New Government Proposals on Welfare

This is taken directly from ‘The Coalition: our programme for government’ paper. It is still lacking a lot of details which need filling out, so a proper analysis can’t be made of it just yet. But it does show there are some major changes coming, which seem to be aimed at continuing to force people off incapacity benefits or training people on pointless courses for non-existent jobs through private companies. We should also note that there are massive plans to cut public spending and I think its safe to say, this is one area the government will be targetting.

The Government believes that we need to encourage responsibility and fairness in the welfare system. That means providing help for those who cannot work, training and targeted support for those looking for work, but sanctions for those who turn down reasonable offers of work or training.

• We will end all existing welfare to work programmes and create a single welfare to work programme to help all unemployed people get back into work.
• We will ensure that Jobseeker’s Allowance claimants facing the most significant barriers to work are referred to the new welfare to work programme immediately, not after 12 months as is currently the case. We will ensure that Jobseeker’s Allowance claimants aged under 25 are referred to the programme after a maximum of six months.
• We will realign contracts with welfare to work service providers to reflect more closely the results they achieve in getting people back into work.
• We will reform the funding mechanism used by government to finance welfare to work programmes to reflect the fact that initial investment delivers later savings through lower benefit expenditure, including creating an integrated work programme with outcome funding based upon the DEL/AME switch.
• We will ensure that receipt of benefits for those able to work is conditional on their willingness to work.
• We support the National Minimum Wage because of the protection it gives low-income workers and the incentives to work it provides.
• We will re-assess all current claimants of Incapacity Benefit for their readiness to work. Those assessed as fully capable for work will be moved onto Jobseeker’s Allowance.
• We will support would-be entrepreneurs through a new programme – Work for Yourself – which will give the unemployed access to business mentors and start-up loans.
• We will draw on a range of Service Academies to offer pre-employment training and work placements for unemployed people.
• We will develop local Work Clubs – places where unemployed people can gather to exchange skills, find opportunities, make contacts and provide mutual support.
• We will investigate how to simplify the benefit system in order to improve incentives to work.

Taken from HM Government website

Debt charity sees ‘sharp rise’ in people needing help

The Consumer Credit Counselling Service has said that it had seen a “sharp rise” in the number of people contacting it for help.

The debt charity said its helpline received 93,234 calls during the first three months of the year, 34 per cent more than during the same period of 2009.

The group warned that the high number of people who had contacted it for help with debt so far this year suggested that it would receive a record number of calls during the whole of 2010.

A total of 335,323 people contacted the group’s helpline last year, the highest number it had ever received.

External affairs director Delroy Corinaldi said: “The UK’s personal debt pain continues and this is even before the imminent public-spending cuts, so it is crucial that those who find themselves in this situation have access to free, impartial and independent advice in whichever way is best for them – online, face-to-face or over the phone.”

The freephone helpline is open from 8am to 8pm Monday to Friday on 0800 138-1111.

Taken from Morning Star

Poor paying for energy profits

Crippling energy costs hit the poor and elderly as companies cash in on cold weather

Households across the UK are facing record energy bills this month as a result of the recent freezing weather conditions. After one of the coldest Januarys in over 25  years gas and electricity bills are set to rise from an average £156 to £237 – a massive 52 per cent increase, according to official figures, with many people falling further into debt in order to pay.

The extreme weather during the first month of 2010 saw average temperatures slip below 3c with widespread heavy snowfall and sharp frosts across most of the UK. According to the Met Office the minimum temperature recorded was (minus) -22c. The extraordinary weather over the winter period is estimated to have caused a 30 per cent surge in energy consumption, as families and the elderly struggled to cope with the freezing temperatures.

Economically it means the UK’s 27 million households will pay out a total of £6.1 billion on their energy bills for the last month, an increase of £1.89 billion despite the decrease in the cost of fuel. Wholesale gas prices fell by 60 per cent during 2008/9, but the savings have not been passed on to consumers with customer bills being reduced by less than ten per cent. Critics argue that the major energy suppliers are waiting until the summer to bring down prices rather than risk a cut in profits during the peak energy consumption over the winter months.

The UK’s largest energy supplier, British Gas with 15.7million customers, is set for a 50 per cent rise in annual profits to more than £500million, while Scottish and Southern Energy’s profits rose by 36 per cent in the past six months. Thousands of elderly, meanwhile, have been unable to afford to keep warm during the coldest spell in 30 years. One energy expert commented “There is still scope for significant price cuts for both gas and electricity to ease the burden on hard-pressed households. A lot of people, especially the old, poor and vulnerable, were already struggling to pay their bills even before the sharp drop in temperatures and they need help.”

