EQ Weekly Roundup 28-11-18

This week’s roundup includes news that the rise in minimum wage has hit profits rather than employment, more shoppers are using their credit cards for day-to-day spending and the cost of calls to direct enquiries will be capped.

This week’s roundup includes news that the rise in minimum wage has hit profits rather than employment, more shoppers are using their credit cards for day-to-day spending and the cost of calls to direct enquiries will be capped.

Minimum wage rises ‘hit profits, not jobs’

Employment levels have held up following a rise in minimum wage levels despite previous concerns raised by businesses, a report has said.

However, prices have risen in some areas to cover the extra salary costs according to the Low Pay Commission. Firms have accepted lower profits and restructured workforces but think thanks have warned about the impact of future minimum wage rises.

The National Living Wage for those aged 25 and over will rise from £7.83 an hour to £8.21 from next April. There are lower statutory minimum wages for younger workers and a higher voluntary living wage of £9 an hour, or £10.55 an hour in London.

Mike Cherry, national chairman of the Federation of Small Businesses, said that the majority of small firms were paying all their staff more than £7.83 an hour before this became the minimum rate in April.

‘Of those who did see wage bills increase following April’s rise, seven in 10 small business owners chose to reduce their profitability, absorbing those costs themselves. Roughly a third scaled-back or cancelled investment plans,’ he said.

‘The impact of a rising rate will vary from sector to sector. Labour-intensive industries with fine margins like childcare, hospitality and retail find increases harder to manage.’

Shoppers switch to credit card use

Shoppers are increasingly using their credit cards for day-to-day spending rather than one-off purchases, the banks’ trade body has said.

The body said credit card spending saw a sharp rise of 12.1% in October compared with the same month in 2017. There were nearly 290 million purchases made using a credit card in October, equalling more than £17bn.

Over the past 12 months, the outstanding level of borrowing on cards issued by the High Street banks grew by 5.7%, UK Finance said.

Debt charities have warned about the use of credit for everyday purchases. They said that people risked financial difficulty if they built up spending on credit cards. If they were hit by a financial shock – such as long-term illness – they could struggle to make repayments and face high interest charges.

Cost of calls to directory enquiries to be capped

The price of a call to directory enquiries will be capped at £3.65 for 90 seconds. Phone industry regulator Ofcom says it is in response to a ‘steep’ rise in prices.

The number of calls being made to 118 services has been falling by 40% a year, but over a million people still use the service. According to Ofcom, people aged over 65 are four times more likely to call 118 numbers than those aged between 16 and 34.

Ofcom’s study found that some providers are charging almost £20 for a 90-second call, with the most popular service, 118 118, charging £11.23 for a 90-second call. The study suggested that although there are cheaper services, customers tend to call the numbers they can most easily remember.

‘Directory enquiry prices have risen in recent years, and callers are paying much more than they expect. Our evidence shows that this is hurting people, with some struggling to pay their bills,’ said Jane Rumble, Ofcom’s director of consumer policy.

New £50 note scientist nominations released

The Bank of England has released a list of scientists who have been nominated to feature on the new £50 note.

The Bank received over 174,000 nominations, of which 114,000 met the eligibility criteria. To be considered, the individual must be real, deceased and have contributed to the field of science in the UK.

The list released by the Bank of England includes more than 600 men and almost 200 women. Black holes expert Stephen Hawking, Nobel-prize winning chemist Dorothy Hodgkin, computing pioneers Alan Turing and Ada Lovelace and many more are on the list.

Further names will be considered until nominations close on 14 December. The decision will be considered by the Bank’s Banknote Character Advisory Committee.