finance – Page 25 – The NEN – North Edinburgh News

‘Common sense’ to prevail over mortgage lending

‘Only borrow what you can afford to pay back’. That seems obvious enough now, but during the property boom the sky was the limit and credit was easy – with disastrous consequences. Lessons have been learned, and new rules come into force tomorrow (26 April) to protect borrowers and ensure a ‘common sense approach’ is taken for every lending decision.

The rules – known as the Mortgage Market Review (MMR) – were drawn up by the Financial Conduct Authority (FCA) as a result of the recent financial crisis and are designed to protect consumers from the kind of reckless mortgage lending that would leave them unable to make repayments.

To ensure that people only get a mortgage they can afford, and to prevent a recurrence of the irresponsible lending practices of the recent past, every borrower will now have to prove that they can afford the repayments both now and in the future. The new scheme will include a new affordability check that will see applicants interviewed by a lender and asked about their income and outgoings.

The FCA has produced a short guide that explains the changes, and around half a million copies will be given out to prospective borrowers in branches of high street lenders, mortgage advisers and estate agents.

Martin Wheatley, the FCA’s chief executive, said: “In the past too many people got a mortgage by simply telling their lender they would have no problem repaying their debt, and that was that. Getting a mortgage can be one of the biggest financial decisions people will ever make, so it needs careful consideration. Our new rules will hard-wire common sense into mortgage lending, and the guide we have created will help explain those changes to borrowers.”

The mortgage industry has been busy getting ready for the changes for about 18 months and many firms are using the new approach already, so some borrowers will not notice the difference.

The FCA has also updated its consumer information pages on its website, at: www.fca.org.uk

Carmichael welcomes income tax changes to help ‘hard working Scots’

Scottish Secretary Alistair Carmichael has welcomed changes to income tax that will see thousands of Scots workers taking more of their pay home. Mr Carmichael said Scotland is benefiting from being part of the ‘fastest growing economy on the world’.

From this weekend, 242,000 people in Scotland will be taken out of income tax altogether thanks to UK Government policy which sees the tax free personal allowance increase to £10,000 in 2014-15 – and that means that from overnight on Sunday an extra 19,000 Scots will no longer pay any income tax.

Scottish Secretary Alistair Carmichael said: “I am extremely proud to be part of a Government that has ensured that every hard working Scot will not pay any income tax on everything they earn up to £10,000. This is a key measure in our long term economic plan and one which every single Scot will be able to see and benefit from in their pay packet this month.

“Scotland is doing well because it’s part of the UK. We are benefiting from one of the fastest growing economies in the world which is creating jobs and ensuring certainty and security for families and individuals across the country.”

Over one million women in Scotland will directly benefit from this increase which comes as Scottish female employment levels reach near record highs.

This year’s Budget also confirmed that the personal allowance will increase again to £10,500 from next year helping even more Scottish families.

Across the UK, Government measures are cutting tax for over 26 million people. This includes taking over three million out of paying any income tax at all – 200,000 of these from this week.

The Sunday 6 April changes also mean that:

Someone working full-time on the October 2014 minimum wage (£6.50/h at 35hrs a week) will pay over 50 per cent less income tax in 2014-15 than a than someone on the national minimum wage in 2010.
Someone working for just under 30 hours a week on the October 2014 minimum wage will not pay any income tax at all.

Taxing times: Osborne ready to deliver Budget

It’s Budget Day, and there’s no shortage of advice for Chancellor George Osborne ahead of today’s financial statement. The TUC says the Budget must address the UK’s growing investment gap, while Holyrood Finance Secretary John Swinney says Osborne’s ‘last chance’ Budget will mean more cuts in Scotland.

