Tagged: debt

Hartlepool’s debt nightmare laid bare by worrying figures

Hartlepool‘s  debt nightmare has been highlighted in a national league table of towns suffering from high levels of personal insolvencies.

The town ranks 16th in the country for towns with the worst record of people with critical levels of debt.

Statistics from information services company Experian show 13 out of every 10,000 households in Hartlepool had an insolvency problem during the survey period which was the last three months of 2014.

Torquay topped the table with Scarborough and Penzance close behind – but Hartlepool’s problem is getting worse.

 Figures show three more people per 10,000 households were in difficulties last year than at the same time a year earlier.

The study also showed hard-pressed and vulnerable young families with squeezed budgets were the worst affected.

Jonathan Westley, managing director of Experian’s Consumer Information Services UK & Ireland, said:

“Insolvency rates within young families and across some key coastal towns and locations in the North remind us there is still some way to go in terms of recovery.

“Many people are still on stretched budgets further highlighting the need for credit providers to recognise circumstances unique to each individual, enabling their money to go further and help support them against debt.”

Overall, the picture is improving and the signs for 2015 are positive with personal insolvencies in Great Britain falling from 10 in every 10,000 households in 2013, to nine in every 10,000 households in 2014.

Mr Westley added:

“The good news is that we’re on the right path and it’s promising that overall insolvency rates are steadily declining. The current low mortgage interest rates may well have aided the improvements we’ve seen among many groups.”

A breakdown of the statistics showed some sections of society were in bigger difficulties than others.

Families with children who have limited budgets were struggling to make ends meet, often found in areas with fewer employment options, the study showed. This group had an insolvency rate of 19 per 10,000 households.

Single people who pay modest rents for low cost homes – and who often live in a property for only a short length of time before moving on – were also struggling to make ends meet.

People on long-term rent deals, who are living in low-value flats or in small terraces on outlying estates, were also shown to be among the at-risk groups.

Source – Hartlepool Mail,  01 Apr 2015

Council Tax Debt Problems Soar 20% In A Year

Council tax debt has overtaken credit cards as the most common form of debt requiring advice and support, says a leading charity.

The Citizens Advice Bureau (CAB) says it expects to help more than 191,000 people struggling to pay Council Tax in 2014/15 – up 20% on the previous year.

And according to a report from the CAB, rising rents could result in up to 122,800 people requiring help with rental debts by the end of March 2015.

The Government abolished Council Tax Benefit at the end of March 2013, meaning that some of the poorest people are having to pay for the very first time.

The move has resulted in a postcode lottery, with benefit claimants and low-income households paying more in some areas than others, depending upon each local authority’s Council Tax Reduction scheme.

A growing proportion of people are approaching the CAB for help and advice on paying rent, council tax, water and fuel debts. Meanwhile, financial issues related to credit cards, mortgages and unsecured personal loans have declined.

While more households are struggling with Council Tax and housing costs, debts resulting from credit cards are expected to fall by 12% in 2014/15 – exposing the ‘changing face of household debt’.

The mainstream credit problems of the post-2008 period have turned into problems with priority debts, says the CAB.

Despite a recent fall in fuel and petrol prices, the CAB also highlights how households have had to endure a 210% rise in energy costs over the last 10 years.

The CAB highlights how the Office for Budget Responsibility expects household debt to soar to a record high of £2.43 trillion by 2019.

There has also been a significant rise in the amount of debt held by self-employed people – up 41% to £20,000. They now represent the highest percentage of people helped by the CAB at 29%.

Citizens Advice is carrying out a separate study about the challenges that self-employed people face.

Behind the self-employed come unemployed people, who have an average debt of £17,500. Pensioners come in a close third, with an average total debt of £17,200.

13% of CAB clients had ten debts or more.

Source – Welfare Weekly,  16 Feb 2015

http://www.welfareweekly.com/council-tax-debt-problems-soar-20-year/

Wonga writes off 330,000-customer debts

Wonga is to write off the debts of 330,000 customers after it admitted it has made loans to people who could not afford to repay them.

The move by the pay-day lender comes after an agreement with the Financial Conduct Authority (FCA) that requires it to make significant changes to its business immediately.

The review means that about 330,000 customers who are currently in excess of 30 days in arrears will have the balance of their loan written off and will owe Wonga nothing.

Approximately 45,000 customers who are up to 29 days in arrears will be asked to repay their debt without interest and charges and will be given an option of paying off their debt over an extended period of four months.

Wonga’s new chairman Andy Haste said: “We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case.

“I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.”

Source –  Northern Echo,  02 Oct 2014

North East councils picked to pilot expansions of ‘troubled families’ scheme

North East councils have been picked to pilot an expansion of the Government’s scheme to help “troubled families”.

They were chosen for the because they are among authorities which have been successful with the existing troubled families scheme, according to the Government.

The programme is designed to help families which have problems with truancy, crime, anti-social behaviour or unemployment.

But it is to be expanded to include families which have suffered from domestic violence or poor mental and physical and health or debt. It will also be expanded to include children under five, whereas previously only school-age youngsters were included.

Gateshead, Newcastle, Durham and Middlesbrough are all to pilot the expanded scheme.

So far, Newcastle has “turned around” 652 families out of 1080 “troubled families” identified, according to official figures. This means it has helped the families deal with at least one of the problems facing them.

