A single person in Britain needs to earn at least £13,400 a year before tax for a minimum standard of living, the Joseph Rowntree Foundation (JRF) says.

A couple with two children need to spend £370 a week and a pensioner couple need £201, the charity says.

Film tickets, a bottle of wine and a bird feeder were on the list of goods people need to participate in society.

The JRF’s figures, which exclude the cost of rent or mortgage payments, are higher than some government estimates.

According to the report, which took two years to put together, the spending power needed to pay for a basic but socially acceptable standard of living was higher than the official government calculated poverty line.

Staying alive

The report combined academic study with a consensus from 39 different groups of people to come up with a series of benchmarks for an acceptable cost of living in Britain.

This government is committed to a fairer, more inclusive society, providing opportunity for all Department for Work and Pensions Take the living standards quiz What are the basics of Britain? Send us your comments

The definition of a minimum standard of living was not merely the amount of money needed for survival, and included “more than just food, clothes and shelter”, the report explained.

“It is about having what you need in order to have the opportunities and choices necessary to participate in society,” it said.

For a single person of working age that included walking boots, a pay-as-you-go mobile phone and a bicycle.

For a pensioner couple, an occasional carvery meal and a bird feeder were on the list, and a single mother needed £210 a week for items including nappies for the baby and a Christmas tree.

Families should get the chance to have a one-week self-catering holiday in the UK, while childcare also took a big chunk of the family budget, the report said.

Needs not wants

The study excluded “aspirational” items, and the JRF said it was aimed at starting a discussion about what was an acceptable standard of living.

“This research is designed to encourage debate and to start building a public consensus about what level of income no one should have to live below,” said the JRF’s director Julia Unwin.

“Of course, everyone has their own views about what items in a family budget are essential. But this is the best effort to date to enable ordinary people to discuss and agree what all households should be able to afford,” she added.

Experts ensured that the lists would provide an adequate diet and enough warmth to remain healthy.

According to the calculations, a single person working full-time would need to earn £6.88 an hour to reach the weekly minimum standard - which is more than the current statutory minimum wage of £5.52.

A single person on Income Support would get less than half this amount.

An out-of-work family would get in state benefits two-thirds of what the JRF regarded as the minimum requirement, but pensioners on Pension Credit reached an acceptable level of income, the charity said.

Poverty levels

Jonathan Bradshaw, professor of social policy at the University of York and co-author of the report, said that this was the first time the question of how much income was enough had been addressed.

The government has pledged to end child poverty by 2020

Official measures of poverty have been based on relative income data.

The official poverty line is a household with an income of 60% of the UK’s median household, with the poverty line adjusted for family size.

The government has used this measure as the base for its pledge to halve child poverty by 2010, and to have eradicated it a decade later.

The JRF’s report took in the views of people from a variety of social groups, in rural and urban areas, before coming up with an average for a cross-section of society.

It concluded that a car was not required by any social group, nor were cigarettes, but some alcohol consumed at home was acceptable.

The JRF accepted that it could not be shown that everyone living below its minimum income standard would be in “hardship”.

Committed government

A spokesman for the Department for Work and Pensions said: “This government is committed to a fairer, more inclusive society, providing opportunity for all. We have lifted 600,000 children and nearly a million pensioners out of poverty.

“We have increased winter fuel payments to £400 for someone aged over 80 and £250 for 60 years plus.

“We welcome the important contribution of this study.”

COST OF LIVING IN 2008

Family type	Weekly budget	Breakdown of expenditure
Single working age	£157.84
Couple working age	£240.61
Lone parent, one child	£210.31
Lone parent, two children	£282.66
Lone parent, three children	£378.90
Couple, one child	£286.45
Couple, two children	£370.05
Couple, three children	£465.71
Couple, four children	£508.18
Single pensioner	£136.60
Couple pensioner	£201.49
Food and drink Fuel (heating etc) Personal goods and services Other Clothing Travel Household goods, services, council tax etc *Note: Weekly budget does not include housing or childcare costs.

Guardian.co.uk

The scale of mis-selling of loan payment protection insurance is greater than previously thought, with as many as two million policies sold to people who may never be able to make a claim, according to a leading consumer body.