The TUC says the gap between current investment levels (14.5 per cent of GDP) and those originally forecast by the Office for Budget Responsibility (17.8 per cent) has grown to £12.4bn a quarter – a gap of almost £50bn. They maintain this has held back the UK economy and, unless addressed, could cause permanent damage to its economic prospects. The TUC’s Budget submission calls for a number of changes to boost investment, including:

Increasing the scope of the UK Guarantees scheme to match the scale of Help to Buy (which could also be scaled back by being limited to first-time buyers)
Bringing forward infrastructure projects scheduled for the next Parliament so projects could start in the next year or two, and;
Cancelling scheduled cuts to corporation tax and reinvesting the money into capital allowances to promote business investment.

TUC General Secretary Frances O’Grady said: “For decades our economy has suffered from over-consumption and under-investment. The Chancellor promised to address this failure but instead has presided over a growing investment gap that has held back growth and which risks causing permanent economic damage. He now has the chance to put things right.

“George Osborne can start to undo the damage caused by slashing capital spending by giving greater financial guarantees to infrastructure projects. This should encourage firms to crack on with the construction of much-needed homes, schools and transport routes.

“The Chancellor should also admit that the billions given away in corporation tax cuts have failed to spur investment. Future cuts should be cancelled and reinvested in more generous capital allowances. After four years of ineffective initiatives, now is the time to start making good on the government’s promise to rebalance the economy.”

With working people still suffering the longest real wage squeeze in over a century, the TUC Budget submission also calls on the Chancellor to halt the squeeze on working families and encourage firms to give their staff a pay rise. The TUC argues that the Chancellor should abandon shifting the personal allowance and higher rate tax thresholds and instead reverse cuts to tax credits and universal credit that are hitting working families on low and middle incomes.

Frances O’Grady went on: “The Chancellor has made Britain’s living standards crisis even worse for working families by cutting vital tax credits and child benefit at the same time as time as wages have shrunk in real terms.

“He has shown contempt for public sector workers by prolonging their wage squeeze even as the economy recovers. Damaging welfare cuts are also adding to the financial woes of hard-pressed working families and must be reversed.
“The one thing guaranteed to cheer working people would be a bigger salary. The Chancellor must do all he can this week to encourage firms to give Britain a pay rise. One way of doing this would be to encourage greater take-up of the living wage.”

This is the last UK Budget before the referendum on Scottish independence, and Scottish Finance Secretary John Swinney said: “This is Westminster’s last chance to seriously tackle inequality and turn away from a budget of continued cuts and austerity before Scotland votes in the referendum.

“Scotland is a wealthy country and we can more than afford to be independent. In each of the last 33 years Scotland has paid more in tax per head than the UK and in the last five years Scotland would be £1600 per head better off than the UK – money that could have been invested in the economy, in public services and reducing debts.

“Instead under Westminster we have seen capital spending cut by almost 27% and our overall discretionary spending power cut by 11% in real terms over the five years to 2015-16.

“We know that we are not even halfway through the cuts planned by Westminster, and that the Chancellor plans a further £12bn of cuts to welfare after the next election. It is also clear that if Scotland sticks with the UK system we could see the scrapping of the Barnett Formula which could result in a further £4bn cut specifically from Scotland’s public services.

“In just under six months’ time the people of Scotland will vote to decide whether budget decisions should continue to be made by Westminster governments Scotland didn’t elect or whether decisions about spending, taxes and public services in Scotland would be better made by the people and parliament of Scotland. Following a vote for independence we can end Westminster’s austerity agenda, tackle the economic challenges Scotland faces and build a fairer more prosperous country.”

Will George Osborne be listening? All will become clear – well, maybe clearer – when the Chancellor delivers his fifth Budget speech at 12.30 today.

Gloves come off over currency union

A currency union in the event of a vote for independence ‘would not be in the interests of either the people of Scotland or the remaining UK’, Chancellor of the Exchequer George Osborne told an Edinburgh audience on Thursday. Unsurprisingly his claims have been rubbished by supporters of independence, but while the two sides disagree over currency union, one thing is clear – the gloves are well and truly off …

Mr Osborne’s speech follows official Treasury advice that in the event of independence they would not recommend a currency union to the Government of the continuing UK, and in an unusual departure from procedure he also published the advice he received from the Treasury Permanent Secretary on whether to join a currency union should Scotland become independent.

