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DebtBytes UK - Bankruptcy, Insolvency, Simple IVA & Bank Charges News UK
UK IVA and bankruptcy focused insolvency advice column for people that are dealing with problem debt, money troubles or falling behind on the bills. This advice column will provide you with information you can use. For more information visit Myvesta UK at Myvesta.org.uk.
17 June 2006
Need Plastic Surgery ?
The UK credit card market has been shaken up by enforced cuts to penalty charges. John Greenwood tracks down the best bargains
Barclaycard is urging its customers to repay more than the bare minimum on their credit cards and is offering them lower interest rates to encourage them to do so.
Credit cards
The credit card company, which has more than 11 million customers, is including a new message on statements for cash--strapped cardholders who have paid off only the contractual minimum of two per cent of their balance for six consecutive months.
Barclaycard customers repaying more than 10 per cent of their balance sees their interest rate fall from 16.9 to 9.9 per cent.
The move comes 10 days after Barclaycard said it would reduce its penalty charge for late payments on credit cards from £20 to £12 following a ruling from the Office of Fair Trading. HBOS, Royal Bank of Scotland and Lloyds TSB have followed suit, while last week Morgan Stanley and Co-op hinted that they too would slash penalty fees.
Experts say the strategy of urging customers to clear their debts reflects a change in tack for credit card issuers, which will have to find new ways to recoup money now that they can no longer profit from hefty default charges.
Barclaycard swiftly increased the interest rate it charges on cash advances by up to 5 percentage points to a massive 29.9 per cent - a clear message that intends to get the money it is losing on penalty charges back somehow. Experts predict that other banks will follow suit with higher interest rates across their product ranges, so it is more important than ever to shop around for the best deals.
"Now they can't make money out of defaulters we expect a surge in marketing initiatives to make you use your credit card more, such as cashback deals, so credit card companies make more in merchant fees," says Brian Brown of Defaqto, the financial analysts.
"We also predict that interest rates will go up and introductory offers will become less attractive, although the reintroduction of annual charges for credit cards is unlikely because as long as one company offers free cards, the rest will have to as well."
Despite fears that deals may become less attractive, there are still some fantastic offers available. Credit card deals come in all shapes and sizes. Making sure you get the right card will save you pounds and give you more spending power.
Here are the best deals for every kind of cardholder.
I have no debts and want a card that gives me as long as possible to pay without charging me interest.
GE Money's Transformation card tops the tables, charging no interest at all for the first 12 months that you hold the card, then switching to an annual percentage rate (APR) of 12.9 per cent. Sainsbury's Bank's Platinum card offers 12 months at 0 per cent interest on purchases, reverting to a slightly more expensive 15.9 per cent APR thereafter.
I don't want the hassle of changing credit card just to get the best introductory offer. I want a card with a reasonable rate of interest if I can't afford to pay my bill off at the end of the month.
The cheapest standard rate credit card is Halifax's Flat Rate card, which charges an APR as low as 5.9 per cent, which is cheaper than many personal loans, although only people with good credit ratings will be able to get this card. American Express's Blue is also competitive, charging just 6.9 per cent APR.
I have a large credit card debt and my current 0 per cent deal is coming to an end, so I need to find a new deal.
There are currently no cards on the market that allow you to transfer your balance to a 0 per cent deal without paying a fee.
The Halifax One card is the best value for balance transfers under £2,500, charging you 0 per cent interest for the first 12 months on debts you bring over from other credit cards, with a one-off balance transfer fee of 2 per cent. It then reverts to an APR of 15.9 per cent.
GE Money's Transformation card offers the same 12 month interest-free period for balance transfers, but beats the Halifax One card for transfers over £2,500 because although its transfer fee is 2.5 per cent of the sum brought over, it is capped at £50. It also beats the Halifax card on its standard APR of 12.9 per cent.
Watch out for introductory offers as most credit card companies choose to allocate payments first to outstanding balances at the lowest rate of interest, such as 0 per cent balance transfers, leaving transactions that attract higher interest rates, such as purchases and cash advances, to continue to accrue -interest.
I always pay off my credit card in full and want a deal that rewards me for spending on my credit card.
Morgan Stanley has the best cashback credit card on the market for low to moderate spenders. Its Platinum Credit card gives you 2 per cent cashback for the first £2,000 you spend, and 0.5 per cent thereafter.
American Express's Platinum Credit card gives you more cashback the more you spend - 0.5 per cent up to £3,000, 1 per cent up to £7,500 and 2 per cent for spending over £7,501.
The Telegraph
June 9th, 2006
http://myvesta.org.uk
Barclaycard is urging its customers to repay more than the bare minimum on their credit cards and is offering them lower interest rates to encourage them to do so.
Credit cards
The credit card company, which has more than 11 million customers, is including a new message on statements for cash--strapped cardholders who have paid off only the contractual minimum of two per cent of their balance for six consecutive months.
Barclaycard customers repaying more than 10 per cent of their balance sees their interest rate fall from 16.9 to 9.9 per cent.
The move comes 10 days after Barclaycard said it would reduce its penalty charge for late payments on credit cards from £20 to £12 following a ruling from the Office of Fair Trading. HBOS, Royal Bank of Scotland and Lloyds TSB have followed suit, while last week Morgan Stanley and Co-op hinted that they too would slash penalty fees.
Experts say the strategy of urging customers to clear their debts reflects a change in tack for credit card issuers, which will have to find new ways to recoup money now that they can no longer profit from hefty default charges.
Barclaycard swiftly increased the interest rate it charges on cash advances by up to 5 percentage points to a massive 29.9 per cent - a clear message that intends to get the money it is losing on penalty charges back somehow. Experts predict that other banks will follow suit with higher interest rates across their product ranges, so it is more important than ever to shop around for the best deals.
"Now they can't make money out of defaulters we expect a surge in marketing initiatives to make you use your credit card more, such as cashback deals, so credit card companies make more in merchant fees," says Brian Brown of Defaqto, the financial analysts.
"We also predict that interest rates will go up and introductory offers will become less attractive, although the reintroduction of annual charges for credit cards is unlikely because as long as one company offers free cards, the rest will have to as well."
Despite fears that deals may become less attractive, there are still some fantastic offers available. Credit card deals come in all shapes and sizes. Making sure you get the right card will save you pounds and give you more spending power.
Here are the best deals for every kind of cardholder.
I have no debts and want a card that gives me as long as possible to pay without charging me interest.
GE Money's Transformation card tops the tables, charging no interest at all for the first 12 months that you hold the card, then switching to an annual percentage rate (APR) of 12.9 per cent. Sainsbury's Bank's Platinum card offers 12 months at 0 per cent interest on purchases, reverting to a slightly more expensive 15.9 per cent APR thereafter.
I don't want the hassle of changing credit card just to get the best introductory offer. I want a card with a reasonable rate of interest if I can't afford to pay my bill off at the end of the month.
The cheapest standard rate credit card is Halifax's Flat Rate card, which charges an APR as low as 5.9 per cent, which is cheaper than many personal loans, although only people with good credit ratings will be able to get this card. American Express's Blue is also competitive, charging just 6.9 per cent APR.
I have a large credit card debt and my current 0 per cent deal is coming to an end, so I need to find a new deal.
There are currently no cards on the market that allow you to transfer your balance to a 0 per cent deal without paying a fee.
The Halifax One card is the best value for balance transfers under £2,500, charging you 0 per cent interest for the first 12 months on debts you bring over from other credit cards, with a one-off balance transfer fee of 2 per cent. It then reverts to an APR of 15.9 per cent.
GE Money's Transformation card offers the same 12 month interest-free period for balance transfers, but beats the Halifax One card for transfers over £2,500 because although its transfer fee is 2.5 per cent of the sum brought over, it is capped at £50. It also beats the Halifax card on its standard APR of 12.9 per cent.
Watch out for introductory offers as most credit card companies choose to allocate payments first to outstanding balances at the lowest rate of interest, such as 0 per cent balance transfers, leaving transactions that attract higher interest rates, such as purchases and cash advances, to continue to accrue -interest.
I always pay off my credit card in full and want a deal that rewards me for spending on my credit card.
Morgan Stanley has the best cashback credit card on the market for low to moderate spenders. Its Platinum Credit card gives you 2 per cent cashback for the first £2,000 you spend, and 0.5 per cent thereafter.
American Express's Platinum Credit card gives you more cashback the more you spend - 0.5 per cent up to £3,000, 1 per cent up to £7,500 and 2 per cent for spending over £7,501.