There were 36,700 more deaths among the elderly during winter than in warmer months, according to the Office of National Statistics, up 12,000 on the previous year. At the same time there are millions of pensioners among the 5.4million who are in fuel poverty. The Age Concern and Help the Aged charity condemned the rise in winter deaths, which it links to ‘cash-strapped older people turning down the heating’. Energy watchdog group Consumer Focus commented: ‘All of the suppliers will be enjoying rocketing profits while millions of consumers worry about how to afford to keep warm.’

The windfall for gas and electric companies comes on the back of an the energy regulators Ofgem critical report that found energy suppliers waiting 65 days after putting up prices before informing customers of the increase, leaving many in the dark over the true cost of their energy consumption.

Taken from Freedom

Home repossessions hit 14-year high

The number of people who had their homes repossessed reached a 14-year high during 2009, figures have shown.

The Council of Mortgage Lenders (CML) said 46,000 homes were repossessed last year, the highest number since 1995.

That was an increase of 6,000 on the total for 2008, but was lower than the CML’s most recent forecast of 48,000.

Lenders took 10,200 properties into possession in the fourth quarter of 2009 – 13% lower than in the third quarter.

In December 2008 the CML had predicted 75,000 homes would be repossessed in 2009.

However, in an interview with Radio 5 live, Housing Minister John Healey caused controversy when he said that, for some people, having their home repossessed was the best thing that could happen to them.

The shadow housing minister Grant Shapps said ministers had “lost touch with reality” and called on Mr Healey to apologise to “the tens of thousands of families who have lost the roof over their heads”.

‘Challenging year’

In terms of payment difficulties, 188,300 mortgages ended the year with arrears equivalent to at least 2.5% of the outstanding mortgage balance, the CML said.

As it has turned out, things are not nearly as bad as they were in the housing slump of the early 1990s.

Thanks to a combination of ultra-low repayment costs, tougher court rules on repossessions, and a variety of government schemes, fewer people than anticipated are either in arrears with their mortgages or have been evicted.

Last year’s 46,000 repossessions were just 61% of the total recorded in the peak year of 1991, when lenders seized 75,500 homes.

And in the past few months the position has started to improve. The CML’s statistics show that short-term arrears and home seizures eased off as 2009 wore on.

But lenders are worried it may not last. About 75,000 borrowers are stuck with stubbornly high arrears.

Any rise in interest rates may well be too much for both them and their lenders, prompting a fresh bout of repossessions.

This was lower than the total of 195,000 it had forecast, and 3% lower than at the end of the third quarter of 2009. But it still marked a 3% rise on the end of 2008.

CML director general Michael Coogan said: “The fact that mortgage arrears and possessions did not rise as much as we feared in 2009 is testament to the effect of low interest rates and a great deal of concerted effort by lenders, government and the advice sector to help borrowers to address financial difficulties when they occur.”

As a result, the CML said that its current forecast for 2010 of 205,000 arrears cases and 53,000 properties taken into possession may be “a little pessimistic”.

However, Mr Coogan added: “We are not out of the woods yet – 2010 will still be a challenging year for many borrowers, and some households will inevitably find their finances being squeezed if and when interest rates do eventually rise.”

The housing charity Shelter said the number of homes being repossessed was still “completely unacceptable”.

“Behind each one of these numbers is a heartbreaking story of a family losing their home and having to rebuild their lives,” said Campbell Robb, the charity’s chief executive.

“The tragedy is most people simply do not need to be repossessed. By giving clear help and advice to homeowners at risk of repossession, Shelter and other organisations successfully helps almost four out of five households avoid the immediate loss of their home when facing court proceedings.”

Court actions

Separately, figures from the Ministry of Justice showed that the number of potential repossessions in the pipeline in England and Wales is falling.

The number of possession actions – the first stage of an attempted repossession by a lender – launched in the courts in the fourth quarter of 2009 was 20,061. The number was 15% fewer than in the previous three months and 26% fewer than at the same time last year.

The number of possession orders agreed by judges also fell to 16,928 – 15% fewer than in the previous quarter and 42% down on the same period of 2008.

In November 2008, the government introduced the mortgage pre-action protocol which said lenders would have to demonstrate to the courts that they had exhausted all possibilities before going ahead with a repossession.

And last year, the government launched the mortgage rescue scheme, which permits not-for-profit housing associations to buy homes from people struggling to pay their mortgage and then allows them to continue living there by paying “affordable rent”.

Meanwhile, the Treasury Committee said that it would be launching a follow-up inquiry into mortgage arrears after publishing an initial report in August 2009.

The inquiry will focus on households struggling with mortgage arrears and those at risk of repossession.

Taken from BBC News

Debt service swamped by 28% rise in demand

The government’s free debt advice service is being forced to turn people away after being unable to cope with a 28 per cent jump in demand, MPs have warned.

