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Budget 2017: how can it help the five million ‘working and struggling’?

UK money worries

Millions of households in the UK are worried about their finances. But what can be done to change this? 

Next Wednesday, Philip Hammond MP, will give his first Budget as Chancellor.

With our latest research finding that five million working people in the UK are now worried about their financial situation, we’re urging the government to use the Budget, along with the promised Green Paper on markets, to consider how it can deliver measures to help them.

Our findings

We looked at how full- and part-time workers felt about their finances. We found that five million of them were struggling, and classed their financial situation as poor or very poor.

Overall, 28% of all UK households said they were experiencing some form of financial distress, be it relying more on overdrafts and loans, or struggling to pay their mortgage/rent and everyday household bills.

When we asked those working households who felt negatively about their financial situation, this rose to three in five (61%).

A fifth had taken a loan or credit card, borrowed money from friends and family or used authorised overdrafts.

Others told us they were cutting back, while one in five (19%) people had defaulted on a loan, bill, mortgage payment or their rent.

Nearly two fifths (38%) thought their financial situation would get worse in the next year, with levels of household debt, fuel prices, housing costs, food prices, and household savings and investments chief among their concerns.

Green Paper on markets

In the 2016 Autumn Statement, the Chancellor announced that the government would be publishing a Green Paper on markets ‘that are not working fairly for consumers’. This is due this spring.

We welcome this and think it’s a great opportunity to finally crack the problems that consumers face in the critical markets, such as financial services, energy, telecoms and transport, and make sure these markets work better for them.

This should include looking at gaps that currently exist in consumers getting redress when things go wrong, or when they don’t get the service they were expecting.

More also needs to be done to encourage people to switch providers to get a better deal. Recent figures from Ofgem on the number of consumers switching their energy company are promising, but more needs to be done to ensure more people do it – and across all markets.

What can be done?

In her first statement in July last year, the Prime Minister said she’d be focusing on helping people who were ‘just managing’.

At a time when people are clearly feeling the pinch, we’re urging the government to use its upcoming Budget and the Green Paper to do just that.

We think it should consider how it can use both to deliver measures that will help ‘working and struggling’ families improve their financial situation and make the critical markets work better for them.

Do you consider yourself among the ‘working and struggling’? Or do you know someone who is? How can the Chancellor use the forthcoming Budget and Green Paper on markets to help?

Comments
Mavis Richards says:
6 March 2017

I’m 73 and have no benefits and have enough not to need them. The fact that people are working 2 or 3 jobs and still can’t pay rent and feed their children is a disgrace. This government is killing the disabled and the poor so that the rich can continue to get richer.

As this convo is about money here is a bit of news that some will say is good and some bad . The UK government has just approved a £10 Billion loan to help rebuild Iraq and the good news – at last ! HMG is “using the head ” ALL the money spent MUST be used by BRITISH firms now thats something that will make me like this government more ! Iraq Acting Finance Minister -Abdul Razzak al-Essa + British Ambassador Frank Baker told Reuters

If you look a little deeper, Duncan, that’s not really the great news you might imagine. It’s unlikely much of this will ever be repaid; in fact, it rarely is, so it’s essentially a donation. Which is fine, but then the next point hides a multitude of sins. While British firms may be the overall recipients in theory, in a Globalising world a great deal – of not almost all – the money will go to companies elsewhere, the major recipent of which will almost certainly be the US.

Having said that Iraq deserves help, as it’s suffered a fair bit, but I’d want to see the breakdown of the £10bn as what a Government spokesperson describes as £10bn is often vastly different from what you or I might.

Ian will it not supply jobs for British workers and use equipment made in Britain or are you saying that UK companies will not use Britons but overseas workers and foreign equipment as well as your point of overseas shareholders owning most UK businesses ? If that is what you are saying then what is being implied by TM/HMG is political propaganda and edging on monetary deception on the British tax payer –that wouldn’t go down well with the UK public in times of recession ( or whatever word you want to call it to make it sound more “acceptable ” ) . I took her at her word -shouldn’t I have ?

