Week 41 2013

Tendring Topics…….on line

A Helping Hand

       

   It is a sad comment on today’s world (or perhaps on my state of mind!) that my heart sank when, responding to a ring on my front door bell, I found two personable young women smiling at me.  Were they hoping to sell me something, seek my financial support for some worthy cause; or try to persuade me to become a Mormon or a Jehovah’s Witness?   It was none of those things.  They were calling on me and my neighbours  to publicise the help that is available from our local Citizens’ Advice Bureau.  They gave me a flyer, reproduced here, giving contact details and the range of their service and – no doubt noticing I was leaning heavily on a stick! – assured me that if, when I needed help or advice, I couldn’t get to their office they would gladly send an adviser to my home.

            They also handed me a very useful little leaflet entitled Quick Guide to Welfare Reform which sets out the effects of the Government’s recent changes to Social and Welfare Services, how they may affect us and what we can do to help ourselves if we are affected. The leaflet tackles the replacement of Disability Living Allowance with Personal Independence Payments, as well as Social Fund Reform, Universal Credit (replacing a number of currently means-tested benefits) the Benefit Cap, the Bedroom Tax and Council Tax Benefit. In each case brief advice is given on ‘what can I do?’ to those affected.

            Supposing, for instance, you are currently receiving Disability Living Allowance and you get a letter (as, if you haven’t already had one, you undoubtedly will!) from the Department of Work and Pensions informing you that that allowance is coming to an end and asking if you want to claim Personal Independence Payments.  If you fail to claim PIP your payments will simply stop.  Your local Citizens Advice Bureau will help with your application for PIP, with appealing the decision if you are not awarded PIP, with finding out what other benefits may be affected and advising you on coping financially if you have a drop in income.

           

A Nation of Debters!

Nowadays practically everyone is burdened with debt to an extent that was unheard of in my pre-World War II childhood and youth.  In those days if you wanted something badly you ‘saved up for it’ perhaps for months or even years.  My parents had a horror of debt that, to some extent, they have passed on to me.  I remember them discussing far into the night whether or not to buy a radio (in those days it was a wireless set of course!) by hire purchase or, as my dad disparagingly described it, ‘on the never, never’.  They did decide to do so in the end!

            How very different things are today!  ‘Saving up’, was struck a mortal blow with the advent of the credit card.  Do you remember the posters advertising the very first ones?   ‘Barclaycard takes the waiting out of wanting!’  Daytime commercial television owes much of its finance to adverts for those easily obtainable (but less easily cleared!) payday loans – ‘Two or three hundred pounds till next payday – just to get you through a one-off crisis’.   But, of course, it’s unlikely that you’ll be able to pay back the whole of that loan plus interest, on your next payday – and the interest will begin to accumulate!

            Then there are debts resulting from government policies.  Student loans, to pay tuition fees and living costs, can amount to £20,000 or more – a debt that can hang over former students’ heads for the whole of their working lives.   House purchase by means of a mortgage loan is strongly encouraged by the government that has the ideological aim of creating \a nation of home owners.  That may be the result in twenty or thirty years’ time.  In the meantime though it creates only a nation of home buyers – a nation of debtors, any one of whom could lose his or her job at any time, default on the mortgage payments and become homeless.

            It is no surprise therefore, to discover that debts are among the most common problems about which Citizens Advice Bureaux are consulted.  They can’t make debts disappear but they can help you to sort out your household budget and perhaps negotiate with your creditors to work out an acceptable way for you to deal with that debt burden.

            Debt is like a cancer.  The sooner it is caught, the more likely it is that there will be a happy ending.  The borrower should consult the local CAB before being ensnared by a loan shark or a payday loan provider.  If you live in the Tendring District phone the number on the flyer at the beginning of this blog.  I think I am right in saying that wherever you live in the United Kingdom there will be a CAB within a few miles.  I know that Tendring Topics….on line has readers in the USA, in Russia, in mainland China and elsewhere in Europe and the world. Debt is a universal scourge that ignores national borders.  I can only hope that there are similar services in their countries for those who need them..