Speaking at the Point Hotel on Thursday, the Chancellor said: “I hope passionately that the people of Scotland choose to stay within our family of nations in the United Kingdom. I want Scotland to keep the pound and the economic security that it brings. But it is clear to me I could not as Chancellor recommend that we could share the pound with an independent Scotland. The evidence shows it wouldn’t work. It would cost jobs and cost money and wouldn’t provide economic security for Scotland or for the rest of the UK.I don’t think any other Chancellor of the Exchequer would come to a different view.

“The Scottish government says that if Scotland becomes independent there will be a currency union and Scotland will share the pound. People need to know – that is not going to happen.”

The Treasury also published the detailed analysis on the economics of a currency union which underpins its advice to the Chancellor. The paper states that while the United Kingdom is one of the most successful monetary, fiscal and political unions in history, the fiscal and financial risks of entering into a currency union with a separate Scottish state would be too great.

The analysis states:

UK is a successful union because taxation, spending, monetary policy and financial stability policy are coordinated across the whole UK, with risks pooled and clear political accountability

Scotland’s economy would be more exposed in the event of independence, with greater risks from shocks in the financial and energy sectors
in a currency union, the continuing UK would be exposed to much greater risk from a separate Scotland, with the possibility of continuing UK taxpayers being asked to support that state in the event of a fiscal or financial shock
if people in Scotland vote for independence, the Treasury would advise the continuing UK Government against entering into a currency union with an independent Scotland

The Chancellor’s view was supported by the finance spokespersons of both the other main Westminster parties.

The announcement was also welcomed by the Better Together campaign. Former Chancellor Alistair Darling, who leads the campaign, said: “If we vote to leave the UK in September, Scotland will not be able to keep the pound. That is the message Scotland must keep in mind when deciding how to vote. This was the day on which Alex Salmond’s bluff and bluster about independence came face to face with reality.

“Why would taxpayers in England want to bail out the banks of what would be a foreign country? Why would a continuing UK Treasury accept a veto from what would be a foreign government over tax, spending and borrowing?

“And why would Scotland agree to have its budget subject to a veto by the rest of the UK? That’s how a currency union works. You only have to look at the problems of the eurozone to see that. It makes little sense. Yet everything about the First Minister’s case for breaking up the UK rests on keeping the pound. The jobs of thousands of Scots in our financial services industry depend on using the pound. Without the pound, all of these are at risk. That is a big gamble we simply don’t have to take.”

The Better Together campaign called on Yes Scotland to explain what currency Scotland would use if we vote to leave the UK – would we join the euro, or maybe even set up a new, separate currency? Put simply, if yer no’ gettin’ the pound, what’s your Plan B?

Calling for clarity, Better Together campaign director Blair McDougall said:

“The nationalists have been in chaos on currency over the last few days. Alex Salmond is a man without a plan. First he says we will keep the Pound, even though it is now clearly off the table. Now Yes Scotland tell us we can keep the Pound without a formal agreement, even though the SNP’s own Fiscal Commission Working Group ruled this out. And Patrick Harvie, a Yes Scotland board member, today said that Alex Salmond needs to set out an alternative to the Pound.

“It is time they got their line straight. If Plan B really is the Panama plan that would mean if something like the collapse of RBS happened again a crisis would become a disaster in an independent Scotland.

“Leaving the UK and losing the Pound would mean higher mortgage repayments, more expensive credit card bills and a big risk to thousands of jobs in our financial services industry. Alex Salmond is gambling with the livelihoods of the people of Scotland.

“The message from those of us who support Scotland remaining in the UK is very simple – a vote for separation is a vote to lose the Pound. The only way to keep the Pound is to stay in the UK.”

