Click here to return to the Press Release Index

5th February 2008

Families Could Be Feeling The Financial Pinch

Families could be feeling the financial pinch in the next year or two, even in the relatively well off North East, if a new report is to be believed. In its report, entitled Why Do We Feel So Broke?, the Centre for Policy Studies says the average household pays £7,800 a year more tax than when Labour took power in 1997 and blames rising mortgage interest and household bills for the squeeze.

Until recently, rising salaries and greater reliance on personal debt had helped the average families to absorb tax increases but since 2005, increases in disposable income after tax and housing costs have stalled or gone into reverse.

According to the Centre for Policy Studies, the increase in taxation, combined with easily available credit, is a "toxic combination" and the level of credit card debt, which has been falling since 2005, masks the fact that many families are using mortgage advances to pay off their cards.

The report concludes that the combination of rising costs and stagnating earnings leaves the average household "more vulnerable to, and less prepared for, any economic downturn".

North East MSP and Parliamentary candidate for West Aberdeenshire & Kincardine, Alex Johnstone welcomed the report but did not welcome its conclusions saying, "After 10 years of Labour Government we are now worse off than we were at the start and while Labour have pushed up tax bills here in West Aberdeenshire & Kincardine, we have had no one to defend us in Westminster. In fact, our Lib Dem representatives have argued for higher tax at every level while their Labour partners have heaped taxation on the low paid and pensioners.  We have had enough of silence and inactivity, it's time that this constituency regained a real voice in the heart of government, someone who will actually speak up for the North East."