Christmas is the toughest financial time of the year for consumers, when spending on food, gifts, and travel collides with soaring heating bills. This year’s Autumn Statement could be an opportunity for the government to offer some immediate help with fuel and personal credit bills.
Household fuel prices are a huge drain on people’s income. They have escalated from a manageable household running cost to holding people’s personal expenditure to ransom through the coldest months of the year. I’d propose looking at different ways of pricing fuels such as electricity and gas that would give the consumer a more effective way of controlling expenditure. While the Labour party’s suggested a price freeze may be unworkable, what is needed is more work on ways that benefit the consumer such as an initial band of subsidized levels to ensure the poorest can heat their homes during the winter.
Payday loans that get out of hand mean that many people find their income disappears before they have a chance to spend it. Financial penalties and rollovers at extremely high interest rates permit payday loan companies to use continuous payment authorities to drain the borrowers’ available income.
At the time of writing, the government has announced that payday loan interest rate caps will be reinserted into the Banking Reform Bill, but there’s a lot more to be done. The underlying reform really has to eliminate the social divisiveness of a two-tier personal credit system: those who can get bank credit via credit cards etc and those who cannot. All parents want to treat their children at Christmas, it seems unacceptable in the 21st century that the poorest end up spending more.
There are more things to address, like the demoralizing low savings rates, their knock on into low pension annuity rates and the overcharging in pension fund fees, but for this Christmas, help with fuel, and credit, would be a start.
Professor Isabelle Szmigin, Professor of Marketing, Birmingham Business School, University of Birmingham