The Telegraph
June 9th, 2006
http://myvesta.org.uk
 |
Debtors Warned That Filing Bankruptcy Is Not A Soft Option
Many thousands of cash poor debtors who are preparing for bankruptcy have not understood the hardship they will face as a result, according to warnings from debt specialists. They claim more than 110,000 people are considering declaring themselves bankrupt this year, in many cases because - wrongly - they consider it to be a soft option.
Almost 15,400 people were declared bankrupt in the first quarter of the year , a 12 per cent rise on the last three months of 2005, and a 51 per cent increase on the same quarter of last year. The increases reflect a five-year trend - the number of personal bankruptcies has risen every year since 2001, but began to spike particularly sharply upwards in 2004.
Tony Supperstone, a consultant at accountants BDO Stoy Hayward and president of R3, the insolvency practitioners' trade body, says the Enterprise Act passed that year has lessened the stigma attached to bankruptcy. "It now looks very attractive - you can be discharged from bankruptcy after six to 12 months, with all your debts cleared."
Frances Walker, of the Consumer Credit Counseling Service, says someone going bankrupt can now expect to be discharged after an average of eight months, compared with at least three years before the law changed. "Many borrowers see bankruptcy as a new lease of life," she says. "For many, being free from the worry of the debt is such a relief that it is worth the consequences of the bankruptcy." The problem, debt experts warn, is that borrowers may not realise how serious those consequences are.
To start with, bankrupts lose all control of their assets, including possibly even their share of the family home. The official receiver, or an insolvency practitioner, divides up the assets and shares them out among the bankrupt's creditors.
"Bankrupts are not allowed to obtain credit of more than £250 and have to seek permission to use bank accounts and credit cards - only basic living expenses can be paid, with any surplus going to pay off creditors," adds Holmes. "Any income earned during the bankruptcy order can be claimed against for an income repayment order for up to three years." That's assuming the bankrupt is able to earn an income. In professions such as the law, bankruptcy could mean losing your licence.
All insolvencies stay on your credit file for at least six years. As a result, bankrupts are likely to find it particularly tough to get credit for an extended period after being discharged - the best case is they will have to pay substantially higher rates of interest. For these reasons, the CCCS says bankruptcy only makes sense for a small number of people with debt problems - of the cases it handled in the first quarter of the year, it recommended bankruptcy to just 12 per cent of borrowers. "If you're a young person without much in the way of assets, it can make sense," says Walker. "But bankruptcy does still have very serious implications."
A better bet, for many borrowers, may be to come to an agreement with creditors - either an informal pact to make fixed repayments over a longer period, or an individual voluntary arrangement (IVA), a legally-binding deal that is less serious than full-blown bankruptcy.
The downside to IVAs versus bankruptcy is that it is likely to take longer to be clear of your debt - five-year plans are most common. But borrowers retain much more control of their assets, and their professional status is less likely to be affected. And the impact on your credit rating will also be less disastrous.
Ways to deal with a debt crisis
* Debt management plans: This is the least formal way to get on top of your borrowing. The idea is to persuade your creditors to agree that you will repay what you owe over a longer time period with affordable fixed payments each month.
* You can try to negotiate with creditors yourself, by writing to them to propose a repayment schedule. Alternatively, groups such as Citizens Advice and the Consumer Credit Counselling Service will negotiate on your behalf with your unsecured creditors , usually for free. Bear in mind that you can't force lenders to agree to this sort of scheme. And the agreement is not legally binding however and creditors often will not agree to any proposals to stop interest and charges.
* Individual voluntary arrangement (IVA): An IVA is a more formal version of the first option, and requires an authorised insolvency practitioner to arrange and oversee the deal. All your lenders can be forced to accept the terms of the IVA if 75 per cent of creditors by value of the total debt agree.
* Insolvency practitioners charge a fee for their services, which will add to your debt however they will be able to negotiate a comnplete freeze in interest charges.
* Bankruptcy: This is the most extreme option. Your assets - including property - are divided up between your creditors, with the insolvency courts ruling on who gets what. You may be discharged after a year, leaving you debt free, but the bankruptcy remains on your credit file for six years, with serious implications for your finances.
http://myvesta.org.uk
Almost 15,400 people were declared bankrupt in the first quarter of the year , a 12 per cent rise on the last three months of 2005, and a 51 per cent increase on the same quarter of last year. The increases reflect a five-year trend - the number of personal bankruptcies has risen every year since 2001, but began to spike particularly sharply upwards in 2004.
Tony Supperstone, a consultant at accountants BDO Stoy Hayward and president of R3, the insolvency practitioners' trade body, says the Enterprise Act passed that year has lessened the stigma attached to bankruptcy. "It now looks very attractive - you can be discharged from bankruptcy after six to 12 months, with all your debts cleared."
Frances Walker, of the Consumer Credit Counseling Service, says someone going bankrupt can now expect to be discharged after an average of eight months, compared with at least three years before the law changed. "Many borrowers see bankruptcy as a new lease of life," she says. "For many, being free from the worry of the debt is such a relief that it is worth the consequences of the bankruptcy." The problem, debt experts warn, is that borrowers may not realise how serious those consequences are.
To start with, bankrupts lose all control of their assets, including possibly even their share of the family home. The official receiver, or an insolvency practitioner, divides up the assets and shares them out among the bankrupt's creditors.
"Bankrupts are not allowed to obtain credit of more than £250 and have to seek permission to use bank accounts and credit cards - only basic living expenses can be paid, with any surplus going to pay off creditors," adds Holmes. "Any income earned during the bankruptcy order can be claimed against for an income repayment order for up to three years." That's assuming the bankrupt is able to earn an income. In professions such as the law, bankruptcy could mean losing your licence.
All insolvencies stay on your credit file for at least six years. As a result, bankrupts are likely to find it particularly tough to get credit for an extended period after being discharged - the best case is they will have to pay substantially higher rates of interest. For these reasons, the CCCS says bankruptcy only makes sense for a small number of people with debt problems - of the cases it handled in the first quarter of the year, it recommended bankruptcy to just 12 per cent of borrowers. "If you're a young person without much in the way of assets, it can make sense," says Walker. "But bankruptcy does still have very serious implications."
A better bet, for many borrowers, may be to come to an agreement with creditors - either an informal pact to make fixed repayments over a longer period, or an individual voluntary arrangement (IVA), a legally-binding deal that is less serious than full-blown bankruptcy.
The downside to IVAs versus bankruptcy is that it is likely to take longer to be clear of your debt - five-year plans are most common. But borrowers retain much more control of their assets, and their professional status is less likely to be affected. And the impact on your credit rating will also be less disastrous.
Ways to deal with a debt crisis
* Debt management plans: This is the least formal way to get on top of your borrowing. The idea is to persuade your creditors to agree that you will repay what you owe over a longer time period with affordable fixed payments each month.
* You can try to negotiate with creditors yourself, by writing to them to propose a repayment schedule. Alternatively, groups such as Citizens Advice and the Consumer Credit Counselling Service will negotiate on your behalf with your unsecured creditors , usually for free. Bear in mind that you can't force lenders to agree to this sort of scheme. And the agreement is not legally binding however and creditors often will not agree to any proposals to stop interest and charges.
* Individual voluntary arrangement (IVA): An IVA is a more formal version of the first option, and requires an authorised insolvency practitioner to arrange and oversee the deal. All your lenders can be forced to accept the terms of the IVA if 75 per cent of creditors by value of the total debt agree.
* Insolvency practitioners charge a fee for their services, which will add to your debt however they will be able to negotiate a comnplete freeze in interest charges.
* Bankruptcy: This is the most extreme option. Your assets - including property - are divided up between your creditors, with the insolvency courts ruling on who gets what. You may be discharged after a year, leaving you debt free, but the bankruptcy remains on your credit file for six years, with serious implications for your finances.
http://myvesta.org.uk
|
15 June 2006
Does The UK Consumer Worry About Everything Other Than Debt?
Research by Prudential's risk report asserts that UK consumers are more worried about terror threats, asian bird flu and super bugs rather than the everyday reality of household debt.
"An era of fear and panic has gripped the nation and it is entirely unfounded". You are far more likely to lose your job and struggle with debts than be a victim of international terror attacks or superbugs," said Paul Cowman, head of protection at Prudential.
"Many people are focusing on unlikely events but not worrying about how they would meet the payments on their mortgage if they were to become seriously ill or lose their job."
Almost two Britons in five (38 per cent) are concerned about possible terror attacks, with 18 per cent worried about superbugs and a similar number afraid of bird flu.
