousands of Brits struggling with debt management issues.

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Helen Saxon from the Finance and Leasing Association (FLA) has moved to encourage consumers to consider carefully the terms of a credit arrangement or debt consolidation loan before opting to borrow money.

In addition, as Britain’s debt management problems pile up, Ms Saxon points out that for those who know where to look “there is advice out there”.

“I do think society has moved into debt being a way of life…you need to make sure that the debt is good debt as opposed to bad debt [and] that you know what you’re taking on,” she made clear.

Earlier this week, in response to the latest Budget announcement from chancellor Gordon Brown, the FLA suggested that there were thousands of small businesses around the UK who will be “missing out” under the new corporation tax arrangements.

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