by Myles Fitt, Head of the CAS Financial Health team.
This article was first published in the Herald on 6 June 2022.
Two weeks ago, after significant pressure, the Chancellor announced a Windfall Tax and a series of measures to help people through the cost of living crisis. It’s a welcome start and will certainly make a difference for many. But the crisis isn’t going away anytime soon and further financial support is desperately needed.
Yet it’s not just the dramatic, ‘big-ticket’ solutions that will tackle this crisis. Smaller ones can too. That well-known Scots phrase ‘Mony a mickle maks a muckle’ springs to mind. Collectively, small changes can make a big difference.
One example would be raising the Protected Minimum Balance for people who are subject to a Bank Arrestment. Currently it is £566.51, and there are calls from CAS and others in the debt advice sector to raise this to £1,000 (and also to consider a sliding scale of repayment based on the number of people in a household). This would mean that people would have more of the money in their bank account protected before any debt repayments are made.
It may seem like a minor technical change, but that’s the point. It’s relatively easy to do, and it would really help those in this situation: bank arrestments can clear out someone’s account, throwing them into a debt spiral which in the end serves nobody and which impacts families and children dependent on them. Raising the Protected Minimum Balance is a small thing in policy terms but would make a real difference in human terms.
A further example would be to increase the minimum threshold for a creditor-led bankruptcy. While there are plans to increase this level from £3000 to £5000, why not go higher? Bankruptcy has a devastating impact on an individual, removing their agency to deal with debt, and it is very much done to someone rather than with them. Adjusting the threshold higher will make a real difference by giving more space for all debt solutions to be considered, making bankruptcy a last resort.
To take an example from a completely different area - social tariffs in the telecoms market. Telecom costs, like everything else, are rising rapidly, and these tariffs can really help people on lower incomes. We’ve been calling for more social tariffs and wider eligibility. The regulator and service providers are moving on this, but slowly. Let’s make it happen faster.
These are just a few ideas - there are many others. Things that may save consumers only a few quid here and there, and which may on the surface seem not worth doing. But anything that could help those who are struggling is surely worth doing now. So I call on all third sector organisations to join CAS in making these smaller changes part of their policy asks when talking to governments, not just the big headline-grabbing ones.
Governments play a critical role in taking steps to mitigate the crisis. But we can all help, across all sectors. For example in addition to local advice provision, CAS is working hard to promote our financial self-help tools: moneymap.scot and checkmycounciltax.scot. Both can help people with the cost of living crisis by signposting to where support can be accessed to boost incomes, cut costs and make savings. In these tough times we can all play our part to make a difference.