Big Changes for Disabled and Elder Care Coming in Britain

The Government of the United Kingdom has recently announced that it will be making changes to the way that care is provided for the elderly and those with disabilities, shifting the perspective of social care from being something to be delivered by the state to a ‘responsibility’ for ‘everyone’, according to recent reports in the UK media. This perception shift will involve allowing those who receive such care to have larger personal budgets, more control over how these budgets are spent and also, increased support for those who give care, focusing on volunteers.

Growing demand from the burgeoning population of British citizens entering their later years, says the independent commission in charge of restructuring social care, has led councils to struggle to provide home help care services as well as placements for carers. The Government says it does not want to try to get ‘care on the cheap’ and is interested in making the new system function better and relieve problems within the current system.

The new policy would not go into effect until 2013 and currently, councils are trying to prepare to stretch out their funds as far as they can to try and make ends meet. According to the Association of Directors of Adult Social Services’ president Richard Jones, the funding challenge is quite severe so people are needed to help get involved to form a more nurturing network to provide care that involves the person, families and the state working together. He went on to say that many people believe social care is simply given free and this has hurt the state’s ability to offer enough on their own.

Over the upcoming 4 years, an additional £400 million would be given to allow carers to have breaks to help make life easier for those cared for and also £3 million is planned to fund the voluntary services sector. Currently, social care spending in the UK is £16.6 billion per year, half of the spending that councils have in their budgets. This applies especially to those who have less than £23,500 in assets who need help covering their care.

Since care can often lead those who need it from solid financial lives to massive debt, the extra £2 billion for councils is seen as a real boon to those in the UK needing assistance with daily life.

Slow Home Sales in UK Said Due to Lack of Mortgages

Typically, during the Autumn months, the United Kingdom’s housing market tends to see something of an upswing, but that is not the case in 2010, say house building groups across the nation. Instead, due to a lack of mortgage finance, first time buyers are being left completely out of the loops when it comes to being eligible to purchase a new home.

This comes as no surprise to consumer finance experts who say that with so many people in debt now, it is nigh to impossible for them to even consider taking on more debt. Those struggling are still being advised to pursue Debt Management Plans if their debt is small since most advocates view this part of the recession as the lower mid point of the cycle, meaning that those who take care of their debts now will be in a good position once the lending and housing markets bounce back.

Leading builder Persimmon says that the sales levels for September did rise each week, but the typical Autumn jump was nowhere to be seen. Even the amount of consumers merely looking was down sharply from a year before.

In terms of the British housing market, Autumn is the 2nd most important season with Spring being the clear leader, traditionally speaking. Summer being the time to take a holiday, the market generally surges again in September. This is making builders nervous as they fear that the housing market is is definitely starting to head back down further than before.

House prices, too, are looking as if they will experience a very steady decline, according to estate agents. Even Halifax and Nationwide, mortgage lenders, have seen released data that shows falling prices across the UK. Despite the lower prices, however, the availability of mortgages remains scarce. Consumers face large deposits and this means that with such poor terms, first time buyers are practically locked out of the market which, in turn, strikes directly at the profits of builder. Redrow even termed the current situation a ‘mortgage famine’ and has complained that it is not a good way to help the economy rebound.

While the market looks bleak for buyers, the industry itself is managing to handle its own debts with builders like Persimmon restructuring their operations to adjust to current economic realities in Britain.

Single Parents in UK Should Get Job When Child is One Some Say

Parents who are raising a child alone in the United Kingdom have now been told that that they may well lose a portion of their state benefits once the baby reaches a year old if they do not begin to prepare to get a job. New sanctions that are set to spur those not currently looking for work to start working will target single parents without jobs who have a child between the ages of 1 and 5 years old. Word of this came from a recent White Paper that has drawn fire from charity groups that focus on children and those which look after single mothers.

The Work and Pensions Secretary, Iain Duncan Smith, outlined this set of plans to rock the benefits – one that critics say is the sharpest set of changes in more than 6 decades. He told the press that parents with children between ages 1 and 5 will need to keep in touch with Jobcentres and discuss a plan of action for what will happen once their child reaches school age. He went on to say that he views the impact on these parents, most of whom are single mothers, as very low and that 40% of the benefits would be the maximum taken, half of that for not attending an interview regarding working and another for missing further appointments on that issue. When the child is 5 years old, if they had not yet found work or were looking for it in an active way, then there would be more penalties applied against them.

