Credit Action News Round-up (11 October 2011)

IFS figures show sharp rise in poverty: Families are set to experience the biggest real term fall in average incomes for 35 years as they suffer due to high inflation and low wages, according to the Institute for Fiscal Studies (IFS). Their research has shown that an average of £2,000 has been wiped off household incomes and that it will take until at least 2015 before 2009 levels are recovered.

The report warns of a big rise in the number of people living in poverty, predicting that the number of children in absolute poverty in 2015 will rise by 500,000 to 3million as a result of changes in the government’s new social contract. This will rise to 3.3 million – almost one in four children – experiencing relative poverty by 2020. The introduction of the coalition’s Universal Credit scheme in October 2013 will "act to reduce both absolute and relative poverty", yet this affect will be dampened by the "large decline in real incomes across the income distribution" and the new system of uprating means-tested benefits, said the IFS.

RBS and Lloyds criticised over ATM charges: Two of Britain’s largest banks have been told by the Treasury select committee to justify their restrictions placed on basic bank account customers who use rival cash machines. Basic bank accounts offer similar services to a standard current account, but do not have overdraft facilities or chequebooks. Whilst Lloyds has had a policy in place which restricts basic bank account holders from using rival ATMs for some time, RBS announced in August that it too would end its policy of allowing access to other banks’ cash machines for its one million basic bank account holders due to high fees.

Committee chairman Andrew Tyrie MP has expressed concern at the policy. RBS said in reply that the bank is charged every time a customer makes a withdrawal or checks a balance at a rival machine, which results in money losses in its basic bank account services. Mr Tyrie says the charges undermine the bank’s commitment to offering basic bank accounts, which the government wish to be made more widely available.

Housing market showing some “signs of life” but not yet booming: Figures released by the Council of Mortgage Lenders (CML) have shown that 52,000 loans were advanced for home purchase increased in August, an increase of 7% compared to July. Remortgaging was also up. The CML described these as “welcome signs of life”, but stopped well short of proclaiming a renewed housing boom. Indeed, both the CML and RICS, who issued a monthly survey of surveyors today, suggested that consumer confidence in the market remained low, with fears over the UK and European economies identified as one cause.

HMRC issues record 1.5m fines to late filers: A Freedom of Information request has revealed that HM Revenue and Customs has handed out 1.5m automatic penalties to those who were late in filing their tax returns, the Telegraph reports. This is an 8% increase on last year. Under new HMRC rules, late filers could now be liable for much larger amounts. The fixed penalty of £100 has been changed – taxpayers could now be liable for up to £1,500, depending on the amount of tax owed and the length of the delay, although the smallest fine remains £100 for those who submit their tax returns a day late (it then increases by £10 for every subsequent day, up to certain limits). The next tax deadline is 31 October for all those planning to submit paper tax returns (there is a separate deadline for those submitting tax returns online).

Pension fund deficit grows: The Pension Protection Fund has said that the UK’s pension funds moved further into debt for a second consecutive month. Overall, the deficit of the 6,533 private sector final salary schemes increased to £196bn by the end of September, compared to £117bn at the end of August. Of these 6,533 schemes, a total of 5,345 were in deficit whilst 1,188 were in surplus. The shift has been blamed on continuing falls in the value of shares, as well as reduced returns from Government bonds.

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