A Housing Bubble?

            I have never pretended to understand economics.  I hope though that I have my fair share of common sense.  It is obvious to me that when the demand for an object or a service increases more rapidly than that service can expand or the objects can be supplied, the price of that service or those objects will rise.

            This is what happened with the housing market in the 1990s.   The demand for houses (spurred on by the political ambition of home ownership for all) outran the supply.   Thanks to Mrs Thatcher’s ‘right to buy’ legislation (that the New Labour Government had lacked the courage to repeal) there was no large stock of publicly owned homes to help keep rents down, so private landlords raised their rents as high as ‘the market’ permitted. The ethical principle of the 'free market'  is, of course, to get as much as you can grab for as little as you can get away with. 

            The demand for home ownership increased.  To encourage purchasers, banks and building societies were prepared to lend 95 percent of cost of house purchase – in some cases even 100 percent, with perhaps an additional loan for the purchase of furniture.  On day-time commercial tv, money-lenders touted for custom; ‘Never mind if you’re unemployed, disabled and have a low credit rating.  We may still be able to help you with a loan’.  ‘Then thrived the usurers’, as Shakespeare might well have put it had he lived at the end of the 20^th century instead of the 16^th!

            Inevitably the bubble burst.  Thousands were left with huge debts and homes that had lost their value overnight. Thousands were made homeless, having lost their homes (that they had thought they owned!) and their savings.  Banks and building societies had to seek government help and the government used our money to rescue them.  That – as the former governor of the Bank of England repeatedly told us – is the cause of the country’s financial problems.  It wasn’t the poor, the unemployed and the disabled who produced the financial crisis from which the government is now trying to extricate us, but the banks and the money lenders aided and abetted by a business friendly government.

Once bitten, twice shy.  The money-lenders, having been rescued with our money, were determined not to be caught out again.  There was still a demand for homes – still no great reserve of social housing to keep rents at a reasonable level.   Interest rates have been kept artificially low but lenders could sieve out risky borrowers by demanding a much larger deposit than in the past before agreeing to a mortgage.  Often twenty-five percent or even more of the purchase price was demanded.

Is history about to repeat itself?  When the government first announced their help-with-the-deposit scheme that guaranteed all but five percent of the deposit on a mortgage, I commented in this blog that the demand for homes ‘at affordable prices’ would now outstrip the supply. Those ‘free market forces’ that are so popular in government circles would ensure that  house prices would rise – perhaps as another bubble expanding to bursting point?   Since then the Institute of Directors, the Institute of Chartered Surveyors and the national Chambers of Commerce are among those who have warned of the same danger. 

Has the government heeded?  Not a bit of it.  They have expanded the scheme to include the purchase of existing houses as well as new-builds and at the recent Conservative Party Conference it was announced that the scheme would begin immediately instead of in a year’s time as had been earlier announced.  It does of course need the co-operation of the Banks and Building Societies. Only Lloyds and RBS (over both of which the government can exercise direct control) have so far agreed to take part. In the meantime, house prices are rising.  I suppose that, as a home owner with my mortgage long since paid off, I should be pleased. I’m not!

           

Week 4 2013

Tendring Topics......on line

‘When will they ever learn?’

          This was the refrain of a protest song ‘Where have all the flowers gone’, written by Pete Seeger in the 1950s and sung by the author and by, among others, Joan Baez and Marlene Dietrich.  Type that title into Google and you can read all about it – and hear it sung on YouTube by its author!

          When will we ever learn?   It might have been thought that we Brits have had a surfeit of military adventures in North Africa and the Middle East.  It was, no doubt, an achievement to have toppled Saddam Hussein - but at what a terrible cost! Iraq was laid waste, its infrastructure and public services destroyed.   Tens of thousands of Iraqis were killed and many thousands more maimed and permanently disabled.   And, of course, there were scores of British and American dead and wounded. What's more, our illegal intervention provided El Qaeda with a powerful recruitment incentive.