Which? formerly the Consumers’ Association, said a third of people taking out the insurance on a loan in the past five years may fall foul of exclusions that would prevent them claiming.

Its findings come days before what is expected to be a highly critical report from the Competition Commission, which has been investigating the £5bn-a-year industry and is likely to announce a crackdown on the way the policies are sold.

The insurance is typically taken out to cover debt repayments if people are unable to work owing to illness, injury or redundancy. It is often sold by banks when people take out a new loan or credit card, and is also offered by retailers, car dealerships and other businesses. However, an Office of Fair Trading investigation criticised many of the companies that sell the insurance, warning them that their policies were a rip-off and often mis-sold.

The Competition Commission announced a full-blown investigation in February last year and the City regulator the FSA, has also looked at the sector, fining seven companies for poor selling practices.

Which? surveyed people who had taken out a loan during the past five years and found that 32% of those who signed up for the insurance may fall foul of one or more of the “significant exclusions” in the small print. That could amount to between 1.7m and 2.1m policies.

“People who are self-employed or on a fixed-term job contract, for example, often aren’t covered by PPI. Nor are many people aged 65 and over, or people who might claim for absences relating to pre-existing medical conditions,” said a Which? spokesman.

The research also found that the average loan is £6,050. One in 10 have borrowed £10,000 or more.

Doug Taylor, Which? personal finance campaigner, said: “We’ve always known that people were being mis-sold [payment protection insurance], but we were still amazed to discover the scale of it. It appears that salespeople are chasing their commissions, while their bosses are chasing profits. Where’s the sense of responsibility to the customer?”.

He said if someone with a loan thought they might have been mis-sold the insurance: “now’s the time to fight back”.

Many people may not be aware that policies only pay out for a limited amount of time, often 12 months, and that credit and store card insurance frequently covers only the minimum monthly payment.

The FSA has already designated the insurance a priority because of the potential risks to consumers, and has fined or censured a string of companies over poor selling practices.

This month sofa retailer Land of Leather was fined £210,000 for not having effective monitoring or training in place to ensure the insurance was being sold fairly. Last autumn the regulator said it had found improvements in some areas, but many firms selling policies were still failing to treat customers fairly. In January it brought in rules designed to improve sales practices.

The Competition Commission is publishing its provisional findings on June 5. Its report is expected to propose sweeping changes in the way PPI policies are sold. It could even call for them to be sold separately.

Source: guardian.co.uk

Ten pee or not ten pee, that was the question. For weeks the government denied it would do anything - or needed to do anything - to help the 5.3m families who were worse off from the start of this tax year last month as a result of the scrapping of the 10p-in-the-pound tax level.

But then earlier this week chancellor Alistair Darling came up with a surprise rescue package. In an unprecedented change to the rules after the start of the tax year, he made some deft alterations to tax allowances and the threshold at which taxpayers move from basic 20% income tax to the higher 40% rate. But the chancellor’s surprise move still leaves winners and losers.

Here’s our guide to the tax row that became a water-cooler topic for those who normally wouldn’t know their VAT from their inheritance tax - or care.

Who were the losers when the 10p rate was scrapped?
· Women pensioners under 65 - they could not claim pension credits until they reached 65

· Students with part-time jobs who would not be able to claim a tax credit

· Other part-time workers on less than 30 hours a week - no tax credits for them as you have to be a full-timer

· Lower-paid people whose partners are higher earners who could not claim working tax credits either, and

· Under-25s without children.
Overall, you could have earned up to £18,000 and lose, but those left worst off were on around £10,000 a year.

Did anyone gain?
Yes. Because the basic-rate tax was cut from 22% to 20%, those earning from around £18,000 to about £41,000 a year paid less tax, gaining up to £8 a week. And many lower-paid workers were compensated for the loss of the 10p band by increases in tax credits.
What is the new income tax deal?

After toying with and rejecting ideas such as forcing employers to pay a higher minimum wage or adjusting the winter fuel allowance for the over 60s, the solution was simple.

The chancellor lifted the personal allowance for those under 65 by £600 from £5,435 to £6,035. This reduces tax bills by 600 times 20p or £120. This was intended to recompense the average amount that was lost by getting rid of the 10p tax band.
Does that mean everyone gets £120 a year more?
No. It’s restricted to those paying basic-rate tax. Those paying top-rate tax - the 40% level - will not get the bonus tax rebate payment.