But while concerns about these things are running high, little attention is being paid to more mundane concerns.
Just one person in ten worries about personal debt or bankruptcy and just one Briton in eight is concerned about their job security.
And these are areas where UK residents can act effectively to protect themselves, by taking out relevant insurance policies.
Dr Peter Marsh, of the Social Issues Research Centre, commented on the findings.
"Today we have little to fear and our lives are rarely at serious risk yet we seem compelled to worry, perhaps even to invent things about which we can fret and express anxiety," he said.
"The result is that we lose a proper focus on risk and get diverted away from real threats.
Telegraph
http://myvesta.org.uk
"An era of fear and panic has gripped the nation and it is entirely unfounded". You are far more likely to lose your job and struggle with debts than be a victim of international terror attacks or superbugs," said Paul Cowman, head of protection at Prudential.
"Many people are focusing on unlikely events but not worrying about how they would meet the payments on their mortgage if they were to become seriously ill or lose their job."
Almost two Britons in five (38 per cent) are concerned about possible terror attacks, with 18 per cent worried about superbugs and a similar number afraid of bird flu.
But while concerns about these things are running high, little attention is being paid to more mundane concerns.
Just one person in ten worries about personal debt or bankruptcy and just one Briton in eight is concerned about their job security.
And these are areas where UK residents can act effectively to protect themselves, by taking out relevant insurance policies.
Dr Peter Marsh, of the Social Issues Research Centre, commented on the findings.
"Today we have little to fear and our lives are rarely at serious risk yet we seem compelled to worry, perhaps even to invent things about which we can fret and express anxiety," he said.
"The result is that we lose a proper focus on risk and get diverted away from real threats.
Telegraph
http://myvesta.org.uk
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07 June 2006
So Just How Joined Up Is Debt Advice In The UK?
The Government has been vocal about the fact that is keen to promote a joined up approach to the provision of debt advice in the UK. However it would appear that the reality of the situation is that this ambition is a very long way from the actuality of debt advice in the UK today.
Indeed the various providers of debt advice and management are hardly best of pals. Providers of consumer funded debt management plans assert that creditor funded debt management companies are not impartial as they ultimately rely on creditors to survive. Creditor funded organisations proclaim that they are independant however and bicker about the fees that are charged to consumers by commercial debt management organisations.
Within the creditor funded sector the grumbling continues as charitable organisations assert that other debt management organisations should operate from a starting point of being 'not for profit' and should not be set up as commercial ventures designed to make shareholders money. Indeed there are notably distinct camps within which debt advice allegiances have been made and bed partners have been chosen.
It is interesting to note that the indebted consumer simply wants to work with organisations that can provide the best advice that will enable them to get out of debt as quickly and and painlessly as possible. The indebted consumer cares not one jot about the squabblings of various organisations seeking to protect and grow market share and voice. They simply care about getting good help in order to get out of debt.
http://www.myvesta.org.uk
Indeed the various providers of debt advice and management are hardly best of pals. Providers of consumer funded debt management plans assert that creditor funded debt management companies are not impartial as they ultimately rely on creditors to survive. Creditor funded organisations proclaim that they are independant however and bicker about the fees that are charged to consumers by commercial debt management organisations.
Within the creditor funded sector the grumbling continues as charitable organisations assert that other debt management organisations should operate from a starting point of being 'not for profit' and should not be set up as commercial ventures designed to make shareholders money. Indeed there are notably distinct camps within which debt advice allegiances have been made and bed partners have been chosen.
It is interesting to note that the indebted consumer simply wants to work with organisations that can provide the best advice that will enable them to get out of debt as quickly and and painlessly as possible. The indebted consumer cares not one jot about the squabblings of various organisations seeking to protect and grow market share and voice. They simply care about getting good help in order to get out of debt.
http://www.myvesta.org.uk
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06 June 2006
Time To Get Tough On Water Bill Dodgers
Individuals who refuse to settle their water supply bills should have their supply drastically restricted, an influential Lords committee has said.
A report from the Science and Technology Committee says about 15% of people are currently not paying their bills, safe in the knowledge they will not have their supply cut off.
The peers' report also calls for water meters and more action to cut leaks.
They say UK water policy is generally "a muddle" with the failure to consider water supply implications of policies such as huge housebuilding programmes.
In particular they say John Prescott's old department failed to allow for water scarcity when planning new homes.
Committee chairman Lord Selborne said the committee, investigating water management, had been "shocked" at the numbers of people who do not pay their water bills, which lead to water firms writing off £960m a year.
He said many people "know they can't be cut off, so there's no reason to pay their bill... it means that every one of us pays an extra £10 to cover their bill".
The report calls for action against those people who can afford to pay their water bills, but refuse to do so.
Lord Selborne explained that a device was in use in Australia which allowed enough water to satisfy the basic health and safety requirements but nothing more.
Leaks
The peers' say they were concerned that the water watchdog Ofwat had not taken the problem of shortages seriously enough.
"Our key message is that the government must work much harder to integrate environmental, social and economic interests in the management of water," their report said.
HAVE YOUR SAY
We need more homes to help first time buyers and cut overcrowding but good planning means we can improve water efficiency at the same time
Yvette Cooper
Housing and planning minister
Send us your views
The committee wants a major cut in high leak levels from water company pipes.
Lord Selborne said his committee was given incorrect information by the government about what the increased water demand might be in areas of housing development such as the Thames Gateway.
He said former Environment Minister Elliot Morley wrongly told the committee increased water consumption would be just 0.1%.
That was a charge denied on Tuesday by Housing and Planning Minister Yvette Cooper who said there was a misunderstanding about what Mr Morley had told the peers.
Planning
Lord Selborne said there was a lot of consultation going on now about the issue, but he said the committee would have liked to see it happening earlier.
"It takes a long time to plan new infrastructure," he told the BBC.
"If you're going to put 200,000 houses into an area, you've got to start planning the reservoirs, the pipes, the cleaning plants for the water, everything like that at least 10, probably 15 years ahead, and of course in this country we're not good at long-term planning.
It is deeply irresponsible to build houses unless water efficiency comes as standard, it is as simple as that
Peter Ainsworth
Conservative environment spokesman
"I'm afraid the government doesn't think that far ahead."
He added that the issue of water shortages required everyone to pull together - and that included people not moaning when roads were dug up to repair leaking water pipes.
In their report, peers urged the government to make it easier for water companies to have universal metering of customers and at the same time provide help through the benefits system for people struggling to pay their bills.
Conservative environment spokesman Peter Ainsworth said: "Everyone, except Mr Prescott, is aware that the South East is suffering from water shortages.
"It is deeply irresponsible to build houses unless water efficiency comes as standard, it is as simple as that."
'More homes needed'
Ms Cooper said the growing and ageing population meant a rising demand for water and for new homes.
"We need more homes to help first time buyers and cut overcrowding but good planning means we can improve water efficiency at the same time," she said.
Meanwhile a spokesman for the Home Builders Federation said: "It is crucial to recognise that houses do not use water - people do - and it is the people who are living and working in the South East now who need homes."
He acknowledged that measures were needed to better manage water supply but insisted new homes were "part of the solution, not the problem".
Tom Le Quesne of environmental group WWF said public water supply was on a "knife-edge", particularly in the South East.
"We can resolve the problem; there's a whole range of measures we can take," he told BBC Five Live.
"First and most important is that any new-build housing should be built to the highest standard of water efficiency."
BBC News
http://www.myvesta.org.uk
A report from the Science and Technology Committee says about 15% of people are currently not paying their bills, safe in the knowledge they will not have their supply cut off.
The peers' report also calls for water meters and more action to cut leaks.
They say UK water policy is generally "a muddle" with the failure to consider water supply implications of policies such as huge housebuilding programmes.
In particular they say John Prescott's old department failed to allow for water scarcity when planning new homes.
Committee chairman Lord Selborne said the committee, investigating water management, had been "shocked" at the numbers of people who do not pay their water bills, which lead to water firms writing off £960m a year.
He said many people "know they can't be cut off, so there's no reason to pay their bill... it means that every one of us pays an extra £10 to cover their bill".
The report calls for action against those people who can afford to pay their water bills, but refuse to do so.
Lord Selborne explained that a device was in use in Australia which allowed enough water to satisfy the basic health and safety requirements but nothing more.
Leaks
The peers' say they were concerned that the water watchdog Ofwat had not taken the problem of shortages seriously enough.
"Our key message is that the government must work much harder to integrate environmental, social and economic interests in the management of water," their report said.