 The war against Saddam is over but Iraq is far from being a country at peace with itself.  The sectarian hatred and violence that we continue to see in Belfast, is trivial compared with that between Iraq's Sunni and Shia Muslims.   In the north of the country the Kurds yearn to be part of an independent Kurdistan incorporating the Kurdish minorities in Turkey and Iran. Members of Iraq’s Christian community, under Saddam Hussein a free and influential minority, are now subject to violent persecution and physical attack. Those who can get out are doing so.  Throughout the Middle East and North Africa, Christians, identified with ‘interfering infidels from the west intent on destroying our religion and historic culture’, are suffering increasing persecution from militant Islamists.  A worker at the Algerian gas plant caught up in last week’s terrorist attack and hostage taking, told us on tv that he had explained to the terrorists who had captured him that he was an Algerian and  Muslim.   ‘You’ll come to no harm’, his captors had assured him. ‘We’re after these crusaders!’

British, American and other NATO forces have been engaged in Afghanistan for a decade.  We are constantly being told how this that or the other area, that two years earlier was ruled by the Taliban, is now under the control of the Afghan government and its NATO allies.  Yet the Taliban still remains capable of launching attacks within Kabul itself and there have been an increasing number – 60 last year – of allied soldiers killed by members of the Afghan forces whom they have been training.  Within a couple of years all NATO combat forces will have been withdrawn and it is confidently believed that the forces of the Afghan government will by then be capable of engaging the Taliban fighters themselves.  They may have the capability will they, I wonder, have the inclination?  Does the ordinary Afghan soldier or peasant really see much difference between NATO forces and the forces of the Soviet Union that, a decade or so ago, the Taliban and other insurgents (with the covert support of the UK and the USA!) managed to oust?

Syria, like Iraq, once had a thriving Christian minority that worshipped freely and without fear.  Now, identified with the tyrannical regime that had allowed them to survive, they find themselves under attack from the rebel forces that we and our allies recognise as Syria’s legitimate government.   Can it really be the intention of ‘the West’ to cleanse the Middle East of Christian minorities and to support governments of militant Islamists from whence recruits for Al Qaeda and similar terrorist organisations spring?   Whatever our intentions may be, that is the effect our actions are having.

Now the French are sending troops to Mali, a former French colony that is under attack from Islamist Arabs in the north of the country supported by Algerian jihadists and armed former supporters of Colonel Gaddafi who have found their way into Mali from Libya*.  The UK is helping transport troops and supplies but is not (so far!) otherwise playing an active part in the conflict.  The French troops, supporting Malian government forces, are expected to make short work of the rebels.  So, of course, were the allied forces in Afghanistan.  They have been there for ten years – and they’re not out yet!

Isn’t it time that we in ‘the west’ paused and gave a little more thought to whom we are supporting, whom we are opposing – and why we are doing either?   The British National Party is totally abhorrent to me and I am reluctant to give the slightest credence to any of its declared policies.  I do think though that their demand that we should withdraw our troops without delay from any country where the majority of the population is Muslim is worth consideration.  Is our military presence wanted there by most of the ordinary people?  Is it harming or helping minorities holding another religious faith? Is it discouraging terrorist organisations like Al Qaeda, or is it encouraging recruitment for them?  Is it closing – or widening – existing sectarian and/or ethnic divisions? Whatever our hopes or intentions for those countries may be, are they really worth even a single human life?

*Was the terrorist attack and subsequent hostage situation on the gas installation in the remotest part of Algeria a consequence of that French action?  The experts insist that it was a well-planned attack that couldn’t possibly have been organised on the spur of the moment.   I think it possible that the attack had been planned to take place  some time in the future but that the French action had provided a useful propaganda reason for bring it forward.

‘Neither a borrower nor a lender be…..’