I don’t know for sure, Duncan, but I’d be fascinated to see just how much of that £10bn will end up directly helping British-owned businesses.

I assumed it was for double-glazing and blockwork drives. Is there anything else we do now on the capital account? Last time I looked that was mostly what they need after a difficult period.

Cynic…

🙂

I understand that the Chancellor is expected to raise personal allowances, which will help taxpayers. That won’t help those who don’t have a sufficiently high income to pay tax.

He probably believes in the trickle-down effect.

That’s what happens when you get older, John.

Ahem – Mine was a serious comment and relevant to the topic.

The point is that many elderly people rely on benefits trickling down to them (as John puts it) because they have no other means of increasing their income. Crumbs off the rich man’s table if you prefer. Those who would be best helped are the genuinely deprived, and this should come through the benefits system. I have never understood why, when the basic state pension is around £7000 a year we (some) moan when (untaxed) benefits are capped at £23000. Some real rebalancing should be done. As state pensions are taxed perhaps we should tax other state benefits? They are both paid out of the same pot.

If your company pension had not been increased for 20 years whilst shareholders continued to benefit from that same company’s profits, you are more likely to end up begging for “crumbs off the rich mans table” with increasing age.

It seems nine state benefits are taxable while eighteen are not. Child benefits falls into both camps, depending on overall earnings. But I fear there are nastier moves afoot.

Since some date in the past year (it’s not clear exactly when this became the rule; it might have been as recently as 01/02/17) all EU citizens who have not worked or been self-employed for five years must now have comprehensive sickness insurance (CSI).

You can read more about it here: https://www.freemovement.org.uk/briefing-legal-status-eu-citizens-uk/

“The main group affected are EU citizens who are self sufficient but who do not have comprehensive sickness insurance. This would include an EU citizen married to a British citizen where the EU citizen does not have comprehensive sickness insurance, is not currently working or self employed and has not worked or been self employed for five continuous years.”

This seriously affects elderly spouses who may have married UK citizens many, many years ago and may have been living here for more than 50 years. It’s clearly intended to placate the Brexit groups but the horrifying reality is that its effects are utterly indiscriminate. Imagine being deported at the age of 80, having been married for 50 years to a British Academic and having to return to your country of birth because the NHS will no longer treat you unless you have comprehensive medical insurance – pretty difficult at the age of 80.

Can you give an example of this Beryl? I am no expert on company pensions but as far as I know they have terms that you sign up to. Are you saying many company pension schemes have had no increased payouts for 20 years, contrary to the terms agreed?

I apologise if my over-slick comment in response to Wavechange’s opener has trivialised this thread. I was trying to make a serious point.

Within Tory party dogma, and espoused by leading members of the Cameron-Osborne tendency, there is a strong feeling that making the middle classes better off will so effectively stimulate the economy that even those on low or negligible incomes will benefit. I take a different view – not entirely unfamiliar to the ‘One Nation’ school of Conservative philosophy – that providing the poorest and most vulnerable people in society with the support they need in all responsible forms will benefit the whole of society and diminish a lot of social problems thus relieving the Exchequer of a burden that could lead to lowering of taxes like VAT that bear hardest on those with low incomes. Practical measures like home insulation and domestic assistance should also substitute for hand-outs wherever possible. I see an inclination towards this approach in the new Prime Minister and maybe we shall be able to make a better judgment in a few hours time after the budget speech. It’s all very well addressing those who are “just about managing” but there are still a lot of people who are not quite managing, as well as a large number who cannot manage in the present circumstances. I live in hope.

I certainly don’t think that we should rely on the trickle down effect. Helping the needy with home insulation and other energy saving measures could well be a better option than handing out cash that could be spent on Lottery tickets, cigarettes and alcohol.

Are you suggesting that the “needy” spend their money in this way, instead of on essentials?
I think this perception exposes a difficulty in a benefits system that doles out cash; we have no idea whether our cash (it comes from taxpayers) is being spent in a way that provides the essentials – rent, food, energy for example – that the needy need. Would we prefer a system where these essentials are provided in kind, not in cash so we know the benefit is actually that – a benefit?

