Families will suffer more than any other group as a result of changes to the tax and benefits systems, according to a report published by the Institute for Fiscal Studies (IFS) this week.

The Government began making changes to tax and benefits in January 2011, and reforms will continue until April 2014. This will include the new universal credit, which amalgamates benefits and tax credits.

– By 2015, a family with 2 children will have their annual income reduced by £1,250, the IFS claims. That’s a drop of 4.2%.

– Families with 3 children will see their incomes fall by 6.8%.

– Families without children, on the other hand, will only lose 0.9% of their income (£215).

It looks like the people that will suffer most will be families with children under the age of 5, families with more than 2 children, and unemployed single parents. This last group will lose over 12% of their annual income (£2,000 a year) on average, according to the report.

It is estimated that, by 2015-16, half a million families with children under 5 will fall into absolute poverty.

The IFS warns that whilst the universal credit makes employment more attractive for the majority of individuals, it diminishes the incentive for a second earner in a couple to get into work.

Groups such as the Family and Parenting Institute have also expressed concern that families and children are set to take the biggest hit as a result of the Government’s austerity measures.

Are you worried about changes to your tax and benefits entitlements? If you think you may encounter debt problems as a result of the reforms, get in touch for some confidential advice.

According to a new report published by the Chartered Institute of Personnel and Development (CIPD), the answer is yes – unemployment will rise to 2.85 million next year, with the number of people in work falling by 120,000.

The CIPD predicts the number of people out of work will hit its highest level since 1994, and the figure will continue rising until it peaks at 2.9 million in the first half of 2013.

If the forecasts for next year are accurate, this will be the first time unemployment has reached 2.85 million and still been increasing since 1991.

It is expected that unemployment will remain above 2.5 million until 2015 as a result of feeble economic growth.

The report doesn’t forecast any change to the figures for long-term and youth unemployment, and cited Government efforts to get these 2 groups into work.

The report also predicted that productivity would continue to stutter and that caps on pay would remain ‘severe’.

Dr John Philpott, chief economic adviser at the CIPD, said

“The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008-9.”

He even speculated that this could “foster a tetchy passive-aggressive mood in many workplaces that could prove very hard to manage.”

Shadow work and pensions minister Ian Austin said “it is crystal clear that this government is failing to get people off benefits and into work.”

However, a spokeswoman for the DWP said “the increase in those claiming Jobseeker’s Allowance has slowed and our welfare reforms are having a positive impact with overall benefit claimant numbers falling by around 40,000 in the last 18 months.”

If unemployment is having an impact on your ability to repay your debts, speak to one of our debt management experts today.

The Government has outlined plans to ban “excessive” credit and debit card fees for things like flights and cinema tickets by the end of 2012.

Complaints have been levelled at airlines and booking agencies, but also organisations like local councils, for imposing excessive card charges. Whilst the Government will be limiting what card charges can be imposed, companies will still be allowed to add a “small charge” to cover the cost of processing payments.

Buying flights online is notoriously confusing, with additional charges seemingly being added at every stage. When customers tick a box to confirm they will pay using a card (how else would you pay?!), extra charges are often added. Sometimes these charges aren’t made visible until as many as 8 pages have been clicked through.

Other organisations guilty of excessive card charges include local authorities and the DVLA, whilst buying train, ferry, theatre and cinema tickets online can also be something of a headache.
Consumer magazine Which? urged the Office of Fair Trading (OFT) to investigate the problem, and, in June, the regulator published a report on the travel industry’s use of surcharges.

The OFT said the industry needs to make the charges clearer, and stop levying surcharges for debit cards. The Government is planning to go beyond the OFT’s recommendations, banning all surcharges it deems to be “excessive”.

A consultation will be launched at the start of 2012.

Shoppers are out in force on the nation’s high streets, sparkly celebrity-filled adverts are taking over our TV screens, and the first flakes of snow are falling.
Incredible as it seems, another year is drawing to a close and Christmas is just 17 days away!

Consumers are embracing the opportunity for some festive cheer, with Christmas providing a much-needed distraction from the onslaught of economic doom and gloom that’s dominated the news for what seems like an age. When times are hard, people are even more desperate for the escapism of gifts, good food and gallons of booze.

But there is a risk that seasonal celebrations could leave you with more than just a slightly bigger belly, some especially garish socks, and a very sore head. If you get carried away, Christmas could be followed by a financial hangover for which there is no easy cure.

Of course, the next few weeks should be a time for indulgence and enjoyment, but that doesn’t mean financial common sense should go out of the window.

So grab a Glühwein, stick on some Slade, and check out our top tips for saving money and avoiding debt problems this Christmas…

1. Be realistic about what you can afford to spend. Create a budget and STICK TO IT.

10. Don’t rely on credit. If you can’t afford it now, can you really afford it later?

Do you have any great money-saving tips of your own? Head over to our Facebook page to share your ideas.

A new study carried out by the National Centre of Social Research (NatCen) shows that as the bleak economic situation continues to force shops and leisure facilities to close, slot machines and gaming arcades are becoming increasingly common.

The NatCen study is the first major analysis of the geographical distribution of fruit machines. It found that they tend to be most prevalent in areas of high unemployment such as the Welsh valleys, areas around Airdrie, Stirling and Glasgow, and Yorkshire towns like Halifax and Barnsley. Areas where the majority of the population is aged between 16-34 or over 75, such as Brighton and Bournemouth, also had more slot machines than other parts of the country.

More unexpectedly, the study also indicates that reasonably wealthy towns, such as Altrincham in Greater Manchester, as well as places like Milton Keynes and Peterborough, are also what researchers refer to as “high-density machine zones,” with one or more gaming machines per hectare.

Researchers point to a correlation between the closure of shops and leisure outlets and the growth of the gambling industry. Heather Wardle, director of research at NatCen, says: “These high-density areas are not only in poor neighbourhoods. There are relatively affluent areas with a high density of machines. Altrincham is a relatively wealthy area but has a high density of machines, and you think, why is that? And it could be because of a lack of other leisure and recreation types on offer in that area. We know Altrincham town centre had one of the highest rates of retail vacancies in 2010.”

Shadow Culture Secretary Harriet Harman recently suggested that betting companies are deliberately targeting the poor by opening branches in areas with high levels of poverty. She argued that this was making the situation worse, and that gambling is increasingly a factor in benefit dependence for many people.

Harman described high-stakes games machines as “evil” and said they had created “a casino on every high street,” but the Association of British Bookmakers said there was no evidence that betting was exacerbating poverty.

If you think you have a gambling problem, GamCare can provide you with support, information and advice. If you are struggling with debt as a result of gambling, we can advise you on debt management solutions.

George Osborne, Chancellor of the Exchequer, is making his Autumn Statement on the economy this afternoon.

It expected that he will announce £5 billion of new investment in the public sector in an effort to keep the recession at bay, but it appears that the majority of the capital for doing this will be raised by cuts and freezes to the working tax credit (WTC).

In April this year, universal child benefit, as well as basic and 30 hours WTC payments, were frozen for 3 years. But there is still a possibility that the third element of the WTC, which is paid to couples and single parents and worth £1,950 a year, could be frozen (rather than increased in line with inflation). This would save the Government £300 million in year 1 and £600 million in year 2.

Gavin Kelly, chief executive of the Resolution Foundation, said would be unfair to take cash away from low- and middle-income families, warning that “this will hit precisely those households who have already been on the end of the most severe squeeze of their lives” and arguing this will do more damage to the economy: “Every pound taken out of their pockets is likely to be a pound taken out of consumption.”

36% of all lone parents currently claim WTCs, compared to just 15% of couples with children, according to single parent charity Gingerbread. Fiona Weir, chief executive at the charity, said single parent families won’t be able to cope with “a freeze on tax credits or a raid on benefits” when both unemployment and prices are rocketing. She also suggested that the Chancellor’s 2010 pledge that his actions wouldn’t increase child poverty is beginning to look somewhat hollow.

Some cuts to the WTC and other benefits which low-income families depend on have already been announced in the 2011 budget. As a result, the cost of childcare will increase by £600 – £1,400 by 2015 according to research carried out by the Social Market Foundation.

George Osborne is on his way to the House of Commons as we speak. It remains to be seen whether the speculation is accurate, but it may well be that, by the end of today, Britain’s lowest earners are faced with an even tighter squeeze on their finances.

The Office for National Statistics (ONS) has published the results of its Annual Survey of Hours and Earnings. The figures show that, in real terms, UK households are seeing their income drop by 3.5% as inflation outstrips pay rises.

In 2011, the median salary for a full-time worker rose by 1.4% to £26,244 and the overall growth in earnings, including part-time workers, was just 0.5%. By contrast, the Consumer Price Index (CPI) inflation rate was 5% or more.

High levels of unemployment and sluggish economic growth have seen the number of people in part-time work increase. 72,000 more people were working part-time in 2011 compared with the previous year, whilst there were 380,000 fewer people in full-time jobs.

Although the gender pay gap has been narrowed further, the rate at which this is happening has slowed down – the gap became £558 smaller in 2010, but just £179 smaller in 2011. If the rate remains as it is, it will take another 30 years for women to get the same pay as men.

The gap between rich and poor is widening, with falling income for some of the country’s lowest-paid workers combined with substantial salary hikes for directors in people in senior management.
Median earnings for directors and CEOs at leading companies rose by 15% to £112,157 – partly the result of a shift in emphasis from bonuses to basic pay. Senior corporate managers saw their salaries increased by 7.1% to £77,679.

At the other end of the spectrum, waiters and waitresses have experienced an 11.2% drop in annual earnings to £5,660, and cleaning staff are now paid 3.4% less than in 2010.
Brendan Barber, general secretary at the TUC, said the ONS data shows that the poor performance of the economy was primarily the result of a squeeze on wages. He said “falling wages and self-defeating austerity have been the main reasons for the UK’s economic woes, rather than a eurozone crisis which has yet to fully show up in official statistics.”

If you need debt management help because of the pressures of rising bills and falling wages, get in touch today.

Millions of households are due to receive letters from their energy suppliers advising them on how to reduce their monthly outgoings.

This announcement follows meetings between Prime Minister David Cameron and bosses at the ‘big six’ firms, as well as consultations with Ofgem (the industry regulator) and consumer groups.

Suppliers will be writing to customers to advise them on the savings they can make by switching payment methods, choosing the most suitable tariff, and getting subsidised or free insulation installed.

They have also agreed to include message on bills this winter reminding customers to check whether they might be able to get a better deal with another company.

The PM told bosses at EDF Energy, nPower, Scottish & Southern Energy, Scottish Power, British Gas and EON that it was ‘absolutely vital’ that they don’t cripple consumers with higher fuel bills when they’re already struggling with the rising cost of food and travel.

Cameron described the move as a “winter call to action” and said that the energy companies will be “permanently watched” to ensure they adhere to the pledges that have been made.

Ofgem recently released data indicating that the annual profit made by energy firms for each customer had risen from £15 in June to £125 in October. These figures were disputed by suppliers, however.

Before the end of the year, Ofgem will publish a report outlining how conduct in the industry can be improved, and how its activities can be made more transparent.

The average household now faces an annual energy bill of £1,345 – an increase of 81% since 2006.

If you are struggling with debt as a result of rising energy bills, we can provide you with confidential debt advice. Get in touch to speak to an expert today.

A new report published by the Institute for Fiscal Studies (IFS) and funded by the Joseph Rowntree Foundation predicts that there will be 3.1 million children in poverty in the UK by 2013.

The independent research body forecasts that incomes will continue to decline significantly over the next 2 years, amounting to the largest drop in earnings for middle-income families since the 1970s when oil and currency crises crippled the economy. This will result in an additional 600,000 children being pushed into poverty, the IFS warns.

The report makes a distinction between ‘absolute poverty’ – households earning less than 60% of the median national income for 2010/11 – and ‘relative poverty’ households earning less than 60% of the median national income for the year in question. In the UK, 2.5 million children were living in absolute poverty in 2010, according to the IFS.

The IFS forecasts that if Universal Credit scheme is introduced in 2013, the number of children in absolute poverty will fall by 100,000 to 3 million. They also predict incomes will begin to rise for middle earners, although by 2015 they will still be below 2009 levels. The Universal Credit is a system being proposed by the government to replace 6 existing income-related employment-based benefits.

The report also warns that by 2015, the number of working-age adults without children in absolute poverty will have risen to 4.1 million, rising again to 4.7 million in 2020.
The report also concludes that targets (set in 2010) to cut absolute child poverty to 5% by 2020 will most likely be missed by a considerable margin – they anticipate the figure will be more like 23%.

On 1^st October, new European rules came into effect giving the UK’s estimated 1.4 million agency workers extra rights relating to pay and benefits.

Now, once temporary employees have been in a role for 12 weeks, they will be granted similar rights to permanent staff, although they won’t have the same protection from dismissal.

Whilst agency workers were already paid the same minimum wage, and had the same basic holiday rights, as permanent staff, they will also now be allowed to use some of the same facilities enjoyed by permanent employees (such as crèches, canteens and transport services). Additionally, temps must now be made aware of internal vacancies and given the chance to apply for them.

After 12 weeks, agency workers now get the same pay, overtime, shift allowance, holiday pay, bonus and maternity rights as permanent staff. Employers don’t have to provide occupational sick pay, redundancy pay, or health insurance, however.

The changes, which were rolled out following lengthy negotiations between unions and the government, may cost British businesses as much as £2 billion a year, it has been suggested. Some have warned that the job market may become less flexible and that recruitment may be stifled by the new rules, whilst there are also fears that employers may lay-off agency staff after 11 weeks to avoid giving them additional rights.

Nevertheless, in this challenging economic climate, people doing temporary work through agencies will no doubt be grateful for the extra pay and benefits they now stand to receive.