Those unwilling to take a job offered to them who would also not apply to do community service work would loose their Jobseeker’s allowance for 3 years. Smith made the statement that those who cooperate would be happy and nothing would happen to them, but that it was not about ‘hammering people’.

What many have pointed out is that the Plan is actually aimed at targeting people who are involved in a ‘black economy’ where £140 billion in benefits each year go to those who are working on the side and not paying taxes. Fraud, also, is costing the system over £5 per year right now.

Critics have accused the new plan of creating a climate of fear and that it targets the poorest children in Britain, most of whom have parents that want work but find it difficult to get a job that still allows them to care for the children even after they are in school. Critics say that there is no protection for parents that says they will not be punished if they cannot find childcare and that this in and of itself, they find, is inexcusable lack of foresight. They cite long term damage to society followed by long term economic damage as being their chief reason for opposing the sanctions.

In what comes as perhaps the most shocking aspect of the benefits system changes, claimants who get emergency hardship payments may find these being turned into loans. When these claimants do not meet requirements set by authorities, they would then owe the Government for their benefits as a means of sanction.

Many Enraged by Plan to Force Work for Welfare

Recent plans have been unveiled that would be designed to force people who have been unemployed for a long period of time to do manual labour for which they would not be paid. The welfare campaigners of Scotland were quick to condemn the plan, citing outrage at its purpose with so many in Scotland already facing stiff debts and Trust Deeds being the primary way many are able to overcome such situations in a fair way. This plan, say campaigners, is flat out unfair to both those working to repay their debts and those unable to find work who would not be paid for their labour.

Those opposed to the pan have stated clearly that it would essentially harness the labour of the poor to fix an economic crisis that they did not help to create. Iain Duncan Smith, the Work and Pensions Secretary, intends this week to reveal the compulsory work programmes which last 4 weeks and involve tasks such as gardening and picking up debris. These tasks will be for those without jobs who have been judged to be lacking in work ethic.

Danny Alexander, Smith’s colleague in the Cabinet, also stated that the Work Activity placements would be used against those claimants who did not take full advantage of employment seeking support and wielded as a sanction. Opponents of the plan, some 40 organisations such as Children 1st, Oxfam, Scottish Council for Voluntary Organisations, Scottish Churches and others allied under the Scottish Campaign for Welfare Reform, have cited that these plans will make it even more difficult for those sanctioned to find actual jobs.

According to the Child Poverty Action Group’s John Dickie, the problem with the proposed plan is that it does not treat people with dignity and fails to help them find a way towards work that will actually pay them. As it involves punishing them it is distracting from the problem that Dickie says is actually at the heart of what the plan is a reaction to: a lack of jobs that can sustain an individual, much less a family. Without child care available and with widespread discrimination, the real jobs with real wages are just not so easy to find as those who support the plan are claiming, say critics.

Critics also cited the jobs as violation of minimum wage legislation and went on to say that making people work for 30 hours or more while not getting paid was essentially insult to injury and would perpetuate the problem. Smith’s approach is to have people experience the habits and routines of working life that he believes they have forgotten about. Thousands of claimants would be targeted for this 30 hour work week because they are believed to be fine with not working or are suspected of having a job they do not declare. Those who fail to comply would lose their £65 per week Jobseeker’s Allowance for 3 straight months.

Smith was quoted as saying that those in the programme would need to understand the message that they need to ‘play ball or it’s going to get difficult’. Critics argue that the plan fails to see that it is lack of jobs which pay enough to help people survive which are the issue as opposed to a lack of work ethic.

Bank of England Holds Rates and Follows US Example

Recent news from Chancellor George Osbourne has revealed that the Bank of England in the United Kingdom will follow the example of the United States’ Federal Reserve, emulating that central bank’s plan to inject more cash into its national economy if the economy gets unstable once again. Due to the fact that the BoE has said it will keep interest rated at just half a percent for now and not print money, the value of the pound shot up in the global currencies markets.

