75% of workers have wages frozen

15th August 2011

As the number of trust deeds being signed begins to climb again in Scotland, the Chartered Institute for Personnel and Development (CIPD) has released statistics confirming only one UK worker in four has received a pay rise so far in 2011.

The widespread freeze on public sector pay is a major and well-reported factor in this scenario. Despite this, the situation appears to be little better for private sector employees. A spokesperson for the CIPD said: “Even those lucky enough to receive an increase in pay will find it below the current cost of living, compounding consumer belt-tightening”.

Some relief may be experienced by low-paid workers in October when the national minimum wage increase takes effect. This may be of particular benefit to those working in the hotel, retail and catering industries.

As well as having their wages frozen, workers are experiencing heavy cost of living increases. Particular areas where this has been felt include rent for private tenants, energy bills, car insurance, petrol, and food. Is it any wonder the number of trust deeds is on the up?

As we have previously reported the average level of personal debt is once again increasing in Scotland. A tipping point appears to have been reached where workers are not able to make further cutbacks, are paying more for basics and are not able to increase their salary. For many this is creating a debt spiral, whereby more credit is needed just to get by from one month to the next. At this stage trust deeds require serious consideration.

Many are already resorting to trust deeds, with the Accountancy in Bankruptcy reporting an increase in the last quarter. It seems likely this is just the beginning of a tough financial period where the number of trust deeds could easily rise above the previous peaks of last year.

The situation will remain tough for those who have signed trust deeds and seen their wages frozen. As costs of living will no doubt have increased, it seems likely that trust deeds providers are going to have to act with pragmatism and discretion to ensure their clients can continue with their trust deeds in an affordable and sensible manner.

Mechanisms do exist to reduce the payments into trust deeds where a detrimental set of circumstances reduce an individual’s capacity to pay.

How well these mechanisms are applied by the various direct providers of trust deeds remains to be seen. The experience of those in our Scottish trust deed forum confirms that some firms are recognising they will have clients who require some flexibility and assistance to be able to complete their trust deeds. Sadly, other firms are reported to be acting intransigently at a time when common-sense and flexibility is called for.

For further trust deeds support and advice our trust deeds forum and news articles act as valuable resource of up to date information. Alternatively call our advice line on 0800 043 7201.

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