Housing Benefit Cuts Caused Debt Spiral

According to recent study, the housing benefit cut led to a debt spiral fro thousands of families in Merseyside.

The changes a.k.a the “bedroom tax” were announced in April and since then over 14 000 residents are now in rent arrears. The housing benefit cut aims at recipients, whose property has a bedroom, which is deemed to be surplus to requirements. May be at some point they will be forced to take loans and sign loan agreements in order to ensure they have somewhere to live.

By doing so, the government is trying to free up larger properties, so that families, who live in homes, too small for their needs could move into them.

It sounds good, however there is a lack of small properties, which can be hired by the “under occupiers”, which leads to additional expenditures for many peple, which puts them into a difficult financial situation.

The NHF (The National Housing Federation) collected information from 18 social  landlords in Merseyside and found out that almost 26,500 households were affected by the recent cuts, but there were only 155 smaller houses available for those people.

Chief executive of the National Housing Federation, David Orr, commented: “The fact is there aren’t enough smaller social homes in Merseyside for people to avoid the bedroom tax, even if they wanted to move.”

A Department of Work and Pensions spokesman, however, said: “We always monitor the impact of our policies carefully but there is no conclusive evidence that people affected by our housing benefit reforms are not getting the help they need.”

 

MPs Want Tougher Regulation of Payday Loans

MPs announced that in their view Office of Fair Trading does not do enough in order to protect consumers from unscrupulous payday loan companies, which do not have proper loan agreements.

According to the chairperson of the Public Accounts Committee due to the wrong policy of OFT borrowers lose £450m a year.

In her words, the regulator had to use more often its powers to revoke the credit licenses of misbehaving lenders.

She said: “It passively waits for complaints from consumers before acting.”

And added that none of the 72,000 firms currently in the market had ever been fined.

In the cases in which the license of a certain director( who is supposed to have a directors service contract) had been withdrawn the same person does not stop their business but just starts it up under a different name.

The OFT said there were tight constraints that stopped them to a certain extent but they were doing their best in order to cope with the situation.

A spokesman said: “In the last financial year alone the OFT has revoked the licences of some of the UK’s largest credit brokers and debt management firms, and taken formal action in more than 85 other cases.”

As the Financial Conduct Authority will receive the regulatory duties next year the committee decided to give some suggestions which in their view would be helpful for the future.

One of the proposals said that not only the annual percentage rate had to be displayed but also the total amount repayable on a loan. Another of the proposed changes was related to the number of times short-term loans could be “rolled over” by lenders.

 

 

Remove age cap on start-up loans

A proposal came from Lord Young, enterprise adviser to the prime minister, who said that British Business would revive if the age limits on the start-up loans are being changed. New conditions are expected to be included in their loan agreement.

The current age of limit is 30 years. Entrepreneur over this age should for the future be allowed to get taxpayer-funded loans so that they could start up a business.

When such loans started being floated the limiting age was considered to be 24, which will probably be stated into the loan agreement.

This was not the only recommendation of Lord Young in his Growing Your Business report. He also gave some suggestions on how to make it easier for small business to apply for £230m worth of public sector contracts.

Lord Young said: “Growing our smallest businesses would transform our economy – they are the vital 95%.”

He explained that the UK businesses would grow if given the proper possibility to. A good decision against the unemployment will come if half of the UK’s micro businesses took on an additional member of staff.

The principal policy adviser at the Confederation of British Industry (CBI), Hayley Conboy agreed with the mentioned report saying that if supported to grow smaller firms would become medium-sized ones.

‘Lord Young rightly identifies that the Government needs to earmark funding to effectively market existing finance and support schemes.’

Of course, not everybody reacted so positively to the new proposals. Graeme Fisher, head of policy at the Federation of Small Businesses (FSB), was not that excited as he stated that such schemes had to be carefully managed, otherwise they might not help the business but even confuse it more.