However, supporters of independence have cast doubt on the Chancellor’s assertions. First Minister Alex Salmond accused Mr Osborne of ‘bluff, bluster and bullying’ and former Labour Scottish First Minister Henry McLeish also expressed concern over Osborne’s ‘misguided’ intervention, saying the Chancellor’s heavy-handed tactics could push more Scots into voting Yes.

Mr McLeish said: “He is basically saying vote yes and we won’t allow you to join a currency union. We will withdraw any goodwill and sacrifice the best interests of Scotland, England, Northern Ireland and Wales.

“Do we really believe that would be the response if Scotland voted to exit the Union? I don’t think so. Wisdom and sanity would return. It would help if the Union would spell out their vision, provide an alternative to independence and offer a bit more carrot and less stick to Scots voters.

“Let’s remember that Osborne’s party want to take us out of the EU. It is the Union that is on trial, not Scotland. Creating a currency union is first and foremost a political decision, not a financial or technical one.

The UK and Scotland would have to settle the politics of this in their respective parliaments or at the polls, so the people of England, Wales and Northern Ireland could have a say in this significant decision.”

Scottish Finance Secretary John Swinney maintains that an independent Scotland will continue to use the pound as it is in the best interests of Scotland and the rest of the UK .

Responding to the Chancellor’s comments on a currency union, the Finance Secretary said that the Treasury analysis has been developed without any discussion with the Scottish Government – and without acknowledging the independent expert work of the Fiscal Commission Working Group (FCWG).

The Scottish Government last year published comprehensive analysis of the different currency options available to an independent Scotland. This analysis by the Fiscal Commission Working Group, consisting of four pre-eminent economists including two Nobel laureates, considered the full range of options and concluded that a monetary union would be in the best interests of Scotland and the rest of the UK.

The Fiscal Commission provided advice on:

Banking union
Risk sharing
Monetary and exchange rate policy
Duration of a currency union

The HM Treasury has had no discussion with the Scottish Government on any of these points.

Responding to the Chancellor’s comments, Mr Swinney said:

“We welcome the opportunity to continue the debate with the Chancellor on the merits of our proposals on a currency union.

“However the Chancellor made clear his conclusions on currency union were based on the advice of Treasury officials. That advice is incomplete and with regard to the size of the Scottish financial sector and operation of monetary unions is backward looking and takes no account of the comprehensive evidence provided by the independent economic experts of the Fiscal Commission, including two Nobel laureates, Professor James Mirrlees and Professor Joseph Stiglitz.

“On every one of the four points the Chancellor rehearsed today, the FCWG have already published comprehensive advice and analysis and their proposed macroeconomic framework is a workable model that would ensure financial stability and allow both governments autonomy over economic and social policies, including fiscal policy. In addition the Governor of the Bank of England has confirmed the Bank will deliver a currency union if agreed by both Governments.

“On the banking union: no country should have to bail out banks again. Across the EU and UK recent regulation has been designed to break the link between taxpayers and banks. The Treasury hugely overstates the size of the banking sector in Scotland which is in line with the rest of the UK. It is the City of London which is hugely reliant on the financial services sector, accounting for 50 per cent of UK financial services GVA. A banking union with an independent Scotland is in the interests of the rest of the UK as the sector benefits from integrated trade.

“On fiscal risk sharing: Scotland’s fiscal position is stronger than that of the UK. An independent Scotland would have had the opportunity to spend more, tax less, invest in an oil fund and still borrow proportionally less than the UK. The Fiscal Commission proposition ensures a harmonised system for financial regulation and resolution of banks. Scotland would take its fair share of responsibility recognising that ‘both Scotland and the UK have a shared interest in ensuring financial stability’.

“On monetary and exchange rate policy: Scotland would have full fiscal and economic freedom to set taxes and economic policy, as has been shown by many countries in the different currency unions which have operated internationally.

