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Whilst the most pressing issue for the government in power come May 7th will be to set about reducing the budget deficit, at the same time, it should not lose sight of the importance of encouraging the savings habit in the UK.
The three main political parties each have a different view on Child Trust Funds, with Labour looking to carry on with the scheme as it is, the Liberal Democrats wielding the axe and the Conservatives maintaining the funding for the poorest third of families and those with disabled children only.
Forget the Bank of Mum and Dad. First-time buyers have found a new way to raise the extra money they need to finance the deposit for their first home: selling make-up from cosmetics company Avon.
The door-to-door makeup sales firm, for whom Hollywood actress Reese Witherspoon advertises their products, says it has seen a “huge growth” of new recruits who cite saving for their first property as a reason to join Avon and supplement their income.
Does the general public care about huge levels of unsustainable debt? Not if it’s the government’s, apparently. As my colleagues wrote in this morning’s FT:
Ten leading investment funds all told the FT that a hung Parliament, potentially delaying action to tackle the UK’s £167bn deficit, was the biggest threat to the market… But Sunday’s polls suggest the public does not share market concerns about a hung parliament. In polls by ComRes and YouGov, they said that would be their preferred outcome. More…
Are Britain’s consumers so intoxicated, or numbed, from their 13-year credit binge that they no longer think of debt as a problem? Not so, claimed Sainsbury’s Finance – arguably the ultimate “off-the-shelf” lender – this morning:
Nationwide Building Society will soon prevent some of its customers from making cash withdrawals of less than £100 from its counters for the second time in 12 months.
FlexAccount, CashBuilder and Cash Card customers will not be able to withdraw less than £100 from counters from June 7 in a bid to cut down on queue lengths. This follows the ban on counter withdrawals under £30 last November.
They are not the only bank to do this. Santander brought in a similar restriction on counter withdrawals under £30 last year and will roll out the same rule for its Alliance & Leicester customers in August.
Who’s the biggest banker basher? It’s a dead heat. Thump! David Cameron says banks will be forced to repay the billions injected by the taxpayer via a compulsory levy. Biff! Alistair Darling will force banks to provide financial services to the unbanked. Wallop! Everybody will crack down on ‘excessive bonuses’.There will only be one loser in all of this. According to a press release from Moneyfacts.co.uk earlier this week, politicians’ reforming zeal is hastening the end of free banking.
Well, pardon me, but I don’t think that would be such a bad thing. Let’s be honest, there is no such thing as ‘free banking’ anyway. Banking services are provided free of charge to the majority of customers, and the cost of that provision is met by charging outrageous fees to a minority. So far as I can remember, this is not how the rest of the world operates. When I lived in the US (in the early 1990s), I was charged 25 cents for every cheque (sorry, check) I wrote. In Hong Kong some years later, I paid a monthly fee to run a bank account. And I’d lived in Germany for nearly a year before I was even deemed worthy of Teutonic banking services.
Who says you can’t get money for nothing? Ok, so most people do. And on the whole it’s very difficult to get anything for free. But two websites, Groupola.com and MyVoucherCodes will be giving away a free £5m online from midnight tonight to midnight Wednesday 17th March. That’s £5 per person who signs up to Groupola.
So, what’s the catch? There is one, but it’s not too onerus. The £5 is not given as cash but as credit that will go into the customer’s Groupola.com account, which can then be used to pay for offers through the site.
Is popular culture to blame for the state of household finances? It occurs to me that today’s indebted thirty-somethings had the misfortune to grow up in the 1980s to a soundtrack of such musically – and economically – dubious classics as ‘Money For Nothing’ by Dire Straits, ‘Gold’ by Spandau Ballet, and ‘Opportunities (Let’s Make Lots of Money)’ by the Pet Shop Boys. They clearly switched off whenever Radio 1′s ‘Oooh’ Gary Davies introduced ‘Money’s Too Tight to Mention’ by Simply Red – but then didn’t we all?
So it’s perhaps little wonder that this generation’s children are now growing up in households with average short-term debt of £8,653, according to Scottish Widows. They’re having to live with it, too – Equifax reports that one third of borrowers are only paying off up to 25 per cent of these credit card debts each month, with nearly one in four making only the minimum repayment.
But the children may grow up to be more financially savvy than their parents – thanks to the music of Tinchy Stryder, the undisputed ‘Prince of Grime’. For those of you unfamiliar with the latest urban sounds, Tinchy recently reached number one, in what Gary used call the Hit Parade, with the self-confidently titled ‘Number One’, featuring N-Dubz. And now, he is giving personal finance lessons in schools.
There’s a glimmer of light for consumers who have seen their account balances diminish due to repeated bank charges. New figures suggest there is up to £480m of unfair bank charges to be paid back by the banks.
The research comes from consumer website MoneySavingExpert.com which has had over 6 million template letters downloaded from it and is launching its new bank charges reclaiming guide on Wednesday – which includes new legal arguments developed since the court case.
Finally - we here on FT Money have received proof that our crusade to encourage you (the great unwashed) to take command of your finances is just and necessary. We will celebrate by downing a glass or two of chianti.
This morning, the Insolvency Service revealed to the FT’s Norma Cohen that the number of people becoming insolvent in this country rose by an eye-watering 25 per cent in the last three months of 2009. This means that the number of bankrupt individuals in England and Wales is now 134,142 or one in every 320 adults. And in the fourth-quarter of last year alone, there were 35,574 individual insolvencies, up 24.9 per cent from the last three months of 2008.