With gloomy January out of the way, we take a look at the latest personal debt statistics from the Bank of England, get the low-down on why so many banks are closing high street branches, and find out about the rising number of us applying for insolvency.
Not only that, we’ll explore research suggesting you could be saving on your ‘big shop’ and we look at how the Government is changing the benefits available to the bereaved…
1. UK personal debt rose by £1b in December
In November Mark Carney, Governor of the Bank of England, said that he would “remain vigilant around the issue” of personal debt.
“Consumer credit is rising at its fastest rate for over a decade and the amount owed on credit cards continues to hit record levels.”
The latest statistics from the Bank of England show that while personal borrowing slowed down slightly in December, the overall level of personal debt in the country remains at levels not seen since the highs of the mid-2000s.
The annual growth rate of UK personal debt for 2016 was 10.6%, down slightly on the previous month’s figures. However, that’s still the second highest annual growth seen in 11 years and the 7th month in a row where it’s grown by over 10%.
With the cost of living on the rise, many households are already facing a difficult 2017. A rise in unsecured credit and subsequent interest and repayments could make that battle even harder.
2. 100s of banks & building society branches to close
Could our high street bank be a thing of the past? Figures released by the Mail on Sunday have revealed that 423 bank and building society branches are set to close, or have been put on notice to close, in the UK in 2017.
The highest number of branch closures comes from HSBC, who have committed to closing 117. They say that branch visits have fallen 40% as more customers move to using their online services.
Yorkshire Building Society says ‘falling usage’ is behind their closure plans. They claim that just seven people a day were using some of the branches they plan to close.
Age UK has responded to the announcements by raising concerns about how this might affect the elderly, especially those living in isolated areas. Jane Vass, Director of Policy and Research at charity Age UK said:
“If a branch closure happens in an area where bus services are poor, or there is patchy internet service and mobile black spots, it can make banking life extremely difficult for the elderly.”
You can view an interactive map and see if you’ll be affected by the closures.
3. Personal insolvencies rise for first time since 2010
The latest statistics from the Insolvency Service have shown that total personal insolvencies grew by 13% in 2016, reaching 90,930, growing for the first time since 2010.
Our CEO Mike O’Connor has expressed concern:
“Insolvencies are on the increase and consumer credit is hitting pre-financial crisis levels. We have also seen record numbers of people coming to us for debt advice in 2016.”
Individual voluntary agreements (IVAs) went up by 23.2% on the previous year, a similar level last seen back in 2009-14 and debt relief orders (DROs) increased by 8.4%. Bankruptcies did fall by 5.4% (possibly due to the increase in the threshold for bankruptcy from £750 to £5000, which prevents creditors bankrupting customers for relatively small debts).
4. Do you shop around for the ‘big shop’?
Market researchers Neilsen have released figures which suggest that we could be making savings on our ‘big shop’ by avoiding larger supermarket chains.
They claim their research shows that shoppers who did their ‘big shop’ for 20 items or more at a discounted supermarket spent on average £39. That’s £15 less than a similar shop at one of the big four supermarkets. They said:
“In simple terms, when people do a big shop at the discounters they spend £15 less than they do at one at the big four, as the shopping basket from a discounter contains a different range of products with more private label, and £20 less than at Waitrose and M&S.”
But the ‘big shop’ is also not as big as it used to be; Neilsen also uncovered that our shopping habits are changing. We’re making 5% more trips than in 2015, and buying ‘little and often’ for convenience and to avoid wastage, which means that our average ‘big shop’ spend is coming down to just over £50.
5. Cuts to bereavement benefits highlighted
The government are making some big changes to benefits for the bereaved from April 2017.
The current system includes three benefits:
- A lump sum if your spouse or civil partner dies, worth £2,000, called the bereavement payment. You may be eligible to claim this payment if your partner paid enough National Insurance contributions, or you were under State pension age when they died and they weren’t entitled to a category A State pension
- An entitlement to the widowed parent’s allowance if you have children, a taxable weekly benefit worth up to £112.55 a week
- Qualification for a taxable monthly allowance worth up to £112, available for one year called the bereavement allowance, if you’re between the age of 45 and state pension age
From April 6th these will be replaced by a new system called the bereavement support payment (BSP). Under the new rules the tax-free lump sums will change to:
- £2,500 for those with no children
- £3,500 for those with children
And the monthly allowances, payable for 18 months will change to:
- A monthly tax-free payment of £100 if you have no children
- A monthly tax-free payment of £350 if you have
The shake-up means that the over 45s will get more support, earning an extra £2,300 tax-free after the changes take effect. However, parents with young children will find that support under the new scheme is far more short term than before. They’ll lose out on years’ worth of support as entitlements end after just 18 months.
Critics have suggested that this may put extra stress on grieving families having to return to work too soon, or take extra hours. Alison Penny, from the Childhood Bereavement Network (CBN) said:
“We fear for the stress this will place on parents trying to support their grieving children.”
That’s all we have for this month; remember to subscribe to our newsletter to be kept up-to-date on the latest money and debt news stories, and budgeting advice.