Millions of people all over the UK are struggling with unsustainable levels of debt and it is important that they are given they help and support they need. The Government has set up the Money Advice Service to provide free and impartial guidance to those struggling with debt or looking for advice on budgeting. The Money Advice Service is also a major funder of free face-to-face debt advice - you may have already seen the Ask Ma campaign on television.
Young people in particular are vulnerable to the lure of easy answers to financial problems. That is why it is so important that schools get over the relevancy of things to real life like interest figures. Some payday lenders offer loans at rates of over 1000% - ridiculous rates which in their adverts they now attempt to avoid mentioning altogether.
In response to this, Liberal Democrats in Government have given the Financial Conduct Authority (FCA) the power to cap the cost of payday loans and we have been supporting credit unions by removing unnecessary restrictions on their governance and allocating £38m to the Credit Union Expansion Project. There are now over a million members of credit unions in the UK. People have alternatives to payday lenders and we should all be getting that message out there.
If one falls into debt, there are various techniques that an individual may use to limit the damage. An example from my own history occurred when I returned from a job to find my UK high-street bank had sold my debt (a £10 unauthorised overdraft) to a debt collection agency. At that time I was living in Norway, so by the time the payment had arrived with the agency, it has missed another deadline and new fees were incurred. This happened several times, resulting in me paying out far far more than the original tenner.
The situation was finally resolved when I wrote to the agency, informing them that a third payment had been made, it was to be a final payment in full settlement of all outstanding debt. If I had to make further calls on the matter, these would be invoiced to them at £5 a minute. If I had to write again, each letter would be invoiced at £50. Their company would also be liable for any further damage caused to my credit history, should they pursue the issue. Further contact would be taken as agreement to these terms.
Needless to say, that was the last I heard of it. It was also the last that particular bank ever heard of me.
While in Government, Liberal Democrats have raised the income tax personal allowance to £10,600, giving over 27 million people a typical yearly tax cut of around £825. Over 3 million of the lowest earners have been taken out of paying tax altogether. In the next parliament, we want to go even further and raise the personal allowance to £12,500, giving a further tax cut of around £400 to the average worker.
It’s not just tax changes we’ve made to help those on lower pay. We have increased the National Minimum Wage from £5.93 in 2010 to £6.50 in 2014/15, meaning someone earning NMW and working a 36 hour week, 52 weeks a year earns £1,067.40 more a year (pre-tax) than in 2010. From October 2015, we have made sure it will rise again to £6.70, the largest real-terms increase since 2008, and worth another £374.40 a year for someone working a 36 hour week, 52 weeks a year.
The economic crash under the last Labour Government led to our economy shrinking by 6%. Instead, Liberal Democrats in Government have a credible plan for the economy that has not only resulted in more people in work than ever before, but it is keeping interest rates and inflation down. The cost of living is falling, meaning nurses and other public sector staff getting a 1% rise this year will benefit in real terms.
To summarise, there are times in all our lives that things go tight and we have to resort to extra credit. It is really important that our education system alert people to what those interest APR numbers mean and that people understand there are far more options out that than the glossy CGI adverts that are all over daytime television. Once in debt, there is government advice available from the Money Advice Service (MA) and charitable agencies like the Citizens' Advice (CAB). The Liberal Democrats are working hard to ensure that people, especially the lower paid, have more money in our pockets and a stable, growing economy where it is easier to judge our needs ahead. If the lenders abuse their position (as has frequently been the case), debt amounts can be capped by law.
If you have further issues or questions, I will be pleased to hear from you.
Edinburgh North and Leith.