HAVE YOUR SAY
We need more homes to help first time buyers and cut overcrowding but good planning means we can improve water efficiency at the same time
Yvette Cooper
Housing and planning minister
Send us your views
The committee wants a major cut in high leak levels from water company pipes.
Lord Selborne said his committee was given incorrect information by the government about what the increased water demand might be in areas of housing development such as the Thames Gateway.
He said former Environment Minister Elliot Morley wrongly told the committee increased water consumption would be just 0.1%.
That was a charge denied on Tuesday by Housing and Planning Minister Yvette Cooper who said there was a misunderstanding about what Mr Morley had told the peers.
Planning
Lord Selborne said there was a lot of consultation going on now about the issue, but he said the committee would have liked to see it happening earlier.
"It takes a long time to plan new infrastructure," he told the BBC.
"If you're going to put 200,000 houses into an area, you've got to start planning the reservoirs, the pipes, the cleaning plants for the water, everything like that at least 10, probably 15 years ahead, and of course in this country we're not good at long-term planning.
It is deeply irresponsible to build houses unless water efficiency comes as standard, it is as simple as that
Peter Ainsworth
Conservative environment spokesman
"I'm afraid the government doesn't think that far ahead."
He added that the issue of water shortages required everyone to pull together - and that included people not moaning when roads were dug up to repair leaking water pipes.
In their report, peers urged the government to make it easier for water companies to have universal metering of customers and at the same time provide help through the benefits system for people struggling to pay their bills.
Conservative environment spokesman Peter Ainsworth said: "Everyone, except Mr Prescott, is aware that the South East is suffering from water shortages.
"It is deeply irresponsible to build houses unless water efficiency comes as standard, it is as simple as that."
'More homes needed'
Ms Cooper said the growing and ageing population meant a rising demand for water and for new homes.
"We need more homes to help first time buyers and cut overcrowding but good planning means we can improve water efficiency at the same time," she said.
Meanwhile a spokesman for the Home Builders Federation said: "It is crucial to recognise that houses do not use water - people do - and it is the people who are living and working in the South East now who need homes."
He acknowledged that measures were needed to better manage water supply but insisted new homes were "part of the solution, not the problem".
Tom Le Quesne of environmental group WWF said public water supply was on a "knife-edge", particularly in the South East.
"We can resolve the problem; there's a whole range of measures we can take," he told BBC Five Live.
"First and most important is that any new-build housing should be built to the highest standard of water efficiency."
BBC News
http://www.myvesta.org.uk
|
04 June 2006
Britians Streets Of Debt
A new BBC programme called Britains Streets Of Debt is starting this week on BBC1 at 9.15 am to 10.00am. The series is on from Monday to Friday and is a broadcasts a close look at various debt problems that are common in the UK today.
Show Titles:
Monday:
The Whistle Blower. For the first time on British television, a senior banking executive reveals how high street banks deliberately target their customers and push borrowing.
Tuesday:
Borrowers Beware. Repossessions have gone up 70% in the last year, as many of the people buying into the home owning dream have ended up borrowing more than they can afford.
Wednesday:
Easy Prey. Millions of Britain's elderly are up to their necks in debt and women over 60 are the fastest growing group of people seeking debt advice.
Thursday:
Losing It Online. Last year we gambled £53 billion and one million people bet regularly online.
Friday:
Going For Broke. Shiralee Doveston owes £9,000 and is desperate to go bankrupt but does not have the £310 administration fee.
Http://www.myvesta.org.uk
Show Titles:
Monday:
The Whistle Blower. For the first time on British television, a senior banking executive reveals how high street banks deliberately target their customers and push borrowing.
Tuesday:
Borrowers Beware. Repossessions have gone up 70% in the last year, as many of the people buying into the home owning dream have ended up borrowing more than they can afford.
Wednesday:
Easy Prey. Millions of Britain's elderly are up to their necks in debt and women over 60 are the fastest growing group of people seeking debt advice.
Thursday:
Losing It Online. Last year we gambled £53 billion and one million people bet regularly online.
Friday:
Going For Broke. Shiralee Doveston owes £9,000 and is desperate to go bankrupt but does not have the £310 administration fee.
Http://www.myvesta.org.uk
|
03 June 2006
Going Bankrupt Is Not The Easy Way Out
Today, personal bankruptcies in Britain have surged to a record high with increasing numbers of graduates and professional workers overwhelmed by massive personal debts. However, declaring bankruptcy often does more harm than good.
On Friday new figures from the Government showed that the number of people becoming insolvent during the first three months of 2006 soared to its highest level since records began. A total of 23,251 people in England and Wales became insolvent during the quarter, 73 per cent more than in the same period last year.
At the same time, the number of people taking out individual voluntary arrangements (IVAs), under which they agree to repay a set amount each month in exchange for interest on their debts being frozen, leapt to 7,961 - an increase of 141 per cent on the first quarter of 2005.
Although more people are buckling under financial pressure, experts also reckon that recent legal changes have made bankruptcy and other forms of insolvency more attractive. Under the 2002 Enterprise Act, which came into force two years ago, a bankrupt's debts can be discharged after just one year, compared with the previous three-year term.
But people who pile on debts thinking bankruptcy or an IVA could be an easy way out are in for a shock. Even when discharged after just a year, a bankruptcy record will stay on a credit file for a further five years, making it difficult if not impossible to obtain even a mobile phone contract, let alone a bank account or mortgage.
"Although bankrupts are now discharged within a year, information about bankruptcies stays on your credit report for at least six years - as does information about an IVA," says James Jones, the consumer affairs manager at Experian, the credit rating agency. "Even after your bankruptcy or IVA has ended, the fact that you became bankrupt or entered into an IVA in the past may still stop you getting credit. It may also stop you getting the best rates."
Mark Ward, the head of consumer services at Call Credit, another rating agency, says: "Bankruptcy seems an attractive option because you are discharged after just a year, but there are massive repercussions for years afterwards."
In the past most people were forced into bankruptcy because their business failed, they got divorced or they lost their jobs. Today, it is being caused by people's spending running out of control, with growing numbers of teachers, police officers, army personnel and young professional graduates among those left saddled with huge debts.
"Years ago people ran into debt problems via divorce or having a business that failed. Now it is lifestyle reasons such as accruing debts, having paid for holidays or home improvements. People having problems repaying a £20,000 debt accrued for landscape gardening is not unusual," says Greg Mullarkey of W3 Debt Solutions. "We are also seeing more people going bankrupt in their twenties than ever before."
Mullarkey tells the tale of a married teacher and a prison officer who had racked up £245,000 of unsecured debt between them and were facing monthly payments of £3,000 excluding their mortgage just to keep the creditors at bay.
"They were literally suicidal having swapped one credit card for another. Because they never missed a minimum payment they never had a problem getting more credit. Their monthly bill has been cut from £3,000 a month to around £680 under an individual voluntary arrangement."
Many graduates are using IVAs to get rid of outstanding student loans because the Government has closed a loophole in the bankruptcy laws that allowed student loans to be written off. Under an IVA the Student Loans Company may agree to write off some of the debt. "The Student Loans Company can decline an IVA, but they often take a pragmatic view," says James Dean of Debtmatters.
Again, experts warn graduates not to be hasty because of the repercussions of writing off a debt. Credit rating agencies say mortgage lenders often ask if you have ever been bankrupt, so even if the order is no longer shown on your credit report you will have to declare past bankruptcy to the lender. Many landlords and employers also check your credit report for court judgements, bankruptcies and IVAs - although they cannot see your credit account information.
So declaring yourself bankrupt or entering into an IVA might also make it difficult for you to rent a flat or get the job you want, particularly if it is a financially sensitive position. "It is essential for people considering bankruptcy or an IVA as a solution to their debt problems to speak to a professional debt adviser before reaching a decision and to consider the serious implications such a decision will have," adds Jones.
If your debts are threatening to get out of control you should, in any case, contact one of the reputable debt advice agencies. Among other things, debt advisers will help you prioritise repayments, thus maximising the chances of avoiding your home being repossessed.
Bankruptcy and IVAs are often the last resort and they may not be necessary. Debt Free Direct says one third of its customers enter debt repayment plans, which are informal arrangements with creditors.
The key is to get advice - you may be better off declaring yourself bankrupt than opting for an IVA, for example. Tony Supperstone, the president of R3, the trade body for insolvency specialists, agrees. "If you have no assets and no income then bankruptcy is probably the best option. But if you are in a professional career you may lose your livelihood by going bankrupt - solicitors and accountants, for instance, will be kicked out. So an IVA may be a better option."
