UK POVERTY – The Conservative party criticise Labour for increasing poverty and attribute some of the blame on rising indebtedness, which they say can be fixed through merely more competition and more financial literacy programmes…. LABOUR'S FAILURE TO TACKLE POVERTY (www.conservatives.com, Monday April 28, 2008) David Cameron attacked Labour's record on poverty at the launch of a document outlining plans to make British poverty history. Under Labour, the number of people in severe poverty has risen by 600,000 - and child poverty increased by 100,000 last year. They have failed because they've concentrated on the symptoms of social breakdown rather than the causes. Our policy paper - 'Making British poverty history' - lays out measures to address the deep-rooted causes of poverty, such as educational failure, family breakdown, drug abuse, indebtedness and crime. David was joined at the launch by Iain Duncan Smith, Chris Grayling and Greg Clark. Extracts below: INDEBTEDNESS A PROBLEM: The conclusion of a recent YouGov poll was that “personal debt is the most serious social problem facing the UK”.45 And debt problems are only likely to get worse following the credit crunch and recent increases in the cost of debt. Personal debt in Britain now amounts to £1.4 trillion – greater than our GDP - and is rising by £1 million every four minutes.46 More people were declared insolvent in the last three months on record than in the whole of 1997. The poorest groups in society are especially vulnerable to problem debt. They are much more likely to gain access to credit through doorstep lending, pawnbrokers, sale and buy back shops and mail order catalogues. There may be 3 million regular users of these types of credit and the size of the doorstep lending market may vary between 2 and 3 million people. One problem with these markets is that lenders tend to charge interest rates of 100-400 per cent, or even greater. (See Social Justice Policy Group, Breakdown Britain, 26 March 2007) TACKLING PROBLEM DEBT The Conservative Party is working with groups such as the Citizens Advice Bureau to break the cycle of poverty, financial distress and over-indebtedness. First, we are committed to tackling the high cost of credit in the doorstep lending sector, which is affecting millions of the poorest families. As a recent Competition Commission report has found, a lack of competition in this market means that home credit customers are being overcharged by up to £100 million a year. We are working with the industry to require home credit companies to share credit data, which would encourage competition and help drive down charges and costs. Second, we have set out the bold aspiration to teach financial literacy in schools to all children between the ages of 11 and 18. As the FSA has found, the average person could gain up to £700 a year by making better financial decisions, which would have a disproportionately beneficial impact on the poorest. Achieving this aspiration means equipping our teachers with the skills they need to teach finance effectively, and not just in isolated financial literacy lessons. It also means making use of the resources and expertise of bodies, and the Citizens Advice Bureau and other groups have agreed to work with us to achieve our goal. And it also means making the most of the current schools enterprise budget. We are currently exploring whether the remit of the existing schools enterprise budget should be broadened to include financial literacy. Third, we give people the tools to borrow responsibly by requiring credit card companies to provide much clearer information to the public about the cost of credit card debt. Under a Conservative government, credit card marketing, application forms and monthly statements will explain exactly how much it will cost to borrow money, how long it will take to be paid back if only minimum repayments are made, and how much they will save over the long-term if they repay slightly larger amounts each month. This will help more people escape the vicious cycle of debt and poverty in which all too many are currently trapped. To help those struggling with difficult choices, we will launch Britain’s first free national financial advice service, providing impartial and independent guidance on financial issues via face-to-face sessions, telephone advisers and online information. Finally, we will take nine out of ten first time buyers out of stamp duty by lifting the threshold for first-time buyers to £250,000. The dream of home ownership is an aspiration for millions of poor families, yet when they do manage to save for a deposit they find that much of it disappears in tax, adding to their mortgage debt. Our policy will save around 200,000 first-time buyers a year up to £2,500 each to help them save for their future and achieve their dreams. ID: 41275 Author(s): SCR Publication date: 28/04/08     URL(s): Link to article

World Partner       EU-Partner

Created: 08/05/08. Last changed: 08/05/08.
Information concerning property and copy right of the content will be given by the Institut For Financial Services (IFF) on demand. A lack of explicit information on this web site does not imply any right for free usage of any content.