MSE leaders' debate: What will Nick Clegg do for your wallet?

With the General Election just over a week away, we asked the five major party leaders what they would do on the major MoneySaving issues you picked.

Of course, politicians are experts at avoiding questions, so make up your own mind on Lib Dem leader Clegg's (pictured, right) policies from his full answers below (with our questions in bold).

See the MSE leaders' debate guide for edited versions of the Conservatives', Labour's, Plaid Cymru's and the SNP's responses.

Petrol Prices

MSE question: While the oil companies and retailers take a cut, 70% of the cost of petrol is made up of tax – so people are really paying the government. Many consumers feel the price is crippling yet environmentally others argue it will be high. 

Do you believe it should be lower – and, if so, will you cut the tax to make it happen?

Nick Clegg's answer: "One of the peculiar things about our economy is just how vulnerable we are to fluctuating oil prices.  But we do somehow have to hold down the growth in traffic (predicted to rise 30% between 2000 to 2015) and reduce carbon emissions.

"I certainly think there's no need to impose a fuel duty escalator when prices are already soaring; that just adds insult to injury for people who need to use their cars. There are many people in remote and rural areas, in particular, for whom a car is completely essential – and I want to see us take up an option we have under EU law to give a rebate to those people.

"And I want to invest more in public transport – especially rail – to give more people a realistic option to leave the car at home. It's not fair to price people out of their cars when there's no alternative."

Energy Bills

MSE question: Energy prices have dropped by seven percent this year, but wholesale prices have dropped much more.  The average energy bill is now £1,150 a year for many people, making it the biggest regular bill after rent/mortgages. 

What will you do to cut costs and/or the profits of the energy providers?

Nick Clegg's answer: "It is crazy that energy companies charge you less for your energy the more you use.  It means a pensioner heating one room pays more per unit than a millionaire heating a mansion.

"We believe people who use less should pay less, so we are determined to change bills so that the first units are cheapest. We also want proper social tariffs – that are at least equal to the lowest price available – for all vulnerable customers (those on means tested benefits) no matter how they choose to pay. And of course, the best way of cutting people's energy bills is to help them save energy. 

"So we will launch a ten-year programme of home insulation, with a home energy improvement package of up to £10,000 per home, paid for by the savings from lower energy bills.  We will also run a one-year ‘eco-cashback' scheme to give people £400 towards energy efficient home improvements – to help kick-start the economy in our first year in office."

Savings (Losings) Accounts

MSE question: The cut in base rate has left many savings accounts paying pitiful rates, leaving many savers losing money in real terms due to inflation. Will you introduce any NEW practical measures to help savers, especially those that rely on interest to boost their income? 

Nick Clegg's answer: "It's hard to balance the needs of businesses and borrowers with those of savers. We now have such low interest rates that it is causing problems for savers, especially retired people. There are several things we can do: first, raise the income tax threshold to £10,000 a year, so that those who rely on their savings income lose less in tax.

"We will use a new Infrastructure Bank to open government bonds to retail investors more easily, allowing people to put their money into improving Britain while still getting a good return (We'd do this through NS&I).

"We will allow people to be more flexible in saving for their retirement – allowing people to access their pension lump sum early if they choose, to help stave off a financial crisis like repossession for example.

"We will end compulsory annuitisation, so you don't have to buy an annuity at 75 but whenever you choose. And we want to look at the rules that imply you get a huge rate of interest on your savings when they assess you for things like pension credit, so people aren't penalised for planning for their retirement."

Bank Charges Future and Past

MSE question: What will you do to stop unfair bank overdraft charges in the future? Plus do you support helping those who've been charged them in the past, including low income and vulnerable consumers, to get their money back?  If you do support reclaiming what will you do to make it happen?

Nick Clegg's answer: "It really is a scandal.  The UK banks only exist because they have been bailed out by British taxpayers, yet financial service companies are still ripping people off – I don't think that's putting it too strongly. 

"It means that customers who slip into minor difficulties can see mountains of debts pile up.  Legal action against the banks hasn't worked, so we will legislate to end unfair bank charges on unauthorised overdrafts, bounced cheques, or failed direct debits. 

"Any charges really have to relate to what these mistakes actually cost the banks (I'd like a similar rule for transaction charges like credit cards to crack down on unscrupulous companies like Ryanair who seem to charge you just for breathing!).

"As for charges from the past, while it's usually a very bad idea to pass retrospective legislation – I believe the banks have a moral obligation to pay them back. The idea that chief executives taking home millions of pounds a year can begrudge people struggling to get by a few hundred pounds simply beggars belief."

Existing Mortgage Holders

MSE question: The supply of mortgage deals for existing customers is limited for the millions with a loan-to-value (LTV) of 75% or above.

House prices have dipped in many areas pushing even some who once had decent equity into this bracket, leaving many people languishing on their standard variable rates or locked in to trackers at 3-4% over base.  

If interest rates rise back to 5% levels this will leave many on 8-9% mortgages. What will you do now and in the future to ease this potential financial disaster?

Nick Clegg's answer: "There's no doubt that many people are already struggling with their repayments - 46,000 homes were repossessed last year, the highest level for 14 years. And you're completely right that this could get far worse if interest rates rise to the levels you suggest.

"We need to encourage people to pay off what they can as quickly as they can (our plans to cut income tax by £700 for most people by raising the tax threshold to £10,000 will mean more people can afford to do this), and regulate the supply of mortgages more effectively so bubbles are never created again. But there is also more we must do to protect homeowners.

