Commenting on today’s Budget announcement, Mike O’Connor CBE, Chief Executive of Consumer Focus, said:
“The Chancellor has the difficult job of managing the nation’s finances in a way that distributes the pain fairly. Inevitably, the emergency budget will be setting off alarm bells for consumers.
“Thousands of the things we buy everyday are going to get more expensive. The VAT rise will hit the poorest consumers hardest as people who earn least already spend proportionately more of their income on VAT and it will be even more important for consumers to shop around for the best bargains.
“All too often the poor pay more because many don’t have access to cheaper online or direct debit deals and often have to resort to higher cost borrowing. The Chancellor must ensure that action to reduce the deficit is matched with measures to reduce this ‘poverty premium’ for low income households.”1
Bank reforms and levy
“The banking levy and reforms to the sector must be a first step towards ensuring the banks serve all consumers better. Almost a million people do not have a bank account and as a result will be paying more for their goods and services.2 Targeted reforms of banking products to bring low income consumers into the mainstream economy are just one way in which the Government can help to tackle the ‘poverty premium’ faced by our poorest households.”
Insurance premium tax
“Putting up tax on insurance may lead to already hard-stretched people deciding it is a safety net they can to live without. For the poorest consumers this would make the unexpected, like being burgled, a disaster, and may force more people to borrow from expensive lenders in order to get by. The Government will need to be alert to the fact that this could lead to consumers having to make some difficult choices.”
- ‘The Poverty Premium’, a report by Save the Children and the Family Welfare Association found the costs poor families bear in acquiring cash and credit, and in purchasing good and services, can amount to around £1,000 for an average size family.
- ‘On the Margins’, a new report launched by Consumer Focus this month, explored the issue affecting almost a million of the poorest consumer in the UK who do not have access to a bank account. The report said that any reform of the banking sector by the Government must address the issue of people marginalised by not having a bank account. It recommended that to help bring these consumer into the mainstream economy there should be a targeted reform of banking products, community banking from the post office and greater support to help people open and manage accounts.