Households to spend billions servicing debt

Households will spend a total of £109 billion this year servicing their debt – double the figure before former Prime Minister Liz Truss’s mini-budget in 2022 and more than 10 times the government’s cut to National Insurance rates.

That is the claim by isles MP Alistair Carmichael, who has condemned what he describes as Conservative “economic mismanagement”.

Mr Carmichael says the average household will spend £3,855 this year tackling debts, an extra £1,917 compared to the year before Ms Truss’s mini-budget.

Separate forecasts from the Office for Budget Responsibility show that total mortgage interest payments are expected to rise by another 26.6 per cent in 2024, having already doubled in the last two years. 

Meanwhile, research by the Resolution Foundation think tank has found pensioners are set to lose out from last week’s budget, due to the government’s decision to freeze income tax thresholds, which will lead to an average of £1,000 increased tax for pensioners.

In the Northern Isles alone, 6,681 income tax-paying pensioners are set to be hit with a total £6,680,764 stealth tax following the budget.

Mr Carmichael said: “This budget was nothing but a Conservative con, with a £109 billion household debt bombshell hidden in the small print and pensioners being squeezed for tax on the sly.

“Families are still paying the price for the Tories crashing the economy in 2022 and sending debt repayment rates sky-high.”

Chancellor Jeremy Hunt said: “In recent times the UK economy has dealt with a financial crisis, a pandemic and an energy shock caused by a war on the European continent.

“Yet despite the most challenging economic headwinds in modern history, under Conservative governments since 2010 growth has been higher than every large European economy – unemployment has halved, absolute poverty has gone down, and there are 800 more people in jobs for every single day we’ve been in office.

“Of course, interest rates remain high as we bring down inflation. But because of the progress we’ve made, because we are delivering on the Prime Minister’s economic priorities, we can now help families with permanent cuts in taxation.

“We do this not just to give help where it is needed in challenging times. But because Conservatives know lower tax means higher growth. And higher growth means more opportunity and more prosperity.”