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Action to tackle student loan debt, clarity about what the Middle East crisis will mean for the UK economy, cheaper borrowing, more scrutiny of supermarket prices … Readers who took part in a Guardian callout before the spring forecast had plenty of things on their wishlists.
In the event there were no major tax or spending measures announced, and some were concerned about whether the US-Israeli war on Iran will scupper Rachel Reeves’s plan to put “more money in the pockets of working people”.
‘My student loan balance is £63,000’
James Houghton, 29, has a “plan 2” student loan – the type at the heart of the row about ballooning debts. Speaking just before the chancellor stood up, he said: “I’d really like to see something that eases that cost.” However, Reeves did not mention student loans in her statement.
This issue has snowballed into a crisis for the government after Rachel Reeves decided to freeze the salary threshold for plan 2 loan repayments.
For many graduates, everything they hand over from their salary is dwarfed by the interest that is slapped on their debt, and as a result the sum they owe is getting bigger and bigger – prompting an outcry.
Houghton, an IT worker who lives in Leeds, graduated from Leeds Metropolitan University (now Leeds Beckett University) in 2019, and his current outstanding loan balance is roughly £63,000, “which feels pretty wild”.
He added that at the moment about £2,000 a year was being added in interest, and the level of his salary means he is now making repayments from his income of about £40 each month.
“That said, I’m not overly concerned about the total amount because it effectively works more like a tax than a traditional loan. I don’t realistically expect to ever pay it off in full, and it’ll be wiped long before I get to retirement,” he said.
In terms of what might come out of the spring forecast, Houghton said prior to Reeves standing up that “I’d be worried about anything that adds more pressure to everyday costs. I think a lot of people my age are just trying to stay on top of things and plan ahead”.
After she sat down, he said: “It would have been reassuring to hear more about how they’d respond if the [Middle East] situation escalates, as I’m concerned it could drive up living costs at a time when many people are already feeling stretched.”
Houghton said that overall he felt “fairly stable financially” at the moment and was managing to meet all of his essential outgoings, including his mortgage.
He said: “Over the past year I’ve sold my car to cut costs and increased my pension contributions, which feels like a positive step.”
‘The cost of living is high and we are not saving’
Helen, a 44-year-old health worker from Somerset, shares the mortgage payments with her husband. She felt Reeves’s statement did not really add anything new, adding: “If living standards do improve, that’s great; however, I can’t see how that will make much difference with the cost of fuel and gas increasing due to [the] current world turmoil.”
One of the main issues for many, she said, was that wages had stagnated and pay rises were hard to come by. Her biggest outgoing is her mortgage, which has gone from a 1.7% interest rate a few years ago to 4.7%. She and her partner spend roughly 30% to 40% of their wages paying it off.
“The cost of living is high and we are not saving. We put an extra £100 toward paying the mortgage rather than saving it,” she said.
In terms of what would help, she suggested reducing interest rates to “make borrowing cheaper”. She needs to get some work done on her house, and said that where in the past people could get a £20,000 loan, that was no longer affordable.
She also said the government should “do something about inflation and food prices”.
‘Reeves was scuppered by oil price hikes’
William King, a 62-year-old medically retired former NHS worker from Glasgow, had to give up his career two-and-a -half years ago after being diagnosed with long Covid. He thought the statement was “scuppered by oil price hikes, which will lead to inflation in transport and fuel costs, which will in turn hit everyone in their pockets”. He found it hard to see how living standards would improve.
He said one of the main issues was that his housing association rent and council tax were rising by 6%, and added that “no one gets wage rises like that these days”.
His everyday costs are climbing, leaving him unable to add to his savings at the end of the month. Because his health keeps him less active and indoors more often, one of his biggest challenges is staying warm. He deliberately rations his energy use, relying on thermals and woolly jumpers, yet still receives high quarterly gas bills that he recently had to fight his supplier over.
“If I’m deliberately rationing it and getting bills like that, what would it be like when I’m using it?” he says.
While he is grateful for his over-60s bus pass and free prescriptions in Scotland, he admitted the situation was tough, adding: “It’s not where I thought I would be.”
In terms of what would help, he suggested a freeze on council tax and rents. He also wants the government to investigate supermarket practices, arguing that the cost of living crisis is being used as a “cover-all to whack up prices” indiscriminately. He believes a watchdog is needed to keep an eye on them.
‘All we are concerned about is being able to pay our bills’
Louise Stewart, 56, who has worked for the NHS since 1989, said she felt “really uncertain” now.
“I’m on a good wage but have just had my redundancy application accepted. I should get a good payout as I’ve only ever worked in the NHS, but suddenly losing a regular wage is daunting.”
At the same time she is awaiting an inheritance from her late mother’s estate, while her husband (who is a decade older) is considering whether he will also stop work.
“This is a time for us to really evaluate our spending habits and consider the essentials versus the luxuries and how we choose to spend our money,” said Stewart, who lives in Stratford-upon-Avon.
After Reeves had finished speaking, Stewart said it was “interesting to see the downgrading of growth predictions [for this year], but it’s difficult to know what the consequences of these will be for real people. I think what we are all concerned about is being able to pay our bills, keep our families warm and fed and not see continuing price increases at the tills and fuel pumps”.
‘Nothing has improved – only got worse’
Asked how he was feeling about his finances and whether anything had improved or worsened over the past year, Stephen Whitmill, 68, a retired ex-nurse and tutor, said: “Nothing has improved – only got worse.”
He said the cost of running a car was “crazy”, adding: “Food costs a fortune … It went up and it hasn’t really come down.”
He added that “it’s too expensive to buy a pint in a pub” – he is no longer prepared to pay pub prices, “apart from Wetherspoon’s”.
Whitmill, a writer who lives in Northampton, said many of the rules that had existed for a long time “are proving not fit for purpose any more” and that the public were not feeling the benefits of some of the things Labour had done. He added: “The energy situation really needs sorting out, and so does water … Labour are doing things but it’s not enough. People are fed up and want to see change.”
Speaking before Reeves stood up, he said he would love to see the government increase the income tax personal allowance, which would get people spending money. That would mean reversing the freeze on income tax thresholds which, in her last budget, the chancellor extended until 2031. Everyone has a personal allowance of £12,570, and below that, income is not taxed.