What will happen is that the starting level for top-rate tax is reduced by £600 to compensate for the extra £600 given as a personal allowance.

The new “threshold” for higher-rate tax will now be £40,835 instead of £41,435. Those earning between the old and the new thresholds will gain part of the £120 extra a year.
What about the winners from the change from 22p tax to 20p?
Raising the personal allowance was a blunt instrument. It will benefit all those with total earnings under the top tax rate threshold. So those earning from £18,000 to £41,000 win twice over - they have already gained from the basic-rate tax reduction and now they are set to profit again from the £120.

And those who can apply for tax credits (such as lower-earning families) will also do well. They will get to keep the promised tax credit increases but also gain from the £600 increase in the personal allowance level when income tax starts.
If some win twice over, are there those who are still worse off?

Yes. Anyone earning around £6,700 to £10,000 a year and who cannot claim a tax credit still has a slimmer pay packet than if the old system had been left in place. In some cases, they could be losing £2 a week compared with last year. So while the better off do even better (see question above), the least well off do the least well. But no one goes further into financial loss as a result of these changes.
When will taxpayers see all this in their salary slips?

The idea is to pay six months’ worth of the £120 rebate - £60 - in September salaries. The balance will be paid at £10 a month until March. HM Revenue now has the massive job of sending employers and employees new PAYE coding notices. This could cause problems as, based on previous experience, many coding notices might be wrong.

Is national insurance affected?

No. Employees will still pay national insurance - a tax in all but name - at £105 a week or £5,460 a year. This is now £575 a year below the new starting level for income tax. The government has said it intends to synchronise the lower earnings level where national insurance starts and the higher level where it ends with basic-rate tax.
What about those over 65?

The budget already increased the “age related” personal allowances of most aged 65 and over by more than enough to offset the loss of the 10p level. Those aged 65 to 74 can earn £9,030 before paying tax, while those 75 and over have a tax-free allowance of £9,180. Last year the levels were £7,550 and £7,690 respectively.

Older people towards the top of the pay and pensions scale lose this “age related allowance”, which starts at earnings of £21,800. But at this level, they are already well over earnings levels where the 10p abolition would impact. But providing they are not 40% tax payers, they will gain at least £120.
Who is paying for all this?
The complete package announced this week is to cost £2.7bn. This will be raised by increased government borrowing so eventually everyone will contribute to its repayment. The Liberal Democrats believe that only £630m will go to those who lost out - the rest will go to those who were already ahead.

Is this new scheme set in stone?

No. No one can be certain of anything in the tax world and chancellors do change their minds. Gordon Brown, when he was chancellor, both introduced and abolished the 10p rate.

There are likely to be further changes to the tax system when the chancellor announces his pre-budget review, expected in November or early December. The changes this week threw up further anomalies such as the national insurance starting level which will have to be addressed.

Wikipedia

Secured

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan.

A mortgage loan is a very common type of debt instrument, used by many individuals to purchase housing. In this arrangement, the money is used to purchase the property. The financial institution, however, is given security — a lien on the title to the house — until the mortgage is paid off in full. If the borrower defaults on the loan, the bank would have the legal right to repossess the house and sell it, to recover sums owing to it.

In some instances, a loan taken out to purchase a new or used car may be secured by the car, in much the same way as a mortgage is secured by housing. The duration of the loan period is considerably shorter — often corresponding to the useful life of the car. There are two types of auto loans, direct and indirect. A direct auto loan is where a bank gives the loan directly to a consumer. An indirect auto loan is where a car dealership acts as an intermediary between the bank or financial institution and the consumer.

A type of loan especially used in limited partnership agreements is the recourse note.

A stock hedge loan is a special type of securities lending whereby the stock of a borrower is hedged by the lender against loss, using options or other hedging strategies to reduce lender risk.[citation needed]
Unsecured

Unsecured loans are monetary loans that are not secured against the borrowers assets. These may be available from financial institutions under many different guises or marketing packages:

credit card debt
personal loans
bank overdrafts
credit facilities or lines of credit
corporate bonds

The interest rates applicable to these different forms may vary depending on the lender, the borrower. These may or may not be regulated by law. In the United Kingdom, when applied to individuals, these may come under the Consumer Credit Act 1974.

