The Budget is a golden opportunity to set out an economy that works better for consumers – they should take it

·3-min read

The strong economic recovery following the initial shocks of the pandemic defied most expectations. Yet there are concerning signs that our bounceback is starting to falter. The economy remains smaller now than in February 2020, and the rate of growth has slowed considerably since earlier this year. 

Some consumers have managed to increase their savings in the past 18 months, but many haven’t been so fortunate. For them, the result is an erosion of living standards, exacerbated by the recent rises in the price of fuel, energy and food. The number of consumers missing bill, loan or credit payments has increased, and consumer confidence is ebbing as more people have a pessimistic outlook on the economy.

It is against this backdrop that the government will deliver its Budget and spending review this week. While the problems outlined above will not disappear overnight, Wednesday represents an opportunity for the government to set out ways to make the economy work better for all consumers. There are critical things it must do without delay.

First, competition policy needs overhauling to reflect the modern economy. More competition, where smaller companies can genuinely vie with larger ones whose market power has become entrenched, is critical to stimulating innovation and economic growth.

Less competition leads to less choice and higher prices – something that is already affecting an increasing number of consumers. Online, the new Digital Markets Unit must be armed with appropriate resources and powers to promote competition and protect consumers and businesses from unfair practices.

Watch: Budget 2021: Living wage and minimum wage increases to be announced in Wednesday's budget

Second, regulators and enforcement bodies, including the Competition and Markets Authority, as well as Trading Standards, need to be properly resourced and have the right powers in order to hold companies who breach consumer law to account. The models for alternative dispute resolution (ADR) also need reforming. In sectors such as aviation, used car sales and home improvements, where there are high-value transactions and a large number of complaints, consumers need mandatory ADR schemes.

And if ADR was more readily available and easy for consumers to use, there would be a stronger incentive for companies to resolve complaints themselves.

Third, ambitious climate targets won’t be achieved unless people are given more support to deal with the changes they will have to make. Consumers are unlikely to adopt new, greener technologies to heat their homes or drive their cars without appropriate financial support, protections and reliable information. Here, the rollout of the government’s green homes grant, designed to help people make energy improvements to their houses, is a cautionary tale. Ambitious in scope, but it assumed that consumers would embrace change without understanding what would really motivate them, with take up far below expectations.

We are approaching a crossroads in our response to the pandemic. Continuing to rely on antiquated systems to help consumers deal with the problems they face risks failing to maximise the potential of our economic recovery. Instead, the government must embrace change and strive to build a system that will meet the needs of consumers as soon as possible. Wednesday is a perfect time to turn proposals into action.

Rocio Concha is director of policy and advocacy at Which?

Watch: Budget will focus on shoring up British economy after shock of coronavirus

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting