The government’s pledge of support for household incomes is welcome. But that can’t be the end of it. Outgoings are also of concern, not the least of which are debt repayments.
Debt weighs most heavily on the poor, both in terms of borrowing costs, type of debt and as a proportion of income. The government should learn from the mistakes of the 2008 financial crisis and make sure it is not just the wealthy who benefit from the bailouts.
The poorest quarter of the population are far more exposed to consumer debt than anyone else, the median level of consumer debt constituted 17% of their pre-tax income, compared with only 4% for those in the richest fifth of the population.
Households are also struggling with other debts. If you miss a single payment of council tax, for example, then the whole yearly sum can become due. In 2018, the charity Citizens Advice found that 2.2 million households in England and Wales were behind on their council tax.
The number of callers to the National Debt Line with council tax arrears hit 30% last year, up from 15% in 2008. Mortgage and rent payments and debt to energy and car companies add to the burden. It would not take much for the poorest among us to “go to the wall” and this current emergency is “anything but small”. Claims for universal credit are already soaring.
The financial regulator has just taken steps to help by ordering banks to offer interest-free overdrafts of up to £500 and payment holidays on credit and store cards and loans. Such measures are welcome, but could go further.
Payment holidays on car loans, utility bills and on rent, for example, would make sense, and credit ratings need to be protected. The state should forgive late payments of council and other taxes and loosen terms on the debts owed to it.
It is the moral and financial responsibility of the government to prevent this turning into a widespread personal debt crisis and one that especially impacts the poor.
A widespread bankruptcy crisis would hurt creditors as much as debtors and suppress the value of assets for years and years to come. In 2008, the finance industry was saved by bailouts.
It is now time for the institutions concerned to play their part in saving the people.
Motivational Quote Of The Day
“Do not let your circumstances control you. You change your circumstances.”
Jackie Chan
Alternative Quote Of The Day
“My girlfriend had a phantom pregnancy. Now we have a little baby ghost.”
Jimmy Carr
Do The Opposite
Clark Wolfsberger has spent the bulk of his career developing and marketing energy drinks, but his latest venture couldn’t be more different. Because in his latest venture, he’s launched a drink called Beauty Sleep, which as the name suggests, is a sleep enhancer.
The drink is sold at over 500 spa’s and is on target to sell 265,000 bottles this year.
There are often valuable insights (and lucrative opportunities) to be had in turning a business on its head. If your business is all about keeping people warm, how about keeping them cold instead?
That might lead you to think about the reasons and circumstances that people need to be kept cold, and a whole new product line – air conditioning perhaps. If your business is about helping people lose weight, how about helping them gain weight instead?
That may lead you to start thinking about the type of people who want to gain weight…bodybuilders, people convalescing from illness etc…and how you might be able to tailor a weight-gain product for them.
Whatever business you’re in, there’s the possibility to turn it on it’s head and see what otherwise hidden or unconsidered opportunities the process throws up.
Today’s National Day
NATIONAL WORKAHOLICS DAY!
PUBLISHERS NOTICE
Dear Streetwise Customer,
Imagine sitting down this afternoon and tapping out a simple letter. It takes you perhaps a couple of hours to get it right…
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Pure fantasy?
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Like to learn how to do the same?
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This is an exciting and realistic alternative to the gloom which is all around us today – an escape route. It’s an alternative that can quickly see you banking more than enough money to see yourself and your family right through this current crisis and then into uncharted financial success when all this is over.
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Kind Regards
John Harrison