Factsheet: Personal loansguardian.co.uk

Types of loans

There are two main types of personal loans: secured and unsecured. Unsecured loans are not tied to any of your assets, but secured loans are - usually to your property, which is why they are often called homeowner loans. If you default on a secured loan, your lender can force you to sell the asset to pay off your debt. Car loans are also secured loans, with the lender using the vehicle you are buying as security for the loan.

Homeowner loans are tied to a property. Photograph: Frank Baron Most lenders offer unsecured loans of between £5,000 and £25,000, although some cap borrowing at £15,000. Smaller loans are available if you shop around, but if your borrowing requirement runs into hundreds of pounds rather than thousands there may be better ways to borrow the money.

If you want to borrow more than £25,000, you will need a secured loan. You will also need enough equity in your property to secure the loan.

Interest rates

The APR (annual percentage rate) on a loan is the amount you will pay in interest each year. Most adverts for loans tend to quote a “typical APR”; you will not necessarily get the same rate of interest when you apply.

Unless you choose a lender with a “one-size-fits-all” interest rate, factors including how much you want to borrow, how long you want to borrow it for and your personal and financial circumstances will all have an influence on how much you pay.

A bank has to have offered its typical APR (or a better rate) to at least 66% of potential customers.

Interest rates can be fixed or variable, and it is important to know which you are signing up for. A fixed rate will remain the same for the term of the loan, which means your monthly repayments will remain the same.

A variable rate will be subject to change, usually in line with the Bank of England base rate. While this is good news when rates are falling, it can be worrying if rates go up and you need to find more money than expected to make your repayments.

Repaying your loan

Most loans are repaid in monthly instalments & usually by direct debit - over a period agreed before you get the money. The lender will tell you how much you need to pay each month when it agrees the loan.

The repayment period is usually fixed and you will have to pay a redemption penalty - for example, two months’ interest - if you want to pay it off sooner. The longer the repayment period, the more interest you will be paying, so go for the shortest you can manage.

Flexible loans, which let you borrow and pay back at will, are becoming more common, but the interest rate charged is often significantly higher.

If you miss a payment the lender will record the default on your credit file. Any new lender may not be put off by one or two missed payments, but if you have missed several you may struggle to get credit elsewhere.

Where to get a loan

The list of organisations offering loans is long and ranges from high street banks, to those that operate only on the internet or telephone, to building societies, credit unions, specialist loan companies and even doorstep lenders.

Typically, cheaper deals are offered by the specialists and internet banks than are available on the high street, but this is not always the case so you should shop around, either online or by contacting lenders to get quotes.

Some Doorstep loans have interest rates as high as 900%. Photograph: Garry Weaser Possibly the most expensive form of credit is offered by doorstep lenders. Unlike mainstream lenders, they will often offer sums of less than £50 - typically used to cover unexpected purchases - and collect payments weekly. However, APRs can be as high as 900% so borrowers who have a choice will tend to avoid them.

Credit unions are an alternative to mainstream lenders and can be an attractive option for some borrowers because they cannot charge more than 2% a month on the reducing balance of the loan (an APR of 26.8%), and most charge just 1% a month (12.7% APR).

Most credit unions offer unsecured loans for up to five years and secured loans for up to 10 years.

Getting into difficulty

Sometimes things go wrong and it is difficult to meet your monthly repayments. If this happens to you, do not ignore letters arriving through your front door.

The best course of action is to get in touch with your lender immediately. Banks and building societies are often willing to help and might offer to freeze the loan temporarily or extend the repayment period.

Their ultimate aim is to recoup their money, but it is usually more advantageous, including cheaper, for them to reschedule your repayments than to take action against you.

It is particularly important to be upfront with your lender if you have a loan secured on your house or another asset, because if things go wrong you may have to sell up to pay back the loan.

Organisations providing advice

Consumer Credit Counselling Service: a charity offering free, confidential advice for people in debt through its national telephone helpline - 0800 138 1111

Citizens Advice Bureau: free, impartial, confidential and face-to-face advice available via more than 3,000 outlets around the UK.

National Debtline: telephone helpline on 0808 808 4000 providing free, confidential and independent advice on tackling debt.