The Telegraph
http://myvesta.org.uk
On Friday new figures from the Government showed that the number of people becoming insolvent during the first three months of 2006 soared to its highest level since records began. A total of 23,251 people in England and Wales became insolvent during the quarter, 73 per cent more than in the same period last year.
At the same time, the number of people taking out individual voluntary arrangements (IVAs), under which they agree to repay a set amount each month in exchange for interest on their debts being frozen, leapt to 7,961 - an increase of 141 per cent on the first quarter of 2005.
Although more people are buckling under financial pressure, experts also reckon that recent legal changes have made bankruptcy and other forms of insolvency more attractive. Under the 2002 Enterprise Act, which came into force two years ago, a bankrupt's debts can be discharged after just one year, compared with the previous three-year term.
But people who pile on debts thinking bankruptcy or an IVA could be an easy way out are in for a shock. Even when discharged after just a year, a bankruptcy record will stay on a credit file for a further five years, making it difficult if not impossible to obtain even a mobile phone contract, let alone a bank account or mortgage.
"Although bankrupts are now discharged within a year, information about bankruptcies stays on your credit report for at least six years - as does information about an IVA," says James Jones, the consumer affairs manager at Experian, the credit rating agency. "Even after your bankruptcy or IVA has ended, the fact that you became bankrupt or entered into an IVA in the past may still stop you getting credit. It may also stop you getting the best rates."
Mark Ward, the head of consumer services at Call Credit, another rating agency, says: "Bankruptcy seems an attractive option because you are discharged after just a year, but there are massive repercussions for years afterwards."
In the past most people were forced into bankruptcy because their business failed, they got divorced or they lost their jobs. Today, it is being caused by people's spending running out of control, with growing numbers of teachers, police officers, army personnel and young professional graduates among those left saddled with huge debts.
"Years ago people ran into debt problems via divorce or having a business that failed. Now it is lifestyle reasons such as accruing debts, having paid for holidays or home improvements. People having problems repaying a £20,000 debt accrued for landscape gardening is not unusual," says Greg Mullarkey of W3 Debt Solutions. "We are also seeing more people going bankrupt in their twenties than ever before."
Mullarkey tells the tale of a married teacher and a prison officer who had racked up £245,000 of unsecured debt between them and were facing monthly payments of £3,000 excluding their mortgage just to keep the creditors at bay.
"They were literally suicidal having swapped one credit card for another. Because they never missed a minimum payment they never had a problem getting more credit. Their monthly bill has been cut from £3,000 a month to around £680 under an individual voluntary arrangement."
Many graduates are using IVAs to get rid of outstanding student loans because the Government has closed a loophole in the bankruptcy laws that allowed student loans to be written off. Under an IVA the Student Loans Company may agree to write off some of the debt. "The Student Loans Company can decline an IVA, but they often take a pragmatic view," says James Dean of Debtmatters.
Again, experts warn graduates not to be hasty because of the repercussions of writing off a debt. Credit rating agencies say mortgage lenders often ask if you have ever been bankrupt, so even if the order is no longer shown on your credit report you will have to declare past bankruptcy to the lender. Many landlords and employers also check your credit report for court judgements, bankruptcies and IVAs - although they cannot see your credit account information.
So declaring yourself bankrupt or entering into an IVA might also make it difficult for you to rent a flat or get the job you want, particularly if it is a financially sensitive position. "It is essential for people considering bankruptcy or an IVA as a solution to their debt problems to speak to a professional debt adviser before reaching a decision and to consider the serious implications such a decision will have," adds Jones.
If your debts are threatening to get out of control you should, in any case, contact one of the reputable debt advice agencies. Among other things, debt advisers will help you prioritise repayments, thus maximising the chances of avoiding your home being repossessed.
Bankruptcy and IVAs are often the last resort and they may not be necessary. Debt Free Direct says one third of its customers enter debt repayment plans, which are informal arrangements with creditors.
The key is to get advice - you may be better off declaring yourself bankrupt than opting for an IVA, for example. Tony Supperstone, the president of R3, the trade body for insolvency specialists, agrees. "If you have no assets and no income then bankruptcy is probably the best option. But if you are in a professional career you may lose your livelihood by going bankrupt - solicitors and accountants, for instance, will be kicked out. So an IVA may be a better option."
The Telegraph
http://myvesta.org.uk
|
Debt Statistics and Figures - Compiled 1st June 2006
Total UK personal debt
Total mortgage borrowing in the UK will have passed the £1 trillion (£1,000 billion) in May 2006, according to the Council of Mortgage Lenders.
At the end of April 2006 the total UK personal debt was £1,191bn. The growth rate remains strong at 10.2% for the previous 12 months which equates to an increase of £100bn.
Total secured lending on homes in April 2006 was £999.2bn. This has increased 10.8% in the last 12 months.
Britain's personal debt is increasing by ~ £1 million every four minutes.
Plastic card / Personal Loans: 282 plastic transactions took place every second in the UK in 2005.
Debit cards accounted for 37% of all retail spend in 2005, ahead of cash at 34%. Plastic cards were used for 63% of all UK retail spending last year
Total credit card debt in April 2006 was £56.0bn.
According to the BBA the proportion of credit card balances bearing interest was 74.9% in March 2006.
The average interest rate on credit card lending is currently 15.5 %, around 11 percentage points above base rate.
39% Brits overspend on their debit cards on day-to-day purchases and the most common reason is because psychologically, they feel they are not spending any money, according to National Savings and Investments’ (NS&I) latest Quarterly Savings Survey.
A new study by uSwitch highlights serious failures in the lending practices of UK banks when issuing credit cards. With UK credit card debt standing at £56.35 billion, and UK consumers accounting for two-thirds of total credit card debt in the whole of the EU, one of the most shocking statistics revealed by the survey is that nine out of ten credit card borrowers were issued cards without the lender carrying out any checks to verify that they could afford to repay the debt. The study reveals that the majority of people (88 per cent) who successfully applied for a credit card during the last year were not asked for proof of their annual income beyond the figures stated on the application, and 95 per cent were not asked to show evidence of their outgoings in order to provide a true picture of affordability.
Plastic cards in issue were 190m in 2004. This works out at an average of 4.1 plastic cards for every adult in the UK.
There are more credit cards in the UK than people according to APACS. At the end of 2004 there were 74.3m credit and charge cards in the UK compared with around 59 million people in the country.
Servicing Debt: Citizens Advice Bureau (CAB) dealt with 1,128,000 debt enquiries last year. In the last decade the number of consumer debt problems dealt with by CAB has increased 118%. CAB clients have an average of £13,000 of debt which is nearly 17.5 times their monthly income. On average it would take CAB clients 77 years to pay back their debts in full.
The average person has just £27 a week left to live on after meeting all their bills and essential outgoings, a survey has showed. Recent rises in council tax and utility bills, combined with high levels of debt, have left the average Briton with £954 worth of monthly commitments to pay from an average income of £1,070, according to Combined Insurance.
Government figures showed 23,351 people became insolvent between January and March - 73% more than in the first quarter of 2005 and 12% higher than in the final three months of last year. At the same time, the number of homes threatened with repossession was up 29% on the same period last year, with over 33,000 actions handled by the courts, according to figures from the Department of Constitutional Affairs.
According to a report by PricewaterhouseCoopers Individual Voluntary Arrangements (IVAs) have doubled in number in 2005, with someone entering an IVA every seven minutes of each working day.
The rate of increase is likely to continue throughout 2006. People are simply spending too much. 83% of those surveyed said expenditure in excess of income was the principal cause of failure, not loss of income or occupation, or marital breakdown. The young are increasingly turning to IVAs as a way out of debt, with 56% being under 40, and over a fifth under 30.
The average debt of a client coming to Consumer Credit Counselling Service (CCCS) for advice is now £32,000. The number of people earning more than £30,000 a year who are asking them for help has risen by 257% in the past three years.
More than 105,000 people telephoned the National Debt Line between January and April, a rise of more than 30 per cent on last year. The helpline had been so 'inundated' by desperate callers that it had been able to deal with just 32,000 cases.
According to the Council of Mortgage Lenders (CML) total household debt has grown sharply as a percentage of disposable income over the past decade and currently stands close to 150%. At the end of 2005, the secured debt to income ratio was 121%, compared to 80% in 1995. And the unsecured debt to income ratio was 24%, almost double that of 10 years ago.
According to a report commissioned by One Advice, nearly 2 million people in the UK have unsecured debts in excess of £10,000. About half a million have unsecured debt higher than £20,000. People in the lower middle-aged bracket (35 to 44-year-olds) were the most likely to have substantial debts that weren’t secured, with some 50,000 individuals in that demographic owing more than £10,000.