“And on permanence; all Sovereign states have the ability to determine currency arrangements that are appropriate for their circumstances. That is not a barrier to successful currency unions.

“The model proposed by the Fiscal Commission Working Group has not been considered and the Chancellor’s statement today is political and completely counter to the spirit of the Edinburgh Agreement, which commits both Governments to working in the best interests of both countries whatever the result of the referendum.

“If the UK Government is to honour its commitment to the terms of the Edinburgh Agreement, the discussion that the Chancellor has entered into today must be informed by the best evidence available. The Fiscal Commission have recommended early engagement between the Scottish and UK Government to properly address these critical issues. The gaps in the Chancellor’s analysis demonstrates the force of that recommendation.”

So there you have the two sides of the currency union divide. The Unionists say it can’t and won’t happen, the Nationalists say it can and it will. Political panic over narrowing poll leads, or a pie in the sky economic gamble?

You pays your money, you takes your choice. For now at least, that money is sterling.

Time’s running out for budget comments

Edinburgh residents have only TEN DAYS to submit their views on the Council’s draft budget for 2014/15 – the consultation period closes on Friday 20 December.

Councillor Alasdair Rankin, the city’s Finance Convener is urging Edinburgh folk to make sure they don’t miss the opportunity to give their feedback on the proposals.

He said: “In my opinion, setting the Council’s budget is the single most important thing we do each year. Every other service the Council provides follows on from this key decision and it has the potential to impact on many lives across the city.

“That is why it is so important that people take some time to look at the proposals and have their say on how we are planning to spend money next year. As elected representatives of the city our priorities should of course reflect the priorities of our residents but we need people to give us that important feedback.”

The full budget proposals can be accessed at www.edinburgh.gov.uk/budget

Feedback can be given in a number of ways:

– fill in the simple online feedback form

– email councilbudget@edinburgh.gov.uk

– Write to Freepost, RSJC-SLXC-YTJY, Budget, Council Leader, City Chambers Edinburgh EH1 1YJ

– talk to a local councillor.

– tweet using #edinbudget

– comment on Facebook

Government set to act on pay day lenders

The Westminster government is to introduce legislation to cap the cost of payday loans. In a move that’s likely to be welcomed by campaigners, the Treasury says there is “growing evidence” in support of the move.

The cap will be included in the Banking Reform Bill, which is currently going through Parliament, and the level of the cap will be decided by the new regulator the Financial Conduct Authority (FCA).

Chancellor George Osborne told the BBC there will be controls on charges – things like arrangement and penalty fees – as well as on interest rates. “It will not just be an interest rate cap, you’ve got to cap the overall cost of credit,” he said.

Although the level of the cap is yet to be determined, the announcement will be welcomed by opposition and campaign groups who have been urging the government to take action against some pay-day lenders’ practices: eye-watering interest rates and hidden charges which hit the poorest hardest and drive desperate people deeper into debt.

Just last week, Citizens Advice Scotland claimed that many payday lenders in Scotland are breaking the promises they made last year to clean up their act. According to CAS research, lenders continued to break ‘most of the pledges in their own code.’

The main points were:

less than half of payday lenders in Scotland are telling people that loans should not be used for long-term financial problems;
only 1 in 3 are checking peoples’ financial background before giving them a loan;
only 14% of customers felt the lender was sympathetic when they got into difficulties repaying the loan; and
only a third of lenders are warning their customers about the dangers of roll-over loans.

CAS Chief Executive Margaret Lynch said: “When the payday lenders published this voluntary code last year we made clear we would be watching them like a hawk to make sure they kept to their word. Because there’s no point making promises if you don’t live up to them.

“Our survey results – together with the experience of other clients we see every day in the CAB – show very clearly that this Code of Conduct Is being ignored repeatedly.

“Across Scotland, CAB advisers are currently seeing over 100 cases every week of people who are in crisis debt to a payday lender. That’s a third higher than this time last year. Our evidence is that many lenders are operating in ways that result in people getting into debts they can’t handle.

