Wednesday, 29 February 2012

Water, Water

The national media is carrying stories about water shortages and the potential for drought restrictions in the South-East, whereas the local media is reporting that reservoirs serving our area are full to bursting.

Coincidentally, water is the subject of a number of debates in Parliament this week.

It is only four years ago that we suffered some devastating floods. I was reminded of the rhyme from my childhood: ‘Water, water everywhere, but not a drop to drink.’  A recent NAO report shows that the increased government expenditure on flood defences since then has protected 182,000 homes.

In 2007, the Labour government negotiated an agreement with the insurance industry. In return for the government increasing funding in flood defences, there was a guarantee of universal flood insurance coverage for homes in affected areas. This agreement expires in 2013. Unfortunately, the coalition government has chosen to cut flood protection investment by 27% this year and in each of the next 3 years. Many projects in our area have been cancelled.

The Association of British Insurers (ABI) has now warned that 200,000 high-risk homes will not be able to get flood insurance once the agreement runs out, unless there is a sustainable alternative scheme in place. However, the government has said it has no intention of doing this. I see big problems ahead.

Meanwhile, the government is rushing forward with new legislation, mainly to cut £50 off the high water bills in the south-west, which arise from the last Conservative government’s botched privatization. Elsewhere, water bills will rise an average 5.7% from April. In the Severn-Trent area, 340,000 households spend more than 5% on their water bill, and in the Yorkshire Water area, more than 190,000 households.

A WaterSure tariff was introduced in 1999. It applies to households with three or more children living at home under the age of 19 or where someone in the household has a medical condition which necessitates high water use. But only one-third of eligible households make use of it.

The government should be using its data to ensure everyone eligible is on the lowest tariff. Meanwhile, if you are eligible, why not apply now?

Monday, 27 February 2012

Stay clear of sharks

The last government took concerted action to deal with loan sharks – unlicensed money-lenders, operating outside the law. They provide loans on bad terms, at exorbitant interest rates, and illegally harass people if they get behind with their payments. For the last five years, enforcement teams in every region have been cracking down on these illegal activities.

However, in their place, we’ve now seen the rise of the lawful loan sharks. It’s sometimes called payday lending. In 2006, the payday loans industry was worth about £350,000 a year. By last year, that had dramatically increased to more than £2bn.

Daytime TV is now flooded with adverts, tempting vulnerable people to see how easy it is to take a loan, which they can repay on their next pay-day at interest rates in excess of 2000%.

Clearly, increasing unemployment, falling wages and benefit cuts are taking their toll on ordinary families. However unrealistically optimistic, people are falling into the trap of believing that they can have one of these loans just once, repay it and move on.

The reality is different. Nearly half the people taking out payday loans are doing it to pay off another debt – usually at a vastly lower interest rate. The Debt Advice Foundation reports that more than 40% of people who go to them for help have financial problems because of payday loans, or similar debt with high interest rates. The Citizens Advice Bureau reports that they have seen a four-fold increase the number of people seen with payday loan problems in just two years.

Last October, I called on the government to take urgent action to cap interest rates on loans. Bluntly, the whole business is just obscene. But, I’m sorry to say, the government has refused to act. I shall keep up the pressure.

However, there is some movement. Last week, the Office of Fair Trading announced that it will carry out spot-checks of 50 major lenders and that it would look into concerns that people are being given loans without the proper checks being carried out. In particular, it will investigate whether firms are targeting people unsuitable for credit and are rolling over loans so that the charges escalate and they become unaffordable.

I have some simple advice for people who might be tempted by a payday loan:
‘’Don’t do it. Don’t even think of doing it. If you’re struggling with debt, go to your local CAB now before you do anything else.’”