MPs dubbed the government’s approach to advising people in debt a “triumph of bureaucracy over practicality” and urged it to “shake up” its strategy to meet the increasing demand for help in the current economic climate.

The Commons public accounts committee said the approach by the Department for Business, Innovation and Skills to debt advice was “unnecessarily complex,” with more than 50 different projects and a number of funding streams.

Committee member Richard Bacon said: “At present, the government is not always using the most cost-effective means of reaching people in need of help with their debts.”

However, the comments follow a National Audit Office report which praised the service for helping more people at a lower cost per person than planned, with 270,000 people seen by an adviser since its launch in April 2006 up to September last year.

David Harker, who is chief executive of Citizens Advice, one of the organisations that carries out debt advice with government funding, said: “Citizens Advice caseworkers funded through the government scheme have assisted over 200,000 clients to manage their debt problems since June 2006.

“Whilst the recession has seen demand for debt advice appointments increase, bureaux are using new ways of assisting clients to make sure everyone can receive help in the shortest time and that the service is as efficient as possible.”

Taken from Morning Star

Rich-poor divide ‘wider than 40 years ago’

The gap between rich and poor in the UK is wider now than 40 years ago, a government-commissioned report says.

“Deep-seated and systemic differences” remain between men and women and minority groups in pay and employment, the National Equality Panel found.

It said in areas such as neighbourhood renewal, taxes and education, policy action was needed to limit inequality.

The issues raised would need “sustained and focused action”, Equalities Minister Harriet Harman said.

“But for the sake of the right of every individual to reach their full potential, for the sake of a strong and meritocratic economy and to achieve a peaceful and cohesive society, that is the challenge that must be met,” she added.

Earning power

Apparent discrimination against people from ethnic minorities was revealed in the report, with those from nearly every minority group less likely to be in paid work than white British men and women.

The panel – set up by the government in 2008 – found that despite women up to the age of 44 having better qualifications than men, men were still paid up to 21% more per hour.

But the authors pointed out that some of the greatest differences come within social groups.

Among women, many work part-time, earning less than £7.20 an hour, much less than the median pay of £9.90 across the country.

<
“Most political parties and people subscribe to the ideal of ‘equality of opportunity’,” panel chair Professor John Hills, of the London School of Economics, told the BBC.

“The challenge that our report puts down to all political parties is how do you create a level playing field when there are such large differences between the resources that different people have available to them.

“Things that allow you to buy a house in the catchment area of a good school or allow you to help your children get on the housing ladder. These are very big differences.”

The study said that the type of job and pay a parent had could have a cumulative effect throughout a person’s life, setting them on “tracks that make all sorts of differences”.

By retirement, the difference between rich and poor can be “colossal”, the report added.

The panel pointed out that half of those who have worked in the top professions have net assets worth more than £900,000, while a 10th of those who have had unskilled jobs have property, savings and possessions worth less than £8,000.

BBC social policy correspondent Gillian Hargreaves said the report would make “awkward reading for the government” as Labour had made tackling inequality a priority.

Theresa May, shadow minister for women and equalities, told the BBC that Labour’s policies had failed.

“It is shocking that after 13 years of a government that wanted to focus on child inequality, we’re still in this situation,” she said.

“Labour has had a one-dimensional approach, looking at the symptoms, not the causes. For example, one in six children are growing up in a workless household. We need policies that can make equality a reality.”

The Liberal Democrats’ children, schools and families spokesman, David Laws, said Gordon Brown’s government had “run out of ideas for tackling the lack of opportunity for so many children and the chasm that separates the rich from the poor”.

Full report – An anatomy of economic inequality in the UK [4 MB]

Summary – An anatomy of economic inequality in the UK [1.79 MB]

Taken from BBC News

More families cannot pay their fuel bills

A combination of cold weather, high gas and electricity prices and mounting pressure on disposable incomes could see a substantial rise in the number of families falling into debt with energy companies, consumer groups are warning.

The alert follows a report by the energy industry regulator, Ofgem, last week, which showed large numbers of people getting behind on their gas and electricity bills.

Ofgem said that even before the winter began, more customers were getting themselves into financial difficulties. There was a 13 per cent increase in the number of electricity customers entering into a new debt arrangement with their supplier in the third quarter of last year, Ofgem said, and a 21 per cent increase in such arrangements between households and their gas suppliers.

In addition, the average level of debt of customers in difficulties was 20 per cent higher than a year previously, and there has also been a substantial increase in the number of people with debts of £600 or more.

uSwitch, the price comparison site, warned that regulators needed to take the issue of debt more seriously, but also advised customers to switch supplier more regularly in order to find the cheapest possible deals. One problem is that the customers most likely to get into financial difficulties also seem to be those who find it difficult to pay their bills by direct debit, an arrangement for which most suppliers offer discounted prices.