"We will give the courts the power to enforce a statutory Code of Practice so mortgage lenders have to offer every alternative to homeowners before they take back their homes. We want to make sure that repossession is an absolute last resort.  It is true that other parties are suggesting stronger guidance, but we think there's no point in doing this unless it is legally enforceable."

First Time Buyers & House Prices

MSE question: Many first time buyers are finding it increasingly difficult to get on the ladder, not just due to the cost of mortgages, but the huge deposits needed. 

What practical steps will you take to help them? Plus, is it wise to encourage people into the property market at the moment? And in five years would you like to see house prices higher or lower than they are now?

Nick Clegg's answer: "The government stoked up the housing bubble to create false growth in our economy. They refused to heed Vince Cable's warnings about this bubble and rejected his proposal to include house price inflation in the Bank of England's targets in order to prevent homes becoming so unaffordable. We are all paying the price for this mistake, and yet the government is still trying to lever up prices.

"In a fair society, everyone should be able to afford somewhere decent to live – not necessarily to buy, of course, but at least to rent. Out of control house prices has led to a real crisis with 1.8 million families on the waiting list for a home and so many young people unable even to dream about buying a home of their own.

"We need to manage house prices very carefully so they become more affordable but without a crash that could be devastating. In my view, a home is a home, not a speculative investment.

"There are specific things we can do to help first time buyers: Liberal Democrats have already been rolling out some innovations, especially in rural areas, where people find it especially hard to get onto the housing ladder. 

"There's the Home on the Farm scheme, started by my colleague Tim Farron, which encourages farmers to convert existing buildings into affordable housing.  There are Equity Mortgages, like the ones we started in South Shropshire, where the council owns a share of the home, which means they can be sold at the cost of building. 

"We also need to do something about empty buildings, which are not just a waste – they are a blight on the local community, and attract crime and anti-social behaviour. My plan is to give the people who own empty homes a grant or cheap loan to renovate them so they can be used again.  This is cheaper, quicker and greener than building new. 

"We also urgently need to look at changing public sector borrowing rules so that councils are allowed to borrow against their trading income and build more council housing again."

Credit Cards

MSE question: Thousands of credit card customers across the UK are receiving letters hiking their interest rates by up to 10%. How will you prevent excessive interest rates rises and what other plans do you have to change the credit card industry?

Nick Clegg's answer: "We urgently need to tackle the credit card industry, which has become extortionate and are pushing people further into debt.  Average rates are now at 18.8 per cent – in a period of incredibly low interest rates – and some people have to pay 40% or 50% APR. 

"It is good news that providers are now balancing repayments more fairly against different debts at different interest levels – the practice of paying off the low cost debts first while allowing high interest borrowing to pile up was irresponsible. Of course, credit and store card providers have to be able to change their rates to reflect the cost of borrowing. 

"But we will put a maximum cap on interest rates both for credit cards and store cards, agreed through consultation."

Council Tax and Water Rates

MSE question:  The current council tax banding system has been in place since 1991 in England and Scotland. It's time for a fair update so that 400,000 homes are no longer in the wrong band. How will you address this?  

Plus, many people still pay water rates based on a valuation of their homes done in 1989 yet they can't appeal it. Will you change that?

Nick Clegg's answer: "You're right: Council tax is not just unfair, it is based on property valuations made right back in 1991.  But we are the only party that wants to do anything about that.

"Rather than revaluing people's homes we think Council Tax needs to be replaced with a fair local tax, based on people's ability to pay.  But we have to pilot Local Income Tax to tackle the practical issues of implementation before it can be rolled out nationally. 

"As for water bills, they have soared since privatization, and they hit places hardest often where incomes are low – like the south west, with its miles of coastline.  What we want to do is to introduce a social tariff for people on low incomes (in England and Wales). 

"We will also roll out smart meters to every household in the country over the next decade, because then people can be charged for the water they actually use, rather than the value of their homes 20 years ago."

Financial Education

MSE question: Financial education was due to become a compulsory part of the curriculum in September 2011 but was scuppered due to disagreements over sex education.  

Will you commit to legislation to put compulsory financial education on the curriculum by September 2011 as planned?

Nick Clegg's answer: "Financial literacy is absolutely crucial in a society like ours where – as Martin always says – we're in a constant battle for consumer revenge against companies whose job it is to make as much profit out of us as possible.

"But I also think children are being let down by a National Curriculum which is already hundreds of pages long, is far too rigid and fails to engage or motivate many of them.

"So we'll encourage financial education, but without trying to dictate to every school exactly how to run every single lesson. Every child is different, and we need enough flexibility for teachers to adapt the curriculum to suit all their pupils.

"Yes, children should learn how to handle money, but we don't want to add to the inflexibility of what is already the most centralised and controlled education system in the developed world."

Stamp Duty

MSE question: The way stamp duty works is ludicrous. When you cross a boundary you pay the tax on the entire cost, not just the marginal rate. It creates an unbalanced and unfair system. Are you brave enough to change it?

Nick Clegg's answer: "It certainly is unfair, and we have a long-term ambition to change it. But changing stamp duty would come with a huge price-tag unless you increased the rates, and – with the black hole threatening to engulf public finances already – this isn't something we can do right now.

"We'll help people more by cutting their income tax, and by empowering councils to provide more affordable homes."

Further reading/Key links

Cut fuel costs: Cheap Petrol and Diesel, Cheap Gas and ElectricityTop accounts: Best Bank Accounts, Top Savings AccountsReclaim cash: Council Tax Rebanding, Bank Charges ReclaimingHousing tips: Cheap Mortgage Finding, Free House Price Valuations, Stamp Duty Calculator

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