Autumn Statement ‘to hurt hard-pressed consumers’

The Autumn Statement is going to make life even more difficult for consumers already struggling to make ends meet.

Chancellor George Osborne revealed his latest set of policies yesterday (December 5th) and it proved to be something of a mixed bag for consumers. While they will be happy the planned 3p hike in fuel duty has been scrapped and with the increase in the pre-tax personal allowance limit, a below-inflation increase in benefits means that low income working families will bear the brunt of the cuts.

Gillian Guy, chief executive at national charity Citizens Advice, noted after the government's decision to strip another £3.7 billion from the welfare system, it is now "squeezed dry". She added that "working families and families on the edge" are going to face a lot of challenges in the coming months.

"The government can't keep hitting the same people over and over again. Let's not forget, below inflation benefit increases will not just hit people who are out of work. It will also hurt working families in low paid jobs who have already been hit by wage freezes and cuts in working hours," Ms Guy remarked.

Working families

According to analysis by the Trades Union Congress (TUC), some working families are going to be £3,000 worse off a year by 2015 as a result of the real terms cuts to child benefit.

TUC general secretary Brendan Barber said the plan represents one of the "biggest ever squeezes" on the budgets of those families trying to hold down jobs. He added small gains made in fuel and tax are far outweighed by the "swingeing cuts" to the welfare system.

Debt and danger

Moving forward, a number of consumers may struggle to stay on top of their household bills and other outgoings. If their debts do begin to mount up, then they should look to take action as soon as possible.

If people have debts of over £1,500 and owe money to more than one creditor, then a debt management plan could be the perfect solution for them. It will merge all of their payments into one manageable monthly sum, while money will be left over for living expenses.

In order to qualify, individuals need to be able to afford a monthly payment of £100 – however in exceptional cases this could be reduced to £80.

The devil is in the detail

Sean McCann, personal finance specialist at NFU Mutual, noted there is both good and bad news for consumers. He pointed to the dropping of the fuel duty tax as evidence of a positive step, but it is not enough.

Alison Garnham, chief executive of Child Poverty Action Group, is also worried about how families are going to get by. She pointed to the fact that six in ten poor children live with a working parent and she thinks the Autumn Statement makes for "grim reading". 

With 60 per cent of the cuts to benefits and tax credits falling on working claimants, Ms Garnham believes many people are going to struggle.

By James Francis