Credit Action News Round-up (26 October 2011)

Around 60% of UK adults don’t have a will: Despite one in five British adults believing they will leave behind more than £10,000 in savings, almost 30 million do not have a will. This represents around 60% of the adult population. Research from unbiased.co.uk has revealed that more than eight in ten 18 to 34-year-olds and two-thirds of 35 to 54-year-olds don’t have a will. This also applies to a worrying 35% of people aged over 55. Of those who do not possess a will, more than one in ten say that writing one has never occurred them, and 10% believe that their estate will automatically go to the right people. Unbiased.co.uk said the figures showed that the UK is “gripped by ‘wills apathy’” and called on people to take action this week, which is Write a Will Week.

For some advice on making a will and drawing up your estate, look at October’s issue of MoneyTalks on saving, or visit the “Guide to Making Will” section of the Credit Action website which you can access by clicking here.

CPI measure for public sector pensions to be challenged in the High Court: The government’s policy of raising public sector pensions in line with the Consumer Prices Index (CPI) rather than the Retail Prices Index (RPI), which was announced in the 2010 Budget, is to be challenged in the High Court.  Six trade unions have called for a judicial review: they believe the policy involved an improper use of ministerial discretion. Next April, public sector pensions will rise by this September’s CPI rate of 5.2% compared with the RPI rate of 5.6%. In an independent report published earlier this year, it was found that the move to CPI may eventually see the value of public sector schemes cut by 20%. Chancellor George Osborne has described CPI as a more “appropriate” measure of inflation which will save the government money by producing smaller increases each year, whilst Dave Prentis from the Unison union described the move as “cynical”.

£1 in every £10 is spent online: Internet sales in September reached £539.4 million, compared with £416 million spent in the same month in 2010. The figure for 2011 is a 5.4% increase on last year, and showed that internet sales accounted for around 9.6% of total retail sales in September. The growth of online sales could produce new shopping trends and provide high-street retailers with ways to re-invigorate their businesses, with Next an example of a company which is experiencing promising online growth. The data was produced by the Office for National Statistics (ONS) revealed some other interesting trends: fuel sales values increased by 20% whilst sales volumes rose by just 2.8%.

IFS research shows education cuts are biggest for more than half a century: According to a report by the Institute for Fiscal Studies (IFS), spending on education will fall by more than 13% over the next four years. The IFS says that this will be the biggest cut to education spending for more than fifty years. Whilst schools in the most deprived areas will see an increase in resources, largely a result of the Government’s policy to award schools “pupil premium” for pupils entitled to free school meals, universities and provision for the under-fives and 16 to 19-year olds will suffer the most. The IFS said that “the cuts will be deepest for capital spending and higher education” and that whilst school spending is “relatively protected”, those in the more affluent areas will see real-term cuts. This is in stark contrast to the previous decade, where school building programmes and early years spending secured much of education’s funding, which rose from 4.5% of the national income in 1999/2000 to 6.4% in 2009/10: the fastest growth period for 30 years. The IFS report says that education’s proportion of GNP will be levelled at 4.6% by 2014/15.

Households save £4bn by switching to standard deals: Research by the Council of Mortgage Lenders (CML) found that around 1.8m borrowers had come to the end of their fixed-rate period by late 2010 and switched onto a variable rate with their lender. Collectively this switch is estimated to be worth around £4bn a year, equivalent to an average saving of £2,600 for each borrower. Although lenders’ standard variable rates (SVRs) are usually higher than their fixed deals, they are tied to the Bank of England’s base rate and so costs have decreased due to the emergency rate cuts in the financial crisis. The CML report estimates that 85% of borrowers who have switched to variable rates will be paying less than their original mortgage rate by the end of 2012, and that around 58% will still be paying back less than their original payment throughout 2014. 

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