Still, Osbourne left many analysts believing that he plans another round of QE, the term for quantitative easing. In an address to the Commons Treasury Select Committee, Osbourne shared that his economic policy making principle is derived from the Bank’s strong fiscal policy that gives monetary policy a greater level of flexibility.

As for an alleged Plan B, in case the UK economy does begin to stall more widely than just the housing market, Osbourne pledged to allow the Bank’s committee on monetary policy to do what they deem necessary to save the economy. Last year alone, the BoE injected £200 billion into the economy by way of QE, but that programme ended some time ago. Critics claim that for all the money spent, very little of it has made an impact on those at the bottom of the British economy who continue to struggle with heavy debts, more economic restrictions, higher cost of housing, tougher financing and a lack of jobs.

These QE programmes typically mean that the BoE buys UK government stocks from investors that hold them, paying those investors in cash. That then puts new funds into money markets in which banks lend to one another. This could be why the average British citizen is seeing precious little in terms of meaningful effects of QE. Economists on the other side of the fence note that these types of programmes are long term investments and could take years to pay off.

This move by the UK closely follows what happened days ago in the US when that country’s Federal Reserve bank decided to inject more than £370 billion into its own economy due to the fact that America is currently seen as being in a ‘jobless recovery’. That translates to US citizens facing similar struggles to those taking place by the average consumer in the UK.

On word of Osbourne’s announcement, the value of the pound shot up to $1.6263, a full 1% higher and the highest level seen since January of 2010. In addition, the economy does seem to be rebounding with increases in service sectors, manufacturing industries and exporting of goods. Housing prices, as well, are on the way up once again.

Property Market in UK Taking Dreaded Second Dip

It has been feared for the past several months in the United Kingdom and now it appears to have arrived, that much feared ‘double dip’ of the housing market. Economists have spoken up to say that despite some of the lowest mortgage rates in decades, lending for new houses has dropped to 10% of what was seen in August of 2010 when over £1.6 billion in net lending was done. For the month of September, only a shocking £112 million in mortgages went on and both of these figures are after repayments and redemptions have been subtracted from the lending totals, according to the Bank of England.

Since many consumers are currently facing steep debt, experts are not entirely caught off guard by the new figures. However, it must be said that in the upcoming months, banks intend to implement conditions for good mortgage deals that require those who want the best mortgages to have sizable deposits with that bank. This could drive lending down further, but the banks intend it as a way to stabilize the lending market. Since this trend is set to be long term, according to economists, many consumers in debt are being advised to seek out debt management plans if they want to work their way out of their debt so that their credit can be in good enough shape to eventually be eligible for a mortgage in this new economy.

One economic adviser, Nida Ali, who works for the Ernst & Young ITEM Club went so far as to suggest that the demand for housing keeps going down because those in the UK who are willing to buy are having trouble finding the proper financing to allow them to purchase a home. This, Ali said, along with the fact that more people are beginning to put properties up for sale means that there is a glut of housing with few available buyers which, of course, creates the perfect conditions for this storied double dip. Since the labour market is not looking as if it will be inclined to support an upswing, the dip is set to last quite a bit longer than it otherwise might. In fact, some economists are going so far as to forecast this housing market downturn will keep on rolling through the end of 2011, at least.

The BoE has shown that mortgages being approved by banks are actually down yet again for the 5th month in a row. They now stand at just under 47,500 which is the lowest they have been since February. To top things off, the prices for houses have dropped by an amount even larger than the average UK citizen’s salary. Across Britain, the prices have gone down by 0.7% in September which is just under £2,400 in value lost in the month of September alone per house.

Combined with the fact that the average home price is still out of the reach of many Britons at £164,381 things are not looking good for housing and all of the markets tied in with it right now.

British Homeowners Finding More Value in Debt Repayment Than Savings

Presently, good loan rates are helping to make it easier for home owners in the United Kingdom to pay off their mortgages so many are using this chance to try to pay down debts instead of saving. This may seem odd to some, but UK consumer financial experts show that for those consumers attacking their debt prior to instituting savings programmes for themselves, the amount they save that would otherwise go to pay off the debt works out to more than what they would have earned from a building society or bank savings account. The reason, experts say, is the different in interest rates between both of these activities.

