What the New Labour Government Means For Your Debt

Here at Money Advice, we understand the burden that financial stress can place on individuals and families and with a new Labour Government being elected in the UK this summer, there may be questions about what this means for those struggling with debt. Labour has committed to implementing changes that aim to ease the financial pressures on everyday people and while their first budget will be announced later this year, several key pledges are already in place that could positively impact debt relief and management.

Expanding Access to Debt Services

One of Labour’s main focuses is to strengthen and expand access to debt support services. By enhancing free debt counselling services, Labour intends to provide more people with the guidance they need. Debt can feel overwhelming for many individuals, but the right help at the right time can make all the difference.
Whether it’s exploring options like Debt Management Plans (DMPs) or Individual Voluntary Arrangements (IVAs), knowing what’s available can help you regain control of your finances. The push for simplified access to debt services means more individuals can reach out for help sooner, potentially preventing their debt from spiralling out of control.
Here at Money Advice, we can provide support to anyone looking to apply for an IVA through our free, confidential, and nonjudgmental service.

Interest Rate Freeze for Vulnerable Borrowers

Another significant promise from Labour is the proposed interest rate freeze for vulnerable borrowers. High interest rates often push people deeper into debt, especially when credit cards and loans are involved. This freeze would temporarily halt the accumulation of interest, giving people breathing space to focus on repaying their principal debt.

At Money Advice, we see firsthand how quickly interest can escalate a debt problem. By pausing these charges, vulnerable individuals can avoid falling further behind and get the opportunity to work on reducing their debt without the added pressure of rising costs. This policy would provide a crucial lifeline for many, allowing them to regain control of their financial situation without accruing more debt through interest.

Fairer Taxes

Labour’s commitment to fairer taxation is another step that could benefit those in debt. By closing tax loopholes, such as abolishing non-dom tax status and addressing inheritance tax gaps, Labour hopes to generate more revenue. This revenue could be redirected into public services, including debt relief programs, which would provide more support for those in financial difficulty.

While Labour has pledged not to increase taxes on working people immediately, it’s important to be aware of their plan to freeze income tax thresholds. Over time, as wages increase to keep pace with inflation, some people may pay more taxes. Considering this in your long-term financial planning is essential, especially if you’re already managing debt.

Renters’ Rights and Housing Costs

For many of our customers, housing costs are a major factor in their debt situation. Labour’s plan to eliminate no-fault evictions is designed to give renters more security, especially those facing rent arrears due to financial hardship. This could provide much-needed stability, giving renters time to manage their debts without the constant threat of eviction.

Labour’s Freedom to Buy scheme also aims to help first-time buyers with low-deposit mortgages. By making homeownership more accessible, Labour hopes to alleviate some financial pressure on renters, particularly those who feel trapped in an expensive rental market.

Many customers cite their mortgage as a main concern when dealing with their debts, so we’ve put together some help when considering IVAs when you have a mortgage.

Working Together Toward Financial Stability

At Money Advice, we welcome new changes that are designed to help those in debt across the UK, whether that’s through expanded access to debt help, interest rate freezes, or fairer taxation.

If you’re facing debt, now is the time to explore your options. Our team is here to help you create a plan for a debt-free future, so why not reach out to us today?