While it didn’t emerge as one of the headlines of last week’s Budget speech by Chancellor Philip Hammond, the government is set to introduce measures to help those in debt.
The full version of the Budget announced new policies to help households manage unexpected costs by increasing access to fair and affordable credit, as well as a consultation on a breathing space scheme for people who fall into problem debt.
No-interest loans scheme pilot
While its launch date is not yet clear, the government has announced it will undertake a feasibility study into a no-interest loans scheme early next year.
Few details have emerged so far, but it’s expected that the loans will be intended to help households manage unexpected or emergency costs, rather than for spending on holidays or shopping. Managed properly, the loans could stop people from turning to high-risk credit sources such as payday loans and loan sharks.
Breathing space for people in debt
For those already struggling with problem debt, the government has planned a consultation on an extension to the so-called ‘breathing space’ scheme.
Under the scheme, those in debt would have a 60-day period of protection against creditor action. This would give them more time to seek advice and make plans to repay their debt in a manageable way.
Other Budget features
There were further measures announced in the Budget that are intended to improve personal finances.
Workers on lower incomes will see a further boost thanks to an increase in the National Living Wage. This will increase to £8.21 per hour and is expected to provide a £690 annual pay rise to 2.4 million full-time workers.
The income tax threshold will also increase from April 2019, meaning workers can earn more before paying tax on their earnings. The income tax Personal Allowance will increase to £12,500, meaning a basic rate taxpayer will pay £130 less tax than the 2018-19 tax year and £1,205 less than 2010-11.