“So the Payday Lenders have had their chance to clean up the industry, and they have failed. It’s time now for the regulators to step in and do it properly.”

Concern over RBS job losses

Royal Bank of Scotland (RBS) is to cut a further 1,400 jobs from its retail banking head office over the next two years, it announced yesterday. The Bank said that up to half of the losses will be at the bank’s offices in Edinburgh, where the ‘back room’ jobs under threat include marketing, communications and other support functions.

The latest round of redundancies follow the loss of more than 35,000 job cuts since public money was used to bail out RBS following the financial crisis – the government still owns more than 80% of the bank.

Ross McEwan, the chief executive of RBS’s UK retail operations, said: “To serve our customers well, we have to ensure that our resources are focused on the things that matter most to them. Regrettably, we can only do that by restructuring the way we work in head office, so that every effort is concentrated on supporting our customers and the frontline staff that serve them. This is clearly difficult news for our staff and we will do everything we can to support them, including seeking redeployment opportunities wherever possible to ensure compulsory redundancies are a last resort.”

The Unite union described the cuts as “brutal and irresponsible”. Warning of the impact that the cuts will have on local economies and customer service, Unite national officer Dominic Hook said: “This is brutal and irresponsible behaviour from RBS which is almost entirely owned by the taxpayer. It is high time that the banks took its social responsibilities seriously. Since the beginning of the year RBS, HSBC, Barclays and Lloyds have announced plans to slash around 6,900 jobs. The industry almost caused the economy to implode in 2008 and now it is contributing to a jobs crisis.

“RBS made £826 million in the first quarter of this year, the bank is returning to profit. Unite does not believe there is a business case for cutting jobs so drastically. RBS argues that the restructure will make the bank more customer focused but a bank can’t be more customer focused with 1,400 fewer staff. Unite is demanding no compulsory redundancies and we expect this state-owned bank to do everything to ensure this is the case.”

There will be a significant impact on RBS staff in head office functions in Edinburgh with the rest of the cuts spread across the country. Two departments providing support to front line staff are being cut by 80 per cent. Since 2008 the bank has cut over 30,000 staff.

Local politicians have also expressed concern over the job losses. Speaking after yesterday’s announcement, Edinburgh Western MSP Colin Keir said: “This is devastating news and I understand that the bank have spoken to the Scottish Government who are acting as quickly is as possible to ensure that appropriate support can be brought in to minimise the impact and soften the blow for the people concerned. The staff facing this terrible news are not the ones who caused the crisis at RBS but members of staff with mortgages and everyday budgets and expenses – and many of them are my constituents. I met RBS this afternoon and have discussed how they will support staff through this difficult time.

“Whilst this news is deeply disappointing the long term investment being announced for Gogarburn, highlights the strength of business locating in Scotland, and I hope this will increase long term security for RBS employees. My thoughts are with the people who are experiencing losses today.”

North and Leith MP Mark Lazarowicz said: “This is a body blow to staff at RBS at what is a difficult time for anyone looking for work. I have been in touch with union officials in support of the staff and I will be seeking a meeting with senior management to discuss the redundancies. At the meeting I will be asking for a clear indication of future employment plans for the bank’s Edinburgh operations and assurances that these job losses are not part of a policy of outsourcing.

“The Chairman and Chief Executive of RBS claimed recently that the financial restructuring of the bank was largely over and that the Government could start preparing to return RBS to the private sector. That should not be at the expense of hard working employees, many of whose colleagues have already paid the price of the failure of management at the bank in the years prior to the financial crisis through losing their jobs.”

Councillor Frank Ross, the city council’s Economic Convener, said: “While this is disappointing news, Edinburgh remains an important player in the world financial markets. We were always aware that the financial crisis would result in a degree of restructuring in the finance sector and that, unfortunately, this would impact on levels of unemployment in the city. Obviously we recognise that this brings great uncertainty and worry for those affected. For this reason, we will seek to work with the Government, their agencies and our partners to ensure the workforce are supported as much as possible and I will be pulling together a task force to coordinate this activity.”