Malcolm, as I understand it, a number of pre-1997 pensioners are not receiving inflation-proofing increases under some companies discretionary trust schemes. For an example, log onto: http://www.pensions-expert.com-pressure-grows-to-provide-pre-1997-inflation-proofing…………..by Angus Peters – February 17, 2017.

I have a close relative who is affected by this and it appears these companies are acting within the UK law. As it only applies to employees who retired before 1997, I would consider this to be a clear case of age discrimination under The Equality Act 2010.

Malcolm – There is plenty of evidence that the poor do spend money on non-essential items. The problem exists in the UK and US and no doubt in other countries. Here is a recent newspaper article: http://www.telegraph.co.uk/news/uknews/5911581/National-Lottery-is-tax-on-the-poor.html There has been proper research to support this but you would have to look for it. Anyone who sees the Lottery as a way of supporting charities would be well advised to do this directly.

If you have trouble logging onto the above website, try:
pensions-expert.com – Pressure grows – Law & Regulation

Seems only to apply to those companies whose employees agreed a non-inflationary proof deal.

http://www.pensions-expert.com/Law-Regulation/Pressure-grows-to-provide-pre-1997-inflation-proofing

It is! 🙂 I suspect it’s the dots after the link in Beryl’s that’s throwing the link.

Am I right in interpreting it that, in a significant number companies, pension contributions made before 1997 did not accrue inflation proofing but the accumulated pension pot at that point would have done for the subsequent 20 years together with any post-1997 contributions? If so people now approaching retirement with the same company throughout their career could have lost indexation of twenty years or more on a small portion of their pension value depending on whether the relevant contributory years were in a high-inflation period [probably], and on the technical details of the scheme [pay levels over the employment period, how much was based on the final years’ contributions etc, the balance of employee and company contributions, whether and what percentage of any of the final pension was in the form of a lump sum, and so forth].

Although employees might have accepted a non-index-linked pension scheme the choices available might not have been favourable and they might have chosen the least-worse option under an element of pressure to save jobs and to protect what pension entitlements they still had.

And now for a bit of good news , I -posted Mooboo Bubble Tea was paying its new employees a grand total of -£0000 . this was heavily publicized on another forum where 40,000 members complained ,also posted heavily on the big social websites .Well it worked , they are now paying new-starts money due to “social pressure ” , my point ? if you create a big enough “stink ” all over the web it works .

Wray D M L says:
7 March 2017

I’m a WW2 child and over many years I have been amazed at how much so many of our youngsters are spoilt. In the area where I live I don’t see children contributing to the family by doing small chores (e.g. cleaning the car or sweeping the front drive or cleaning some windows, etc. all of which my fellow sibling and I did when younger) and thereby cementing their very existence to a family and registering that in this rather cruel world one gets nothing for free. Rather they take and continue to do so without giving anything back.
I would urge the Chancellor, amongst other things, to substantially reduce the exorbitant level of VAT and initiate legislation to bring back the level of senior corporate officers’ reward(s) to acceptable levels and to find a way to make Directors who bleed their companies white to be responsible for their actions.

How would you replace the tax take lost when you substantially reduce vat (it does resemble the old purchase tax in scale). In 2013/14 it was £104.7 billion. Income tax was around £170 bn, National Insurance around £110 bn to put it in perspective.

Much as we all dislike paying taxes, VAT is probably the fairest.

Except it pays no regard [other than a short list of exempted goods and services] to the ability of the purchaser to pay. VAT is a regressive tax. It has its uses [like taxing on their expenditure those who live off unearned income] but it was better at 15%, in my opinion, in parallel with a graduated income tax scale that achieved a sensible level of wealth redistribution.

I think you’re right, John.

Essentials – rent, mortgage, food, public transport are untaxed, I believe. Energy is taxed, at the minimum 5%, but this is to comply with EU legislation and is not at our government’s choice. If “discretionary” spending is taxed then this seems, as fair as tax can be, a reasonable approach.