The figures released yesterday by the Bank of England show that, for banks, net lending was down hugely. While August 2010 saw a difference to the tune of £1.6 billion, September 2010 showed just £112 million – a mere 10 per cent of the previous month. Figures released by the British Bankers’ Association go on to show that banks lent slightly more on mortgages, in terms of actual money lent, with September showing £4.6 billion lent compared to the £4.4 billion for August.

Homeowners also repaid their building societies across the UK more than £12 million than they were lent, as a group, for September 2010. In all, since the beginning of the year, September has had the highest repayment amount, a whopping £2.8 billion repaid.

Since mortgage rates are lower than they have been in decades, economists say that it makes sense UK consumers would want to pay down their mortgage debts rather than waiting for the lengthy accruing of interest in savings accounts which typically earn very small percentages of interest back. Some analysts, however, point out that in order to really get back on track, banks still need to lend more to encourage the housing market to rebound and, along with it, all of the retail sectors such as home furnishings and insurance, which help bolster the British economy.

Banks in UK Bracing for PPI Claims Totalling Up to £5 Billion

Things are looking bad for UK banks as they are staring down the barrel of £5.1 billion over the course of the next 5 years for the purposeful misselling of PPI (Payment Protection Insurance) to consumers who now are legally entitled to be compensated for the misselling. In turn, consumer help services like 1ppi.co.uk have taken up the cause to help consumers and are finding tremendous success processing these claims. Banks are not happy, but the Government has made it clear that they must pay for their mishandling of the trust consumers have placed in them. Without that trust, say economic experts, Britain’s economy will have trouble fully recovering as consumers grow wary of dealing with the banking system. The compensations serve as a way for these banks to re-establish that trust with their customer base.

Credit card holders are the primary victims of this missold PPI and many were crunched financially during already rough economic times. Major British banks like HSBC, Barclays and Lloyds Banking Group are looking at paying out millions of pounds in compensation as the scandal over PPI gains more and more public exposure. Morgan Stanley, a US investment bank, released research which shows that Lloyds alone, the bank believed to be most heavily involved in the PPI misselling, is going to face up to £1.5 billion in PPI claims. Credit Suisse recently said via its analysts that it could be paying a solid £1 billion due to PPI misselling.

The Financial Services Authority of the UK had said in August 2010 that the industry would be facing up to £3 billion in claims over PPI, but Morgan Stanley has said that it based its estimated on a success rate of 46% for compensation claims because people now know of services like 1ppi.co.uk having such strong success at getting consumers their rightful compensation. Previously, some estimated that only £740 would be the cost to the banking industry, but with word reaching more and more consumers, they are taking action to get their missold PPI compensation at a far greater rate than some thought might happen.

On average, claimants are getting £2,000 according to some estimates with £2,500 being the average reached by other analysts. Banks caught in this PPI scandal face very heavy charges, as well, in terms of additional costs for them in terms of fines and also other fees. Economic analysts say that with each PPI claim filed, consumers send a strong message to UK banks that they will not tolerate such deception in the British marketplace.

Those in the UK who need to file a PPI claim are definitely advised to pursue this action since they stand to gain quite a bit if they have been missold PPI on a credit card or in other cases. The success rate of 1ppi.co.uk is seen as a good indication that these services get those claims processed and get consumers the money they deserve.

British Women Choosing Debt Consolidation Loans More Than Men

Recent figures from the Government of the United Kingdom’s help line for insolvency have shown that there are a significantly larger percentage of women in the UK than men who are choosing loans for debt consolidation as a means of straightening out their finances. Financial experts suggest that often an IVA could have been a better solution for these women, but a lack of information is pushing them towards other solutions that could keep their cycle of debt going – not a good sign with such heavy cuts coming from the UK government that could send many spiraling down further into debt if they do not find a way to fix financial problems.

The figures themselves showed that 22 per cent more women in the UK are now facing a serious financial problem that they hope such loans will cure, compared to 8 per cent more British men. Some have pointed out that the issue could be a case where women tend to be in charge of managing household finances in the UK and therefore may be the half of a married couple most likely to call in and seek help from the Government’s help line.

