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Posts Tagged ‘The need for low-income financial stability’

The Cost of Living crisis: – It’s those money men, stupid

August 15, 2013 Leave a comment

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Hypocrisy has become an artform for many of today’s Political class, and talking up politically expedient issues, spinning away inconvenient truths or criticising others for doing no more than they would do themselves has become the apparent norm.

After a media splurge targeting their inactivity in the sun whilst Cameron has been busy making hay under his, Labour have returned to the stage this week focussing their less than lacklustre performance on the ‘cost of living crisis’, giving every indication that this is the ‘issue’ that will steward their return to majority Government in 2015.

If tackling every issue were seen to be as simple as giving it its own branding or strap-line like this and waiting for it to go viral, we would have a marketing man in Number 10 already – which of course we actually do.

Sadly, the ‘cost of living crisis’ is probably the most dangerous issue that any of our Politicians could ‘play’ with, in the run up to the 2015 General Election, and we should perhaps all be concerned by its apparent adoption by the political left in order for it to be manipulated as a vote-winner. After all, the future of most of us is tied up with it, and its genesis reaches far deeper into the fabric of our society than any of our leading Politicians seem willing to contemplate or have the moral capacity and determination to deal with – even if they have apparently now acknowledged it for their own political ends.

The reality for most of us outside Westminster is that we don’t need posturing Politicians and media hype to remind us of the fact that wages are effectively standing still whilst the cost of paying our bills just seems to keep on going up and up, month after month, year after year without any sign that it will ever relent. Many hard working people simply struggle to keep themselves afloat even before they start to consider some of the luxuries that those very same politicians and newsmen probably take for granted.

Real people living in the real world already know firsthand what it is they are experiencing when the letters hit the mat; the e-mails arrive, the phone rings and when they go and shop. When the pay rises, tax breaks and bonuses that they desperately need aren’t coming to middle England and those hovering either above or below Britains poverty line– simply because the Government’s Pot is already exhausted and the Nation simply cannot afford it – these same people need politicians to drop talking up the effects of the problem and start tackling the cause head on.

This task is not one that will lend great comfort to any politician who values their place in history more than they do the lives of the people who elected them and this is problem enough with British Politics today in itself.

Facing the reality that the free market has surpassed its point of balance and therefore the good for which it was intended is not a thought that many in power will want even to contemplate. Therefore accepting that increasing freedom within the markets to pursue infinite profit, whilst that very same action is effectively enslaving great swathes of the normal population within fiscal misery is not a pill that many of today’s Politicians will swallow willingly. But it is there in front of all of them just the same.

Through the creation of the virtual monopolies which are the utility and energy companies; private businessmen, shareholders and pension funds have been given seemingly insurmountable power over the lives of everyone by being able to dictate their own paydays, whilst they go unhindered by Government and Regulators – who have nothing really but the interests of their Industry at heart.

Likewise, ever growing convoluted supply chains, often reaching the length and breadth of the Country or even across Continents allow many different traders, dealers and agents to add their cut to the margins which you would normally expect to see only from producers and retailers, then inflating prices way beyond what they should realistically be.

Further still, those businesses without control or a sizable share of their markets are also having their margins forcefully squeezed by the companies and organisations who do and many of these businesses are the same ones that cannot afford to recruit or pay more than negligible wage rises to the very same people who are now being affected financially from almost every angle you could imagine.

Whilst no reasonable person would argue that businesses exist to make a profit, it is simply beyond logic to add layer after layer of profit onto the most basic and essential of items or services and then expect end users to keep picking up and meeting these overinflated bills without any real additional income of their own to cover these exponential and wholly unrealistic rises.

Companies, traders, financiers and all manner of individuals and entities are in effect ‘vacuum profiteering’, making money ex nihilo or basically creating something from nothing in a manner which could be akin to having the midas touch, were it not for the misery that it is increasingly inflicting upon those who are wrongly being expected to pay for it.

Without those who hold this power over our economy taking steps to regulate and restrict the way that they make profit, they are through their very actions writing an agenda for Government over many years to come – whatever its Political make-up may be, that has the potential to create social and financial problems of a size and scale across our Nation that Government itself won’t be able to afford to put right – simply because the Taxpayer has no money left to fund it.

Such levels of responsibility over the health and wealth of a Nation should never have been placed in the hands of money men in the first place without sufficient safeguards in place to protect the many who could be affected by the unscrupulous profiteering of a few. But it has.

No Political Party should be seeking to take the moral or politically philosophical high ground on this issue as it is a problem which can only be tackled one way. That is by Government stepping back into the free market and taking an actively pro-market or even interventionist approach to regulating market behaviour – should it be so required. The UK needs to retain capitalism but it must also maintain it in a responsible and considerate way that doesn’t destroy the ability of consumers to consume in the process.

By taking just the key players such as the utility, energy and finance companies to task, Government could go a considerable way to putting safeguards in place that would ensure a basic standard of living can be maintained against the minimum wage, and that the minimum wage would then itself reflect a living wage and one that should keep many more people safe from harm and therefore from being a potential burden to the State.

Regrettably, action of this kind does not reflect the creed of contemporary Politicians and the point continues to be missed that wealth creation only works effectively when there are benefits – in whatever form they may be – for all.

Conservatives, Liberal Democrats and Labour don’t want to embrace the answer and neither does UKIP, which is riding high on the tide of discontentment and disenfranchisement that the lack of connection with reality amongst the other Political monoliths has created within the Electorate itself.

It’s time for Politicians to wake up and smell our overpriced coffee before it’s all too late.

image thanks to http://www.telegraph.co.uk

Payday Loans: Profit from misery and the throw back to the age of the Debtors Prison – but this time without brick walls

July 1, 2013 1 comment

payday-loansDesperation, the emotion it brings and the knee-jerk response to any opportunities that might even just temporarily stop the cause of that pain, can lead those of us experiencing it to do what others may consider to be some pretty illogical things.

