Impact of the Chancellor’s Budget for our sector

CSA Chief Executive Chris Leslie writes: 

“The Chancellor’s Budget and Spending Review this week has by now been widely analysed – but what impact will it have on the collections and debt purchase sector?

There are clear operational consequences for firms in our industry as with any other; the decision to invest in skills (and positively more resources for apprenticeships and Kickstart) and reforms to business rates are welcome. The recruitment challenge facing firms is reflected in the lower projections for unemployment – and significant inflation of four percent over the coming year will impact on pay rounds and consumers more widely. While growth is predicted to be a healthy 6% this year and for 2022, its reversion to 1.3% in 2023 feels lacklustre.

Consumer confidence is currently in challenging terrain following a more optimistic summer, with the petrol crisis, shortages, energy price cap rise and withdrawal of government pandemic support – including the £20 Universal Credit uplift – all affecting attitudes to debt repayment and access to credit. The decision to raise the national living wage and provide relief with a more generous Universal Credit taper will provide greater disposal income for the least well-off.

The Chancellor has provided more resources for the Money & Pensions Service for debt advice and funding for Debt Relief Order administration in England. For SMEs, the Recovery Loan Scheme was extended to 30 June next year and some creditors will clearly benefit from the reduction in the bank surcharge rate.

The Economic Crime (AML) Levy has been set at £100 million pa, though we have already received Ministerial assurances that the debt purchase sector is not within scope of the money laundering regulations. The Competition & Markets Authority has been granted an additional £130million for its work, perhaps reflecting its expanded role. And there were smaller hints of policy and taxation changes to come that may be of significance: the reference to stamp duty changes for securitisation arrangements in the future will be worth watching closely.