I support John’s suggestions but I would introduce higher rate VAT for luxury goods. What constitutes luxury goods is of course open to debate but maybe the general public could be invited to provide their views.

I support higher VAT rates on luxury goods and did put it forward earlier, but the suggestion is controversial and can distract from the flow of the Conversation. I don’t see it becoming a reality.

It’s worth bearing in mind that VAT is charged on some foods :

Food and drink for human consumption is usually zero-rated but some items are standard-rated, including alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water. Because certain food and drink is zero-rated, so are certain animals and animal feeds, and plants and seeds – if the animal or plant produces food that is normally used for human consumption.” [GOV.UK].

Anecdotal evidence suggests that VAT-able foodstuffs are popular among lower-income groups and are also highly fattable [or fattipose if you want the technical wording].

It is certainly controversial and if it were to be on the cards for the budget we would probably already know. Older people will doubtless remember Purchase Tax on luxury goods, which predated the introduction of VAT.

From the Budget: “We will shortly bring forward a green paper on protecting the interests of consumers.

But ahead of the Green Paper, we will take the first steps to protect consumer from unexpected fees or unfair clauses, to simplify terms and conditions, and to give consumer bodies greater enforcement powers.”

Hopefully Which? will keep us informed of progress. We have certainly had the opportunities to discuss these issues in earlier Conversations.

Thanks for sharing that Wavechange, indeed we’ll be looking to keep you all informed of the progress of this.

We’ve responded to the Budget today – Alex Neill, our Managing Director of Home Services, said:

‘With millions of working people struggling to make ends meet, we welcome the Chancellor’s continued commitment to making essential markets work for consumers. It’s vital that the forthcoming Markets Green Paper addresses the issues that people face in financial services, energy, telecoms and transport.’

We’ve also created a Budget summary here http://www.which.co.uk/news/2017/03/budget-2017-all-the-key-announcements/ – as always there will be a Convo too…soon!

When I heard that announcement I rather hoped the government was actually going to give Which? enforcement powers. There are, of course, several other consumer bodies, mostly concerned with single products or services. If there are resources available [and that is not clear -only powers are mentioned] I would prefer to see Trading Standards reinforced to equip it for the role it should have in protecting consumers.

The reason I posted the quotation was that I had assumed that Which? would be bestowed with greater authority.

Perhaps we should produce a ‘Which? Conversation users’ super-complaint’ to push Which? to look at the failings of Trading Standards and how these can be overcome.

That would be nice 🙂

If you can push for action, Lauren, that would be great. There is little we can do as individuals.

The “failings” of trading standards is loss of staff caused by loss of adequate funding. The Consumers’ Minister (part time) presumably should have some say in this. We would firstly need to decide where that extra funding should come from. But we should also look at how trading standards is organised at local and national level, and restore access to consumers instead of via a third party – CA.

Perhaps Which? could put out a position paper on this for public comment, prior to having a discussion with government.

If you are keen to do something, you could organise a petition at local level to ask your trading standards provider – county council or city/town council – to provide the funding necessary to restore their staff and facilities. You might have a fight with those who want better social care.

How they do it in the USA (part 106 ) I just got to vote on “Obamacare ” , give the “Donald ” his place he is nothing if not democratic , any chance of that happening here ? –no I didn’t think so.

Just found out Parcel Force CHARGES their drivers £250 if they are sick and cant come in , I take it they are on a contract and are not full time employees, changed days from yesteryear .

Here is a link: https://www.theguardian.com/business/2017/mar/06/sick-parcelforce-couriers-royal-mail-mands-john-lewis-hamleys-dpd

Maybe ‘up to £250’ might mean £0. I thought it was normal practice to continue to pay employees when they were sick.

“Self-employed owner drivers working with Parcelforce can expect average earnings from £45,000 to £70,000 per annum.”

“As self-employed subcontractors, they are contracted to ensure the services are provided but not to provide them personally. Many owner-drivers do not actually do the route themselves, but employ someone to do it for them. Self-employed owner-drivers agree to cover the cost of fulfilling their routes if they are unable to do it themselves and are unable to provide cover. Parcelforce ensures that collections and deliveries are carried out and that customer service levels are met.”