“The recession will have played a part, but Ofgem cannot afford to brush the cost of energy under the carpet. Energy bills are substantially higher – at £327 or more – than they were at the beginning of 2008, even after suppliers cut their prices last year, and this will have had an impact on the ability of many households to afford and pay for their energy,” said Thomas Lyon, an energy expert at uSwitch. “These debt numbers could get worse as we are in the middle of a bitter winter which could add an extra £60 on to our next quarterly bills because of the extra heating and energy we have all had to use – this will hit those who pay by cash or cheque particularly hard.”

Taken from The Independent

House prices increase by 273% in 50 years

According to a new study by Halifax, house prices in the UK have increased by 273% in real terms since 1959.

According to the study, once retail price inflation is accounted for, the price of housing has increased at an average rate of 2.7% a year, outstripping average wage increases amounting to 2% yearly.* The fastest increase in house prices occured between 1999 and 2009, when they shot up by 5% a year.

Meanwhile, access to council housing has shrunk. The percentage of the population living in council housing expanded throughout the 1960s and 70s, peaking at 33% in 1981. With the introduction to right-to-buy under the Thatcher government, and failure to build new social housing stock in recent decades, the proportion of the population in social housing now stands at 18%.

The increased proportion of owner-occupiers – from 43% in 1961 to 68% in 2009 – chimes with the picture of an increasingly debt-saturated economy, as easy credit fills the widening gap between increases in wages and the increasing standard of living.

*However, “average” wage increases frequently do not account for increasing levels of income inequality. “Average wages” are often the median wage, meaning that a small section of the population enjoying significantly increased incomes can push up the “average” while the majority of the population experience meagre or nonexistent growth.

Taken from libcom

Parents struggling to make ends meet

Nearly two-thirds of families with children need both parents to work just to make ends meet, research showed today.

Around 60 per cent of households with children are reliant on having two salaries in order to pay their bills, according to insurer Scottish Widows.

The figure is nearly twice the 36 per cent of families that do not have dependent children that are reliant on two salaries.

Families with children are also accruing increasing levels of debt as they struggle to make ends meet.

The average household with dependent children owes £8,653 in short-term debt, such as credit cards and loans, compared with £7,003 for households without children.

Families with children also typically have higher mortgages, with an average of £91,648 still outstanding on their home loan, £3,000 more than when the same research was carried out a year earlier.

By contrast, families without children had paid down their mortgage by around £4,000 during the previous 12 months, to leave them owing an average of £77,500.

Clive Allison, protection director at Scottish Widows, said: “The days of one parent going out to work while the other takes care of the family is just not an option for many people.

“More than half of families with dependent children now rely on two incomes to maintain a decent standard of living, and as our statistics show, this isn’t likely to ease off any time soon.

“For many families, sacrificing half their income when they have children is a luxury they just can’t afford.”

Taken from The Independent

Loan sharks circle round the poorest

Around 100,000 of Britain’s poorest families will be crippled with £82 million of debt during 2010 after borrowing money from loan sharks to fund the cost of Christmas, research has claimed.

It is estimated that people on low incomes collectively borrowed £29m from illegal lenders to fund the festive season.

But once interest rates, which average 825 per cent but can be as high as 1,500 per cent, are taking into account, they will end up having to repay around £82m, according to housing association Circle Anglia.

The group commissioned the research by think tank the Financial Inclusion Centre, claiming that there had been a 22 per cent increase in the number of people using loan sharks during the past three years, with an estimated 200,000 people turning to them in 2009.

Circle Anglia executive director of operations Andy Doylend said: “These figures are very concerning and demonstrate the scale of illegal lending across Britain.

“We hope that, by turning the spotlight on loan shark activity, we can help more people to seek help and get sound financial advice.”

Commenting on the research, Barnardo’s chief executive Martin Narey said: “Many are trapped in areas of high unemployment and, when the cash coming in doesn’t meet their needs, they don’t have access to low-interest loans because they are seen by high street banks as too risky.

“Those in dire need who can’t get credit from doorstep lenders are pushed into the clutches of illegal loan sharks.”

A Citizens Advice Bureau spokeswoman said many clients were too afraid to admit they had gone to loan sharks but that one mother had “said she was so frightened she had had to move house because a brick was thrown through her window and the loan shark – who charged 15 per cent extra if payment was even one day late – was known to have ‘kneecapped’ defaulters in the past.”

A Treasury spokesman said it was vital that low-income households have access to financial products while also being protected from exploitation.

“Government is working to ensure that the sector is regulated appropriately and the Office of Fair Trading is undertaking a review of the high-cost credit market, including the impact on vulnerable consumers,” he said.

Taken from Morning Star