Pay freezes to increase IVA need?

One of the major problems facing British consumers at present is the fact pay rises are running behind inflation, as shown by the latest official government figures earlier this month and now further confirmed by research by consumer group uSwitch.

Those for inflation showed the Consumer Prices Index rate to be four per cent in the year to February, while in the three months to January the annualised earnings growth was 2.2 per cent for basic pay and 2.3 per cent overall.

Worse still for some, the latter statistics indicated the bulk of the pay increases had come in private sector businesses and banking, meaning that while some big bosses were counting their large bonuses, many people were left well short of the short of increase that would even keep parity between pay and prices.

The details added by a survey by uSwitch show 56 per cent of the working population -16 million people will have their wages frozen this year, while of the 11 per cent getting a pay rise, only one-in-five will receive one in line with or above inflation.

And for those struggling with debt, this means an even greater battle to maintain payments, something that may leave some considering an individual voluntary arrangement.

This works through a deal in which creditors agree to take a smaller amount, with this being binding on all of them if 75 per cent agree to it. This is repaid over a period of up to five years and after this any debt left is cancelled.

How far inflation was behind wages in February will become clearer as new figures emerge, with the latest Bank of England inflation figures due out next week (March 22nd).

By Joe White