                   Such was the advice that, in Shakespeare’s play Hamlet, Polonius  gave to his son Laertes before he set sail for England.  This suggests to me that even in Shakespeare’s time, England was known as a country in which it was all too easy to fall into the hands of the moneylenders.  It certainly is today – and I’m not referring to ‘the deficit’ and the national debt that worries politicians so much.  I am talking about the burden of personal debt carried by far too many of my fellow Brits.   It is a burden that leads to domestic violence, breaks up marriages, renders families and individuals homeless, can motivate criminal activities and  can lead to suicide.

 The local daily Gazette records that research has found that in the first fortnight of 2013, seventeen percent of us were still paying off bills incurred before Christmas 2011!  Richard Aldridge, Chief Executive of Colchester’s Citizens Advice Bureau told a reporter that he wasn’t surprised by that figure. He said that, ‘Last year Colchester CAB debt specialists helped clients to write off more than £3.6 million.  The average debt was about £8,000.   One of the highest debts was more than £200,000 – and that was excluding a mortgage loan’.

            National figures reveal that one in five consumers started the New Year with more than £5,000 credit card debt and one in seven people in the east of England  struggles to keep up rent or mortgage payments.   Mr Aldridge warns (as I have done in this blog) that the increasingly popular ‘pay day loans’ are  a short-term fix and that interest can get racked up to ridiculous levels, as much as 4,000 per cent a year!   The CAB helps people to understand their income and expenditure and to look at priority debts such a keeping a roof over their heads and paying fuel bills.  ‘We know the situation is going to get worse when welfare benefits change in April.  The sooner the CAB is contacted the sooner there can be help to resolve the crisis.  There is no magic wand, but help is at hand’.

          Meanwhile the Government, that never lets us forget about national debt, seems able to regard  remarkably philosophically. debts incurred by hundreds of thousands of British citizens.   For the past two years the number of applicants for places in Universities has fallen sharply.  The reasons are painfully obvious; the huge burden of debt with which graduates are burdened and the difficulty they have in finding appropriate employment.   A government spokesperson says plaintively that, ‘They don’t seem to realize that they have to pay nothing up front and that they only have to start reducing that debt when they’re in a well-paid job’.  I can well imagine that that kind of argument might satisfy the thoroughly irresponsible and the ‘shirkers and scroungers’ about whom we read in the national press.  It doesn’t appeal to people who, like me, were brought up with a horror of debt and who try to live within their means, avoiding it at all costs.  Had students depended on loans instead of means-tested grants in the early 1970s, we would certainly not have encouraged our elder son to become an undergraduate at Cambridge.  It is all very well to say that graduates don’t have to begin repaying their loans until they are in a well-paid job; that is just when responsible graduates want to start buying a home in which to settle and raise a family. For many of them that student loan debt is likely to be hanging over their heads for the remainder of their working lives.

            Then there’s this urge – encouraged by the government and by the popular press – to buy your own home.  All young couples in a stable relationship (oh dear – only a few years ago I would have written ‘all young married couples’!) are assumed to want to ‘get their feet on the home ownership ladder’.  I have just heard on a commercial radio station a property developer urging that ‘with interest rates at a record low level, now is the time to buy!’    Interest rates undoubtedly are at a very low level but house prices aren’t.   Nor are the deposits required by banks or building societies before granting a mortgage loan.  Furthermore few working people nowadays are in a position  to say with confidence that they’ll  be able to keep up the mortgage repayments for the twenty or thirty years that will elapse before they hold the deeds of their home. It is only then that they will be truly home owners, and not just home buyers liable to be rendered homeless if they default on those mortgage repayments.

            Napoleon is said to have remarked with contempt that ‘the English are a nation of shop keepers’.   We’re certainly not that these days.  The most profitable shops are part of nation-wide or international enterprises, probably with their headquarters and their controlling ownership overseas.  What we are nowadays is a nation of debtors and – increasingly – a nation of debtors who are not only unable to repay their debts, but even to pay the interest on them.