Hugh Rutherford, Chair of the Edinburgh Business Forum, said: “Although disappointing news we need to remember the financial institutions who have recently opened centres here including Tesco Bank, Sainsbury’s Bank and the Green Investment Bank thanks to our talented and skilled workforce. This continued investment from the financial sector in Edinburgh will help keep the City economy growing. The diversity and strength of the Edinburgh financial services sector, which has been growing through the downturn, and the skilled financial services workforce, will hopefully be absorbed by the new growth sectors in the financial areas of the capital.”

Earlier this month, RBS reported a return to profit the bank hopes to return to the private sector next year.

Meet the Funders event in April

Meet The Funders 18 April

Is your community group looking for funding? Daft question, really – things have never been tougher for the voluntary sector. There are still some funding opportunities out there, however, and next month at the Assembly Rooms there’s a chance to meet potential sponsors.

The city council-organised Neighbourhood Partnership ‘Meet the Funders’ event takes place on Thursday 18 April from 1 – 4pm at the Assembly Rooms on George Street. An impressive group of funding providers will be exhibiting on the day, so if you’re a group looking for support this is an opportunity not to be missed. It’s completely informal and you can drop in any time – put the date in your diary now!

Swinney calls for welfare cuts U-turn

The Chancellor should use next week’s UK Budget to revisit welfare reforms which stand to place real strain and hardship on Scottish families, Finance Secretary John Swinney said today. Writing to the Chancellor ahead of Wednesday’s Budget, the Finance Secretary has highlighted the impacts in Scotland of the UK Government’s welfare reform programmes.

The letter sets out Scottish Government analysis which shows, for example, that whilst the bedroom tax will save the UKG money, this will be outweighed by the costs imposed on the Scottish economy. Over time the policy will remove £110m from the economy, through its impact in Scotland alone. This does not capture the wider social costs of the policy nor the distress and disruption that it will cause.

The letter also highlights that the full package of welfare reforms will present significant financial and operational challenges for all layers of government in Scotland. In his letter to the Chancellor Mr Swinney urges the UK Government to:

Provide immediate support for investment and jobs
Withdraw its bedroom tax policy
Take action on the distribution of European Structural Funds (ESF)
Improve access to finance for small and medium sized enterprises
Devolve responsibility for Air Passenger Duty to the Scottish Parliament

Commenting on his letter Mr Swinney (pictured below) said: “Since 2010 the UK Governments fiscal policy has been premised on the need to maintain market confidence and the UK’s AAA credit rating. The Chancellor has chosen austerity over investment in growth and jobs and the cost has been the continuing deterioration in the public finances, prolonged recession and the downgrade of the UK’s credit rating.

“That cost is increasingly borne by the most vulnerable in our society and public services in Scotland urgently seeking to mitigate the worst impacts of the UK’s disastrous welfare reform programme. Scottish Government analysis shows that based on reasonable assumptions the projected UK Government savings from the bedroom tax are significantly outstripped by the net loss to the UK of over £100 million over the long-term. This policy is unfair, is unlikely to deliver savings in real-terms and cuts across devolved policies. The Chancellor should use his forthcoming Budget to withdraw it.

“While we welcomed the Chancellor’s partial recognition of the need for urgent investment to boost growth in the Autumn Statement. we again call on the Chancellor to use this Budget to provide a real stimulus and greatly expand capital investment With colleagues from Wales and Northern Ireland, I have also called on the Chief Secretary to the Treasury to invest in growth.

“Small and medium sized businesses are the lifeblood of Scotland’s economy. Growth will be led by the private sector yet it continues to be choked by half-hearted Coalition measures. Figures released last week on bank lending again confirm that the UK Government’s action to improve access to finance for the country’s small and medium sized businesses is failing to deliver. We continue to press the Coalition Government to go further and faster in improving access to finance.

