No-interest loan schemes, extra cash for mental health care and greater investment in the nation’s roads will be unveiled by chancellor Philip Hammond in today’s (29 October) Budget.
People on low incomes struggling to repay their debts or access affordable credit will be offered a helping hand in today's Budget.
A study looking at a new no-interest loan scheme, the next steps for a 'breathing space' from problem debt, and a £2m innovation fund to help affordable lenders compete with the payday loan providers, will be outlined in the Budget at 3.30pm.
According to an announcement from HM Treasury, a no-interest loans scheme would see the government explore ways to partner with debt charities and the banking industry to provide interest-free loans to those on low incomes, helping them pay for life’s unexpected costs.
The government claimed a similar scheme in Australia has had widespread success, helping four out of five of those who took a no-interest loan to stop using payday loans.
The government added a scheme like this could offer the UK’s three million high-cost credit users a more affordable alternative, and help prevent people from falling into problem debt, or in extreme cases, turning to loan sharks.
A feasibility study will be undertaken in 2019 looking at how a pilot could work in the UK.
It is also expected that chancellor Philip Hammond will publish detailed proposals on a 'breathing space', which would give people in problem debt legal protections from creditor action.
Having listened to charities, campaigners and the financial services industry during a call for evidence earlier this year, it’s expected that the proposed breathing space period will be increased from six weeks to 60 days, giving people in problem debt more time to get their finances back on track.
The chancellor is also expected to announce a £2m challenge fund for budding tech entrepreneurs to invent solutions to make it easier and more attractive for people to borrow from more affordable lenders.
The challenge will open to pitches early in the new year.
According to HM Treasury, these actions are part of the government’s long-term plan to tackle problem debt and ensure all families have access to the financial services they need.
In September, the government launched Help-to-Save, a unique savings account offering hardworking people a bonus of 50p for every £1 they save which can be spent on whatever they like.
Also, the government announced in August that a new independent body will be established to promote financial inclusion.
As well as a shake-up of payday lending. the chancellor is expected to announce in the Budget the NHS will increase mental health investment by at least £2bn a year in real terms by 2023 to 2024.
Mr Hammond will confirm that the first stage of the NHS long-term plan will be to help achieve parity of esteem between mental and physical health services.