Two million households are living on a financial knife-edge, susceptible to an economic downturn or changes in personal circumstances, according to a recent Financial Services Authority (FSA) report. A further half million households are already in serious financial difficulty paying bills and meeting debts, the report found.
Four million people say they always run out of money at the end of the week or month.
14 million adults (35%) are relying on their overdrafts to get by each month; 3.5m are permanently overdrawn, while two million workers start the month in their overdraft, even after they have been paid.
Three quarters (74%) of British couples find money the hardest subject to talk about with their partners according to a recent survey by the Financial Services Authority (FSA). They also found that over a quarter (27%) of couples regularly argue when they try to discuss their finances; about a third (32%) of couples lie to their partners about how much they spend on their credit cards; over a third (35%) of British couples are kept awake at night worrying about their money situation
One in 10 single people says their finances are out of control whilst 41% have already suffered a financial crisis at some point in their lives, compared to 28% of married people
Research from AXA shows money worries are a significant cause of worry, anxiety and stress according to GP and leading mental health expert, Dr Roger Henderson, who recently published a paper identifying the condition Money Sickness Syndrome (MSS). Almost half (43%) of the UK adult population is affected by money worries and have experienced MSS symptoms. 3.8m people admit money worries have caused them to take time off work and more than 10.76m people suffer relationship problems because of money worries, with almost one in five complaining of a sex life slump.
Grant Thornton says that UK consumers are the most over-indebted in Europe.
A quarter of those in debt are receiving treatment for stress, depression and anxiety from their GP.
Young people (under 30): Young people have the highest level of unsecured debt in the UK, with the average person under 30 owing nearly £8,000, recent figures have revealed. People aged between 18 and 29 owe about £7,718 each through credit cards, overdrafts and loans, the equivalent of 36 per cent of their total household income, according to Alliance & Leicester. Student loans were found to make up 46% of this figure.
.
The proportion of bankruptcies among the 18 to 29-age group has more than doubled in the last 4 years. It has jumped from 7.9% in 2001 to 18.7% last year.
A recent FSA report highlighted:
* 29% of 16-24 year olds said they would not know how to prepare and manage a weekly budget;
* 19% of 22-24 year olds have short-term debts over £5,000;
* 62% of young people said if they got into money trouble or debt they would not be able to name any advice or support services they could turn to for advice
* One in five students dropped out of courses; Of undergraduates who considered dropping out financial difficulty was a strong factor for 34.4%;
* 94% of 16 year olds believe it is important to know how to manage money; only 53% have been taught how to
More than half (59%) of 16-24s admit they go over budget when using a debit card and 41% of 25-34 admit to overspending on their debit cards.
Pensioners / Pensions: Research from Scottish Widows Bank reveals one in six (over 1 million), pensioner homeowners in the UK have an outstanding mortgage on their home – each with an average debt of £45,313 – making a nationwide debt of almost £47 billion. What is more, one in three owe more than £50,000 and one in ten more than £100,000 putting increased pressure on retirement income.
Over 8 million British workers (21%) don’t have any pension provision according to a recent report issued by Virgin Money. This is despite continued warnings from the Government and the pension industry of the need to save now to avoid inadequate income at retirement.
One in three households are now liable to have to pay inheritance tax on their estate when they die following soaring property price growth. An estimated 8.2 million households own property and other assets that are worth more than the current £275,000 inheritance tax threshold, according to life insurer Scottish Widows.
According to the Prudential one in five pensioners struggle to make ends meet. 17% of OAPs live on under £5,000 a year. A third of pensioners live on under £7,500 per year. Nearly one in five pensioners goes back to work after retiring.
Housing: According to the Department for Communities and Local Government (DCLG) the average house price in the UK in March 2006 stood at £186,519 (£195,001 in England). UK annual house price inflation rose by 3.3%. Annual house price inflation in London was 4.0%.
Note: the weightings used by DCLG were changed for the February 2006 figures.
The number of homes sold in England and Wales has soared by 37% in the space of a year, according to the Land Registry.
Gross mortgage lending totalled £25.1 billion in April - the highest April lending figure on record according to the latest data from the Council of Mortgage Lenders (CML). Lending was 16% higher than in April 2005 and marks six months of record lending figures.
According to The National Association of Estate Agents (NAEA) the average time between instruction and completion is 17.1 weeks.
The average loan approval for house purchases in April increased to £ £140,400, some 9% higher than a year earlier.
Nationwide said that house price growth was sluggish for the second month in a row in May with prices rising just 0.2% in the month, marginally up on the 0.1% increase in April but down significantly on March’s strong 1.1% gain. The annual rate of house price growth slowed slightly in May to 4.7%. This supports the figures from the Land Registry for January – March 2006 which showed an annual growth of 5.05% over the same period in 2005.
The amount of unmortgaged property wealth held by UK home-owners currently stands at £3.6 trillion. Housing equity is the largest component of total wealth held by people living in the UK. Mortgage lending has helped fund a dramatic expansion of home-ownership, from 60% to 70% of the population during the last 20 years. Roughly 40% of the housing stock is owned outright, mainly by retired and older middle-aged households,
The cost of owning and running a house rose by 7% in the financial year 2004/05, more than three times the rate of CPI inflation, according to research by Halifax. Total annual housing costs increased to £6,366 in 2004/05. For the average UK homeowner, housing expenses take up 17.5% of their disposable income
Housing 1st Time Buyers: The average house price in the UK in March 2006 for first time buyers now stands at £145,214 which is an annual increase of 4.2%. (Note: the weightings used were changed for the February 2006 figures. This has had a large impact on the reported average house price for first time buyers)
According to the National Association of Estate Agencies (NAEA) the first time buyer share of the market decreased to 7.9% in April. This is considerably lower than the same period last year when first time buyers’ share of the market was at a high of 22.3%.
In the UK, the average deposit required by first time buyers in Q1 2006 was 17% of the purchase price. Based on repayment loans, in the UK, repayments as a % of household income for first time buyers were 21% in Q1 2006.
Bradford & Bingley research shows the number of parents giving, or lending, their children the deposit for their first home has doubled in the last year to 42%. One in ten first time buyers receiving assistance are buying jointly with their parents, or relatives.
High Street Spending: Parents typically spend £165,668 on raising a child from birth to the age of 21, according to friendly society Liverpool Victoria's most recent annual Cost of a Child survey. This works out at £7,889 a year and represents a rise of 7.8 per cent on last year's survey, more than three times the rate of inflation, and up 18 per cent on the 2003 survey.
The cost of running the average new car has grown to nearly £5,000 a year, or £14 a day, according to the latest RAC Cost of Motoring Index.
The average wedding costs around £19,595. 45% of couples - some 117,000 nationwide - have no financial planning to pay for the big day, a study by stockbrokers Brewin Dolphin Securities found.
Money Education / Financial Literacy: 25 million Brits (56%) spend 60 minutes or less per week reviewing their finances, with the average amount of time we dedicate as a nation reaching only 1 hour 19 minutes – the least amount of time in Europe, according to a study from Scottish Widows. We spend nearly twice as long (2 hours 11 minutes) chatting on the phone or texting each week, and 6 times as long (8 hours 4 minutes) watching TV.
A quarter of Brits (25%) have no idea how much they spend in a week, and a similar number (26%) have no idea of their monthly cash flow. This lack of knowledge extends into other financial aspects of life. Only half (51%) the population know the balance on their credit cards and nearly half (46%) have no idea what interest rates they receive on their savings or are paying on their accounts and debts.
Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink. With rising personal debt levels in Britain, and a lack of long-term savings, better money management seems a pressing issue.
Nearly four out of five people do not know that APR refers to the interest and other costs of a loan, four in ten admit they do not understand mortgages or ISAs, and a third lack confidence in their financial affairs. These are some of the results of a survey conducted recently by Mori. One in five did not understand the concept of inflation. Nearly a third did not know that insurance products are designed to protect their owners from unforeseen events. Only 30 per cent could calculate four per cent interest on £2,000 over two years.
Savings / Pension: Half the population (52%) could survive financially for just 17 days, should they suffer an unexpected loss of income, according to research by Combined Insurance.
FSA research shows that 81% of the pre-retired think that a state pension will not provide them with the standard of living they hope for in retirement. Nevertheless, 37% of these people have not made any additional pension provision.