It is often the case that a contract includes a performance requirement. Driver contractors presumably know they need to fulfill their part of the contract and should make provision in case of a problem. we would soon be criticising Parcelforce if they didn’t deliver our parcels.

Malcolm ,speak to Hermes delivery men and ask them how much they get paid with zero security . Parcel Force also obliges its delivery men to guarantee they will deliver at traditional peak times of the year like Christmas , not allowed to be ill or have family problems.

I think it is the case increasingly in the service sector that firms cannot afford to permanently staff up to peak demand levels so engage temporary staff to fill the gaps and cover the peaks. The regular drivers of Parcelforce-liveried vans are presumably on normal contracts of employment and get sick pay and holiday pay in accordance with their conditions of service. When the company hires in supplementary drivers and vehicles to meet increased service volumes they need reliable performance otherwise such casual workers would just not turn up when required or would work for a different company. It seems reasonable to me that pay is stopped for such workers for the days they are absent as the company has to hire in others or sub-contract the deliveries out to another firm.

I don’t know how much Hermes pays its sub-contractors. I have heard they are effectively on piece rates. This suits some workers who can organise the deliveries around their personal routines.

I believe this story started with a report on DPD’s practices. This company is reckoned to be one of the best and most reliable carriers and it has invested heavily in technology to ensure customers can know, in a one-hour time slot and then progressively more-or-less to the minute, when their parcels will arrive. They could not allow this reputation to be jeopardised by drivers unwilling to abide by their side of their contract. It is amazing how much sickness absence has reduced in the UK over the last decade as a combination of incentives and penalties has raised attendance levels and boosted productivity. We used to wait weeks for a purchase delivery; now we can have it tomorrow. That is entirely due to greater flexibility in the fulfilment chain.

My comment was about Parcelforce. Hermes were not mentioned.

If a delivery contractor has an agreement with Parcelforce then they should ensure they can carry out their side of the contract. If they have to provide cover in case of a problem that is a contingency they need to take into account in their business. Would we all be happy to hear that we’ll get our delivery…,,,,,,,.but we might not if someone doesn’t do it? We’d expect Parcelforce to have arrangements in place to cover eventualities – what a professional business is about.

And the self-employed sub-contractors can insure against such contingencies as well. I expect the daily rate for services supplied is adequate compensation in all the circumstances.

I am not surprised that Parcelforce comes in for criticism. If they were making a contract with a small company then it is fair to expect it to deliver or pay a penalty, but expecting an individual to do this seems irresponsible to me. Yes it is possible that the individual could take out insurance, but is this insurance available and how much does it cost?

I wonder how much occupational stress Parcelforce is causing. I wonder how many people are on the roads when they are sick and should not be driving.

I have often wondered what happens to deliveries that go missing without trace? I have had 2 deliveries, each worth about £85.00 that failed to turn up, but have been replaced by the retailer after much deliberation, culminating in late delivery. It usually happens after receiving an e-mail confirmation that the goods are in transit. Who stands to benefit?

The thieves that stole it Beryl .”In transit ” means it has been NOTIFIED of an “uplift” , whether by the carrier contracted to the firm or the firm itself . It therefore can be “an inside job ” if the senders warehouse staff key in the information OR the bloke employed by the carrier . In other words the warehouse staff or the carriers employees . My recorded delivery wasn’t singed for but only showed-in transit – because the Post Office delivery guy hadn’t bothered his backside to get it signed for nor notify the fact it was delivered it was the regional council planning department that notified me they received it . I learned my lesson pay for the top class service my second one got there ONE day after I posted it and signed for and posted on the web.

Rob North says:
11 March 2017

A neighbour ordered a bicycle and ended up with four, delivered over several weeks while she was at work. The seller was adamant that they hadn’t sent the last three and would not be charging for them. After lengthy discussions with a logistics company she managed to get them collected. Her conclusion was that they were destined for other people but due to a glitch at a third party logistics outfit they had been sent to her – all records showed only one delivered. She said that given the trouble she had, next time she would put them on eBay….