The prospect of escape at any level can certainly lead to the failure to consider detail that any one of us would normally think about. And when events feel like they have brought our lives to the edge of a precipice and no other answers are coming, would we really care anyway?

The point is being tragically missed in Government that disposable income is falling fast for everyone who is unable to obtain anything beyond standard ‘cost of living’ pay rises; that  ‘standing still’ or ‘treading water’ financially has become all but impossible for a great many people, and that this downward slide is hitting those with the smallest incomes hardest of all.

In some cases, cutting back on luxury items simply isn’t enough to counter the escalation of monthly, weekly and even daily costs which must be met just to survive. Prices on items like fuel for travel, car parking, travel tickets, basic food, clothing, utilities and communication escalate with what feels like jaw-dropping regularity and very few of us other than those charging the fees actually believe that such inflation is genuinely sustainable.

Even those with comparatively good household incomes have cut back and whilst some would argue that reducing the regularity of nights out, buying new clothes or downgrading the annual holiday will hardly make a difference, many of these same people are now using savings or high street credit cards to balance their household books in the hope that things will soon change. But for some of those with less, hope of that kind simply isn’t an option.

Living hand to mouth is a phrase that many will consider an anachronism and borne of a different era. But for many on the lowest incomes, the reality that money is gone as soon as it comes into their hands is very real indeed, so the prospect of ‘a couple of hundred quid to keep things tied over til the end of the month’ coming at you from the TV screen can for many seem a very easy, perhaps timely and almost certainly an attractive way out. But a quick yes followed by the receipt of cash within minutes can easily overshadow the realities of what may be sold as a ‘Payday Loan‘.

With interest charged at a rate of let’s say 1000% calculated as an APR against a loan for a year (per annum or P.A.) of for example £100, the charge without any repayment over one calendar month would be a fee of £83.33. And when you take a quick visit to the internet and see that ‘Representative APR’ or interest rates go up to nearly 6000%, you can see how easy it is to make a difficult situation one which will quickly become completely horrific.

With perhaps as many as one million UK households using Payday Loans each month, you would hope that the Coalition would be doing much more to address the financial issues which everyday people are facing generally. At the very least it would be more than reasonable to expect them to take real action to address what some would argue as being a sanitised form of loan sharking by casting a legislative net across this very dark and murky pool.

But with a Government which has gravely missed the point that real savings in the long term requires the pain of real and meaningful reforms in the short, they also appear to have very little idea how passively influential they are being in guiding ever more people towards the first steps of the negative debt spiral, that in today’s economic climate seems all but impossible for many to then escape. Put simply, no action is action all the same and this action is helping nobody but the loan companies themselves.

There is no simple or isolated solution which will solve this growing problem and protect many more people from the virtual enslavement which is experienced through being the victim of what is arguably a legalised form of crime. However, Government could:

  • Regulate the Payday Loan ‘product’ and enforce a ceiling on interest rates to a manageable level. The fact is that a £25 charge for £100 over a month would still equate to an APR of around 300%. Even at half that if you give generous consideration for what are probably very small administrative costs via the Internet, that still leaves a profit of £125 on every £1000 lent every month or £1500 over the course of a year. Pretty good money even then!
  • Take greater control of the credit assessment processes run by the finance industry which have disqualified many Payday Loan users from gaining mainstream credit and effectively pushed them into the hands of the unscrupulous.
  • Push for mainstream lenders to begin offering the Payday Loan ‘product’. If necessary develop a method to provide a level of guarantee through direct access to the users source of income and Legislate accordingly.
  • Create a Government owned ‘Peoples Bank’, run as a not-for-profit on commercial lines, which has an appropriate level of altruism in its approach to support those who really need it, whether they are domestic users or even small businesses who need the financial leg-up that nobody else seems willing to provide.

There are many more ways that Politicians could help the people in need who Elected them to Office if they really wanted to try.

The biggest step they could take would be to acknowledge that the power of any Government extends way beyond the services that it pays for and then act, knowing that this influence should and must be used to its fullest when the behaviour of any person, group or business is having a negative or detrimental effect on any part of our wider community for no other purpose than making unreasonable levels of profit.

The reality is however that increasing numbers of Taxpayers are now paying for a system which is failing to support them when they need it most, and then paying way beyond the odds for an alternative form of support which isn’t actually supporting any one of them at all.

Without the Coalition even talking about the need for Britain’s lowest wage earners and genuinely-benefit-dependent to be able to maintain a basic standard of living between payments, it is not only finance companies who should be branded for irresponsible practice.

Failing to deal with just this one of so many different problems facing this Country is simply storing up more trouble for yet another day and in all likelihood another Government. And whilst the absence of an overall majority may suit Politicians who don’t have the heart to do their job, everyone else is still suffering.

If you have found and read this blog because you are experiencing financial hardship in any way and are looking for help, please know that there are real people out here who care; who want to help; and that some of them might even be Politicians!

There are some really helpful Charities and Debt Advice Organisations who will do everything that they can to support and guide you through the issues you are facing, or possibly help you to find even more people who can.

A couple worth trying are the Citizens Advice Bureau who may have an office you can visit near your home and the Step Change Debt Charity (Formally the Consumer Credit Counselling Service or CCCS) who can also be called on 0800 138 1111.

If things already feel like they have gone too far to try and make sense of, there are also the Samaritans. Contact any of these Organisations and you will speak to real people who are genuinely there to try to help and are not there to judge you in any way.

image thanks to http://www.moneyadviceservice.org.uk 

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