The majority of people in the UK are not planning ahead sufficiently, and are likely to be storing up problems for the future. 39% of people say they tend to live for today and let tomorrow take care of itself. In the last three years, 28% of people have experienced a large unexpected drop in income, and 21% have faced a large unexpected expense. 70% have made no personal provision to face a drop in income, and 55% do not think they have sufficient provision to face an unexpected expense.
According to the latest quarterly National Savings and Investment survey almost half of Brits (45%) do not saving regularly.
Compiled by Richard Talbot of Credit Action
http://www.myvesta.org.uk
Total mortgage borrowing in the UK will have passed the £1 trillion (£1,000 billion) in May 2006, according to the Council of Mortgage Lenders.
At the end of April 2006 the total UK personal debt was £1,191bn. The growth rate remains strong at 10.2% for the previous 12 months which equates to an increase of £100bn.
Total secured lending on homes in April 2006 was £999.2bn. This has increased 10.8% in the last 12 months.
Britain's personal debt is increasing by ~ £1 million every four minutes.
Plastic card / Personal Loans: 282 plastic transactions took place every second in the UK in 2005.
Debit cards accounted for 37% of all retail spend in 2005, ahead of cash at 34%. Plastic cards were used for 63% of all UK retail spending last year
Total credit card debt in April 2006 was £56.0bn.
According to the BBA the proportion of credit card balances bearing interest was 74.9% in March 2006.
The average interest rate on credit card lending is currently 15.5 %, around 11 percentage points above base rate.
39% Brits overspend on their debit cards on day-to-day purchases and the most common reason is because psychologically, they feel they are not spending any money, according to National Savings and Investments’ (NS&I) latest Quarterly Savings Survey.
A new study by uSwitch highlights serious failures in the lending practices of UK banks when issuing credit cards. With UK credit card debt standing at £56.35 billion, and UK consumers accounting for two-thirds of total credit card debt in the whole of the EU, one of the most shocking statistics revealed by the survey is that nine out of ten credit card borrowers were issued cards without the lender carrying out any checks to verify that they could afford to repay the debt. The study reveals that the majority of people (88 per cent) who successfully applied for a credit card during the last year were not asked for proof of their annual income beyond the figures stated on the application, and 95 per cent were not asked to show evidence of their outgoings in order to provide a true picture of affordability.
Plastic cards in issue were 190m in 2004. This works out at an average of 4.1 plastic cards for every adult in the UK.
There are more credit cards in the UK than people according to APACS. At the end of 2004 there were 74.3m credit and charge cards in the UK compared with around 59 million people in the country.
Servicing Debt: Citizens Advice Bureau (CAB) dealt with 1,128,000 debt enquiries last year. In the last decade the number of consumer debt problems dealt with by CAB has increased 118%. CAB clients have an average of £13,000 of debt which is nearly 17.5 times their monthly income. On average it would take CAB clients 77 years to pay back their debts in full.
The average person has just £27 a week left to live on after meeting all their bills and essential outgoings, a survey has showed. Recent rises in council tax and utility bills, combined with high levels of debt, have left the average Briton with £954 worth of monthly commitments to pay from an average income of £1,070, according to Combined Insurance.
Government figures showed 23,351 people became insolvent between January and March - 73% more than in the first quarter of 2005 and 12% higher than in the final three months of last year. At the same time, the number of homes threatened with repossession was up 29% on the same period last year, with over 33,000 actions handled by the courts, according to figures from the Department of Constitutional Affairs.
According to a report by PricewaterhouseCoopers Individual Voluntary Arrangements (IVAs) have doubled in number in 2005, with someone entering an IVA every seven minutes of each working day.
The rate of increase is likely to continue throughout 2006. People are simply spending too much. 83% of those surveyed said expenditure in excess of income was the principal cause of failure, not loss of income or occupation, or marital breakdown. The young are increasingly turning to IVAs as a way out of debt, with 56% being under 40, and over a fifth under 30.
The average debt of a client coming to Consumer Credit Counselling Service (CCCS) for advice is now £32,000. The number of people earning more than £30,000 a year who are asking them for help has risen by 257% in the past three years.
More than 105,000 people telephoned the National Debt Line between January and April, a rise of more than 30 per cent on last year. The helpline had been so 'inundated' by desperate callers that it had been able to deal with just 32,000 cases.
According to the Council of Mortgage Lenders (CML) total household debt has grown sharply as a percentage of disposable income over the past decade and currently stands close to 150%. At the end of 2005, the secured debt to income ratio was 121%, compared to 80% in 1995. And the unsecured debt to income ratio was 24%, almost double that of 10 years ago.
According to a report commissioned by One Advice, nearly 2 million people in the UK have unsecured debts in excess of £10,000. About half a million have unsecured debt higher than £20,000. People in the lower middle-aged bracket (35 to 44-year-olds) were the most likely to have substantial debts that weren’t secured, with some 50,000 individuals in that demographic owing more than £10,000.
Two million households are living on a financial knife-edge, susceptible to an economic downturn or changes in personal circumstances, according to a recent Financial Services Authority (FSA) report. A further half million households are already in serious financial difficulty paying bills and meeting debts, the report found.
Four million people say they always run out of money at the end of the week or month.
14 million adults (35%) are relying on their overdrafts to get by each month; 3.5m are permanently overdrawn, while two million workers start the month in their overdraft, even after they have been paid.
Three quarters (74%) of British couples find money the hardest subject to talk about with their partners according to a recent survey by the Financial Services Authority (FSA). They also found that over a quarter (27%) of couples regularly argue when they try to discuss their finances; about a third (32%) of couples lie to their partners about how much they spend on their credit cards; over a third (35%) of British couples are kept awake at night worrying about their money situation
One in 10 single people says their finances are out of control whilst 41% have already suffered a financial crisis at some point in their lives, compared to 28% of married people
Research from AXA shows money worries are a significant cause of worry, anxiety and stress according to GP and leading mental health expert, Dr Roger Henderson, who recently published a paper identifying the condition Money Sickness Syndrome (MSS). Almost half (43%) of the UK adult population is affected by money worries and have experienced MSS symptoms. 3.8m people admit money worries have caused them to take time off work and more than 10.76m people suffer relationship problems because of money worries, with almost one in five complaining of a sex life slump.
Grant Thornton says that UK consumers are the most over-indebted in Europe.
A quarter of those in debt are receiving treatment for stress, depression and anxiety from their GP.
Young people (under 30): Young people have the highest level of unsecured debt in the UK, with the average person under 30 owing nearly £8,000, recent figures have revealed. People aged between 18 and 29 owe about £7,718 each through credit cards, overdrafts and loans, the equivalent of 36 per cent of their total household income, according to Alliance & Leicester. Student loans were found to make up 46% of this figure.
.
The proportion of bankruptcies among the 18 to 29-age group has more than doubled in the last 4 years. It has jumped from 7.9% in 2001 to 18.7% last year.
A recent FSA report highlighted:
* 29% of 16-24 year olds said they would not know how to prepare and manage a weekly budget;
* 19% of 22-24 year olds have short-term debts over £5,000;
* 62% of young people said if they got into money trouble or debt they would not be able to name any advice or support services they could turn to for advice
* One in five students dropped out of courses; Of undergraduates who considered dropping out financial difficulty was a strong factor for 34.4%;
* 94% of 16 year olds believe it is important to know how to manage money; only 53% have been taught how to
More than half (59%) of 16-24s admit they go over budget when using a debit card and 41% of 25-34 admit to overspending on their debit cards.
Pensioners / Pensions: Research from Scottish Widows Bank reveals one in six (over 1 million), pensioner homeowners in the UK have an outstanding mortgage on their home – each with an average debt of £45,313 – making a nationwide debt of almost £47 billion. What is more, one in three owe more than £50,000 and one in ten more than £100,000 putting increased pressure on retirement income.
Over 8 million British workers (21%) don’t have any pension provision according to a recent report issued by Virgin Money. This is despite continued warnings from the Government and the pension industry of the need to save now to avoid inadequate income at retirement.
One in three households are now liable to have to pay inheritance tax on their estate when they die following soaring property price growth. An estimated 8.2 million households own property and other assets that are worth more than the current £275,000 inheritance tax threshold, according to life insurer Scottish Widows.
According to the Prudential one in five pensioners struggle to make ends meet. 17% of OAPs live on under £5,000 a year. A third of pensioners live on under £7,500 per year. Nearly one in five pensioners goes back to work after retiring.
Housing: According to the Department for Communities and Local Government (DCLG) the average house price in the UK in March 2006 stood at £186,519 (£195,001 in England). UK annual house price inflation rose by 3.3%. Annual house price inflation in London was 4.0%.
