People are sick of work that does not pay
OUR ADVICE TO CHANCELLOR RISHI SUNAK ON TODAY’S BUDGET...
Dear Chancellor,
It’s your first Budget so I know it may be a bit daunting. But if you keep the thought of being fair and looking after the needs of everyone, especially the most vulnerable who have been left struggling for the past 10 years, then you can’t go wrong.
Daily life is already really tough for those who earn the lowest wages that simply aren’t keeping up with the rising cost of living, and the most vulnerable who rely on benefits to try and get by. Plus, we now have the huge added pressure of the coronavirus causing havoc.
It’s time to take your foot off the austerity pedal and give everyone a break – a little relief from the constant pressure and worries around money and trying to make ends meet.
To help you, I’ve highlighted some of the biggest concerns for our readers. And I have some handy suggestions from a range of experts on what you can do to tackle these issues.
Today is your chance to make your mark, show the country you understand its needs, and prove you can get your sums right. BENEFITS
The system must provide people with enough money to live on, and keep up with the rising costs for basics such as rent, energy and food.
That means reviewing the levels on areas such as Local Housing Allowance. Ensure it is in line with rental prices and doesn’t leave people faced with a shortfall.
There is a critical shortage of affordable social housing and many families are forced into expensive private rentals. This isn’t a lifestyle choice – it’s because they have to put a roof over their family’s heads.
Universal Credit advances and deductions need to be overhauled. They should be included in the debt breathing space system that is being introduced next year.
The five-week waiting period for cash at the start of a claim puts a huge pressure on people. Including Universal Credit advances in the breathing space system will give them a 60-day period to get back on their feet – without being hounded for payments or being left short for essentials.
The Money Advice Trust says there needs to be changes to the deductions process as the amounts being taken from benefit payments are often too high. “We would like to see greater discretion and flexibility to ensure the deductions are only applied when they are affordable,” a spokesman said. WAGES
Basically, many people doing a hard day’s graft don’t earn enough money to be able to afford the essentials and this needs to change, including banning zerohours contracts.
People need to be paid wages that cover their bills and won’t leave them ending up relying on credit and building up unaffordable debt, or begging for handouts to keep on top of their outgoings.
People are proud and happy to work but 6.5 million people are now part of Britain’s working poor.
A report from The Financial Inclusion Alliance found six out of 10 people living in poverty are in work. Meanwhile, those in rent arrears are more likely to be in work than unemployed. TUC general secretary Frances O’Grady said: “We’ve been through a decade of devastation. Public services have been cut to the bone and living standards have fallen. The Chancellor must put working people first and deliver a decade of renewal.
“His budget should set out a credible plan for better jobs with higher wages. Zero-hours contracts must be banned. And communities must get funds to restore services like children’s centres that help working families.” DEBT
Council tax is one of the biggest issues for those struggling with debt, and households in arrears get aggressively hounded to pay up. A third of those seeking help from the National Debtline have council tax arrears and the way the councils collect and chase these debts needs urgent reform.
Money Advice Trust research shows that
1.4 million council tax debts were passed to bailiffs by local authorities in 2018/19. The current system where someone who misses one monthly council tax payment becomes immediately liable for the whole year’s bill must be stopped. This only escalates money problems and pushes people further into an endless debt spiral.
PENSIONS
Stop “tinkering” with the pensions system – only meddle further if you have plans to simplify things and take out all the layers of complexity that even the experts struggle to get their heads around.
Both the state pension and private pension systems are way too complex after constant changes that have left the majority of people bamboozled – and at risk of making bad decisions when it comes to how they access their savings.
One smart move you should make is to lower the age and earnings levels for automatic enrolment – so all workers start saving into pensions as soon as they start a job.
That will improve their chances of building up a decent pot to see them through retirement.
Currently, millions of lower-paid and younger workers don’t qualify and miss out on contributions from their boss. ISAs
These should be a simple way to save tax free but the vast range on offer with their individual rules and regulations around who qualifies, ages, amounts and penalties has turned many people off. The ISA is crying out for simplification.
Stop launching new ones to replace older ISAs that worked, such as the Help to Buy ISA and the Lifetime ISA. And you should go back to the drawing board with the penalty you charge if people have to take money out of the LISA before the age of 60 for any reason other than to buy a first property.
Currently, savers must pay 25%, which doesn’t just take back the Government bonus but a chunk of the original investment too – reducing it to 20% would make the system much fairer for everyone. INHERITANCE TAX
This tax is another area that needs a dose of common sense. We need updated allowances and a drastic simplification. The £3,000 gifting allowance hasn’t changed in 39 years and the nil-rate band hasn’t moved for 10 years. But the worry is if you do decide to change things it will only add another level of complexity.
As Sarah Coles from investment firm Hargreaves Lansdown said: “The last time the Government touched IHT it actually made things more complicated, by introducing a new allowance specifically for property. So piecemeal won’t do, we need sensible and co-ordinated simplification.”
Dame Gillian Guy, chief executive of Citizens Advice, summed the situation up well when she said: “No one imagined that coronavirus would be the backdrop for this Budget.
“While there are big issues to address, front of mind for many people right now is how they’ll afford their bills if they do fall unwell.
“The Chancellor must set out plans to protect the millions of workers not eligible for statutory sick pay and ensure the benefits system can respond flexibly to those who need it. Otherwise people will face the impossible choice of ignoring guidance to self-isolate or being pushed into financial hardship.”
Please don’t hit our hard-working readers who are simply trying to keep their heads above the water. Yours, Tricia Phillips
Personal Finance Editor