However, some have stated that there is a preponderance of choosing luxury or simply more expensive goods among women that is a tendency which can be shared by men, but is often not. Of the more than 64,000 women tallied in those figures, it appears that many had been consistently spending more than their incomes could bear for quite some time. This desire to keep up a seemingly extravagant lifestyle shown in TV programmes and movies appears to be hitting women in the UK hardest if they are between the ages of 25 and 49 years old. In that demographic, more than 45,000 ended up as part of the 64,000 women calling in for help. While not blaming such businesses flat out, experts said that retailers constant bombardment of women in this age group to encourage spending has revved up during the economic crisis Britain has undergone recently and that such advertising could be having a mild subconscious effect on consumer buying habits. However, the solution they pointed to was simply better fiscal education for consumers.

Often, these women have reported actually borrowing money to purchase more disposable goods instead of to fund investments to get themselves ahead. Financial responsibility advocates suggest that had they leveraged their borrowing power to be able to improve their situation rather than ‘treat the symptoms’ of financial pain, they could well have ended their own debt problems. Now, instead, they face bankruptcy and still are not aware that an Individual Voluntary Arrangement could be entered into as a solid path to financial recovery.

Huge Changes in Government Spending on the Way in Britain

It has only been a short time since the latest plans for cuts in Government spending were released, but already the public in the United Kingdom is reeling from the news of how sweeping the changes brought about by Chancellor George Osborne are set to be. With changes affecting everything from the retirement age to the criminal justice system in the UK, nearly everyone is paying attention to the solution for the UK’s massive public burden of debt now. According to media reports, even former Prime Minister Margaret Thatcher is tracking the situation from her hospital bed.

Osborne himself has now come forward to say that there will not be an alternative plan to the one that he has chosen to put into action. In an effort to reduce the massive scale of the national deficit which is consuming a full 12 per cent of the UK’s Gross Domestic Product, Osborne unveiled a programme which he says display “hard but fair choices”. The spending review has been made major news in the UK media and along with it, all sorts of criticism as those who oppose the Conservative plan voice their opposition. Of course, experts say that this was to be expected no matter what plan might be put forward since the UK is still stinging from the recent economic troubles and nervous about what the future might hold. For his part, Osborne continues to stand firm and refuses to back down from his position that the UK must make difficult choices if it wants its economy to recover.

A 2 year review of the programme is what the Institute for Fiscal Services is lobbying for Osborne to consider, saying that the cuts may affect public services so severely that the plan may need to be adjusted. More than £81 billion is set to be cut from government spending and the areas which will see cuts include local government, social housing, welfare, police forces and higher education – a fact that is alarming to many, but absolutely essential according to Osborne who has stated that the UK today is clearly at an extremely strong risk for bankruptcy.

In all, the new spending cuts will axe a total of £18 billion from welfare because they cut an additional £7 billion from the budget that had already been reduced by £11 billion in the previous budget. To put this into realistic terms, one group of UK citizens whom this particular cut will directly affect are those 1 million individuals who now receive £50 per week in incapacity benefits that they have been receiving for a year or more. Additionally, the cuts to housing benefit rules have certain charities predicting increased levels of UK homelessness in the younger demographic. To some, especially those in Labour, the cuts are simply too harsh and treat the poor with unfairly intense effects which will not reach the rich. However, some commentators have been quick to point out that even the royal family itself will be receiving a reduction in their typical subsidies as a result of the new plan.

Both the International Monetary Fund and large corporations support the changes Osborne is introducing and he is using this support as way to bolster himself from the withering criticism the plan is drawing his way, especially from Labour. Osborne’s plan will take 4 years to play out and in the mean time, his supporters say that the increased focus on fiscal credibility will put the UK in good stead with the rest of the world by making sure that the national deficit does not destroy the economy and end up triggering far more draconian changes than the cuts to public spending appear to have at first viewing.

A private sector recovery led by big business is what Osborne is banking on to bring the UK back into good financial fitness. He went on to say that while he did consciously cut things like housing benefit for the UK’s single young people, he did not cut into the nation’s health care service, the roads system, schools nor green energy initiatives. The Chancellor pointed out that with spending on housing benefits to such a level that it currently exceeds the amount spent on the police force in the UK, he saw a problem and wanted to take direct action to correct it before it got further out of hand.

This story will obviously have many more details coming to light as both sides speak out about the new plan. Economists say the changes will definitely be felt by the majority of the UK in one way or another.