Note: the weightings used by DCLG were changed for the February 2006 figures.
The number of homes sold in England and Wales has soared by 37% in the space of a year, according to the Land Registry.
Gross mortgage lending totalled £25.1 billion in April - the highest April lending figure on record according to the latest data from the Council of Mortgage Lenders (CML). Lending was 16% higher than in April 2005 and marks six months of record lending figures.
According to The National Association of Estate Agents (NAEA) the average time between instruction and completion is 17.1 weeks.
The average loan approval for house purchases in April increased to £ £140,400, some 9% higher than a year earlier.
Nationwide said that house price growth was sluggish for the second month in a row in May with prices rising just 0.2% in the month, marginally up on the 0.1% increase in April but down significantly on March’s strong 1.1% gain. The annual rate of house price growth slowed slightly in May to 4.7%. This supports the figures from the Land Registry for January – March 2006 which showed an annual growth of 5.05% over the same period in 2005.
The amount of unmortgaged property wealth held by UK home-owners currently stands at £3.6 trillion. Housing equity is the largest component of total wealth held by people living in the UK. Mortgage lending has helped fund a dramatic expansion of home-ownership, from 60% to 70% of the population during the last 20 years. Roughly 40% of the housing stock is owned outright, mainly by retired and older middle-aged households,
The cost of owning and running a house rose by 7% in the financial year 2004/05, more than three times the rate of CPI inflation, according to research by Halifax. Total annual housing costs increased to £6,366 in 2004/05. For the average UK homeowner, housing expenses take up 17.5% of their disposable income
Housing 1st Time Buyers: The average house price in the UK in March 2006 for first time buyers now stands at £145,214 which is an annual increase of 4.2%. (Note: the weightings used were changed for the February 2006 figures. This has had a large impact on the reported average house price for first time buyers)
According to the National Association of Estate Agencies (NAEA) the first time buyer share of the market decreased to 7.9% in April. This is considerably lower than the same period last year when first time buyers’ share of the market was at a high of 22.3%.
In the UK, the average deposit required by first time buyers in Q1 2006 was 17% of the purchase price. Based on repayment loans, in the UK, repayments as a % of household income for first time buyers were 21% in Q1 2006.
Bradford & Bingley research shows the number of parents giving, or lending, their children the deposit for their first home has doubled in the last year to 42%. One in ten first time buyers receiving assistance are buying jointly with their parents, or relatives.
High Street Spending: Parents typically spend £165,668 on raising a child from birth to the age of 21, according to friendly society Liverpool Victoria's most recent annual Cost of a Child survey. This works out at £7,889 a year and represents a rise of 7.8 per cent on last year's survey, more than three times the rate of inflation, and up 18 per cent on the 2003 survey.
The cost of running the average new car has grown to nearly £5,000 a year, or £14 a day, according to the latest RAC Cost of Motoring Index.
The average wedding costs around £19,595. 45% of couples - some 117,000 nationwide - have no financial planning to pay for the big day, a study by stockbrokers Brewin Dolphin Securities found.
Money Education / Financial Literacy: 25 million Brits (56%) spend 60 minutes or less per week reviewing their finances, with the average amount of time we dedicate as a nation reaching only 1 hour 19 minutes – the least amount of time in Europe, according to a study from Scottish Widows. We spend nearly twice as long (2 hours 11 minutes) chatting on the phone or texting each week, and 6 times as long (8 hours 4 minutes) watching TV.
A quarter of Brits (25%) have no idea how much they spend in a week, and a similar number (26%) have no idea of their monthly cash flow. This lack of knowledge extends into other financial aspects of life. Only half (51%) the population know the balance on their credit cards and nearly half (46%) have no idea what interest rates they receive on their savings or are paying on their accounts and debts.
Around 15 per cent of 18 to 24- year-olds think an individual savings account (ISA) is an iPod accessory, and one in 10 reckon it's an energy drink. With rising personal debt levels in Britain, and a lack of long-term savings, better money management seems a pressing issue.
Nearly four out of five people do not know that APR refers to the interest and other costs of a loan, four in ten admit they do not understand mortgages or ISAs, and a third lack confidence in their financial affairs. These are some of the results of a survey conducted recently by Mori. One in five did not understand the concept of inflation. Nearly a third did not know that insurance products are designed to protect their owners from unforeseen events. Only 30 per cent could calculate four per cent interest on £2,000 over two years.
Savings / Pension: Half the population (52%) could survive financially for just 17 days, should they suffer an unexpected loss of income, according to research by Combined Insurance.
FSA research shows that 81% of the pre-retired think that a state pension will not provide them with the standard of living they hope for in retirement. Nevertheless, 37% of these people have not made any additional pension provision.
The majority of people in the UK are not planning ahead sufficiently, and are likely to be storing up problems for the future. 39% of people say they tend to live for today and let tomorrow take care of itself. In the last three years, 28% of people have experienced a large unexpected drop in income, and 21% have faced a large unexpected expense. 70% have made no personal provision to face a drop in income, and 55% do not think they have sufficient provision to face an unexpected expense.
According to the latest quarterly National Savings and Investment survey almost half of Brits (45%) do not saving regularly.
Compiled by Richard Talbot of Credit Action
http://www.myvesta.org.uk
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01 June 2006
Major Banks Will Reduce Credit Card Penalty Charges
At least three of the UK's largest banks will reduce their credit card penalty charges following OFT' demands.
But one of the banks, Barclays, is will increase the interest rates that it charges for some card holders.
Barclays, Lloyds TSB and HSBC will cut their penalty charges by nearly half from £20 to £12 in the next two months.
The changes were demanded by the Office of Fair Trading (OFT) in April, when it said standard penalty charges levied by card issuers were excessive and unfair.
The Office of Fair Trading said at the time that the UK's banks were illegally overcharging their customers by £300m a year through unnecessarily high charges.
These are levied for late payment of credit card bills, failed payments or spending more than a card's borrowing limit.
The demand for lower charges brought howls of protest from the banking industry, but the banks were told to respond by 31 May.
The OFT does not have the power to impose its order directly, but threatened to take legal action to do so if the banks ignored its instruction.
It also angered the banking industry by suggesting that basic bank charges, such as those for overdrafts, should be capped in a similar fashion.
Royal Bank of Scotland, which owns NatWest, has yet to announce a decision, but said it was still in discussion with the OFT.
Barclaycard
Barclaycard has more than 11 million UK customers in the UK, some of whom will now face paying higher interest rates.
We have to reflect in our pricing the costs we incur in our business
Barclaycard spokesman
From 1 August, when the new lower penalty charge comes in, the interest rate paid by about 10% of its customers will rise by between 2% and 5%, within a range of 14.9% to 29.9%.
Cash advances will now be charged at 27.9%, up from 21.9%.
The bank said that only its most creditworthy customers would pay the lowest rate of 14.9%.
A bank spokesman explained: "We have to reflect in our pricing the costs we incur in our business."
BBC News
http://myvesta.org.uk
But one of the banks, Barclays, is will increase the interest rates that it charges for some card holders.
Barclays, Lloyds TSB and HSBC will cut their penalty charges by nearly half from £20 to £12 in the next two months.
The changes were demanded by the Office of Fair Trading (OFT) in April, when it said standard penalty charges levied by card issuers were excessive and unfair.
The Office of Fair Trading said at the time that the UK's banks were illegally overcharging their customers by £300m a year through unnecessarily high charges.
These are levied for late payment of credit card bills, failed payments or spending more than a card's borrowing limit.
The demand for lower charges brought howls of protest from the banking industry, but the banks were told to respond by 31 May.
The OFT does not have the power to impose its order directly, but threatened to take legal action to do so if the banks ignored its instruction.
It also angered the banking industry by suggesting that basic bank charges, such as those for overdrafts, should be capped in a similar fashion.
Royal Bank of Scotland, which owns NatWest, has yet to announce a decision, but said it was still in discussion with the OFT.
Barclaycard
Barclaycard has more than 11 million UK customers in the UK, some of whom will now face paying higher interest rates.
We have to reflect in our pricing the costs we incur in our business
Barclaycard spokesman
From 1 August, when the new lower penalty charge comes in, the interest rate paid by about 10% of its customers will rise by between 2% and 5%, within a range of 14.9% to 29.9%.
Cash advances will now be charged at 27.9%, up from 21.9%.
The bank said that only its most creditworthy customers would pay the lowest rate of 14.9%.
A bank spokesman explained: "We have to reflect in our pricing the costs we incur in our business."
BBC News
http://myvesta.org.uk
|
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