“With the powers of independence Scotland would have the economic levers and the scope to tailor welfare policies in line with Scotland’s interests, to ensure that Scotland’s businesses and people no longer have to fund the failures of a UK Government.”

Credit Unions – a local alternative to payday loans

A couple of news items caught my attention last week. One was about the number of empty shops on high streets and in shopping centres across the country. The economy is still in the doldrums, and people are just not spending. Apparently one in five retail units currently lies empty. It’s not all doom and gloom, however – recessions and depressions bring business opportunities for some, and it’s boom time for pawnbrokers and ‘pay-day loan’ companies. It seems these enterprises are springing up all over the place – perhaps our only growth industry, even.

The other piece of news was the Westminster government’s crackdown on these very same companies – the top fifty have been ordered to get their house in order or face closure by the summer.

The Office of Fair Trading said that the £2 billion a year industry has got to clean up it’s act. OFT Chief Executive Clive Maxwell said: “We have found fundamental problems with the way the payday market works and widespread breaches of the law and regulations, causing misery and hardship for many borrowers”.

He added: “Payday lenders are earning up to half their revenue not from ‘one-off’ loans, but from rolled-over or refinanced deals, where unexpected costs can rapidly mount up. This irresponsible lending is not confined to a few rogue payday lenders – it’s a problem across the sector. If we do not see rapid, significant improvements by the fifty lenders we inspected, they risk their licences being removed.”

For most, payday loans are something to avoid – everyone knows about the eye-watering interest rates being charged. Pay day loan companies often only quote what a loan will cost you in pounds and pennies, but take out a typical payday loan and you could find yourself being charged at a rate of anything between 1,600 % and 2,700%.

And that’s all the more shocking at a time when personal loans from ordinary high street banks have never been cheaper, available for as little as 9% APR – assuming, of course, that you can get one. But for those that can’t – an increasing number of desperate people –payday loans are the only option, the last resort. And these same people then often find themselves mired in a nightmare spiral of ever-growing debt, sometimes facing the distinct possibility of losing their homes – local advice organisation like Granton Information Centre have reported a significant increase of people tackling serious debt issues.

So a crackdown on payday loan companies – however welcome – won’t help the thousands of people who are currently tied in to horrific loan arrangements. What can they do?

Firstly, seek independent advice, from an organisation like Granton Information Centre or your local Citizens Advice Bureau. DON’T take on another loan to cover your last one.

And think about going a Credit Union. Credit Unions were set up to help people just like you, offering mutual and ethical savings and affordable loans. Credit Unions are regulated ‘Not for Profit’, Member-Owned (mutual), Financial Service Co-operatives and can best be described as organisations that encourage their members to save together and lend to each other responsibly. This allows these members the opportunity to gain greater control over their finances.

Community-based, community owned and community operated, two Credit Unions operate in the local area – North Edinburgh Credit Union in Wardieburn Drive and Capital Credit Union in Stockbridge.

Association of British Credit Unions Ltd (ABCUL) Chief Executive Mark Lyonette said last week: “Given the anecdotal evidence we hear from credit unions that help payday loan customers pick up the pieces, we are not surprised that the OFT has found evidence of such large scale poor practice in the payday lending industry.

“Loans repayable in full within a few weeks are rarely appropriate or affordable because this only stores up problems for later. If a loan is needed, spreading repayments over a few months will usually make more sense. Credit unions are a great source of affordable credit and many have helped people get out of the expensive habit of using payday loans. They can also help people to look at their finances and get into a savings habit so that they do not have to rely on a short-term loan next time they are short of money.”

North Edinburgh Credit Union’s Annual General Meeting

will be held on Thursday 21 March at 6pm at the NECU office on Wardieburn Drive.

Go along and support your local credit union