Durham has helped 676 out of 1,320 families, Gateshead has helped 301 out of 595 and Middlesbrough has helped 303 families out of 570.

Chief Secretary to the Treasury Danny Alexander said: “The Troubled Families Programme is an excellent example of how re-thinking public services can have a huge positive impact on the lives of families across the UK.”

The Department for Work and Pensions will provide 300 specialist troubled families employment advisers.

The troubled families programme was launched in 2011, following riots in the summer, when David Cameron vowed to turn around the lives of 120,000 problem families by 2015.

But a report last year by the National Audit Office raised concerns including the fact that only 62,000 families were currently in the programme nationwide, 13 per cent below the number that “might reasonably” have been found, and a family can be counted as being “turned around” if it shows improvement in just one area.

> Perhaps there just aren’t so many “problem families” as politicians would have us believe ?

Source – Newcastle Evening Chronicle,  19 Aug 2014

The minimum income is 2.5 times what people get on benefits – but still they are labelled scroungers

Vox Political

140630minimumincome The numbers speak for themselves: Under ‘Adequacy of safety-net benefits’, EVERY SINGLE INCOME GROUP has lost out. While others have suffered a great percentage drop, single working-age people remain the least able to make ends meet.

“How much money do you need for an adequate standard of living?”

That is the question posed every year by the Joseph Rowntree Foundation – and every year the organisation calculates how much people have to earn – taking into account their family circumstances, the changing cost of these essentials and changes to the tax and benefit system – to reach this benchmark.

This year’s research finds:

A lone parent with one child now needs to earn more than £27,100 per year – up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more…

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Tax credit debt collection is a double-edged attack on the poor

Vox Political

140126facts

There’s more than a little of the piscine about the fact that our Conservative-led has set debt collection agencies onto poor families who have been overpaid tax credit due to errors made by HM Revenue and Customs.

Firstly, the move undermines the principle behind the tax credit system – that it is there to ensure that poorly-paid families may still enjoy a reasonable living standard. Tax credits are paid on an estimate of a person’s – or family’s – income over a tax year and the last Labour government, knowing that small variances could cause problems for Britain’s poorest, set a wide buffer of £25,000 before households had to pay anything back.

By cutting this buffer back to £5,000, the Conservatives have turned this safety net into a trap. Suddenly the tiniest overpayment can push households into a debt spiral, because their low incomes mean it is impossible to pay…

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MP blames Government for North east depression epidemic

Shocking new figures show that the North is the anti-depressant capital of Britain.

The region takes up six of the top 10 places in England for use of the drugs, with poverty and deprivation being blamed for the widespread problems with people’s mental health.

NHS data shows doctors here prescribe more anti-depressants per head than anywhere else in the country, with more than one million prescriptions handed out in the last three months of last year.

In the former industrial heartland of East Durham there are 45 prescriptions for every 100 patients – the second highest rate in the country.

And six of the 10 most-prescribing areas are in the North East, including Sunderland, Gateshead, South Tees, Newcastle West, and North Durham.

Mental health charities said depression and anxiety were strongly tied to deprivation, with some laying the blame at the government’s door. Easington MP Grahame Morris, a member of the Commons Health Select Committee, said: “We’re fighting a rearguard action to protect our community.

“I see in my surgeries every week people displaying symptoms of anxiety, stress and depression as a consequence of the government’s policies.

“I had a gentleman come to see me on Friday who was 60-years-old, had worked from being 15, and he’d had to give it up due to a crumbling spine.

“He’d been put in a fit for work category when he couldn’t walk for 20 paces, and his benefits were suspended for eight months while the appeal is heard.

“There’s a definite link between the Government’s policies of austerity and welfare reform and the impact it’s having on people’s mental health.”

Doctors in Sunderland made 41.2 prescriptions for every 100 people in the area, while Gateshead gave out 40.7.

Other badly affected areas included Salford, St Helens, Barnsley and Blackpool – all former industrial areas. Richard Colwill, from the mental health charity SANE, said the figures should be treated “with caution” because they might be inflated by repeat patients for drugs which are used for a range of other conditions.

But he argued they “should be no surprise” because of the strong links between depression and “unemployment, debt and homelessness”.

He said: “SANE’s own experience suggests that it is not only the high demand for treatment that is concerning, but also the dwindling supply.

“The Government’s relentless agenda to cut expensive community and inpatient services often leaves healthcare professionals with little to offer other than medication.”

Paul Farmer, chief executive of mental health charity Mind, said: “We know that reforms to the welfare system are taking their toll on the mental health of many people. Depression can affect anyone, regardless of background, but there are certain factors that can increase the risk of someone developing depression.

“Unemployment, financial difficulties, a problematic housing situation and physical health problems can all put stress on people, which in turn can lead to mental health problems.”

A spokeswoman for clinical commissioning groups in the North East said: “It’s well-known that poverty and mental health are linked, just as poor housing and mental health are linked.

“As the North East has some of the highest areas of deprivation in the country, it’s not surprising that there are higher numbers of people who need support for mental health issues.

“It’s important that people realise that while sometimes medication is required, there are alternatives for those with mild to moderate depression or anxiety.

“Talking therapies work very well and can act more quickly than perhaps antidepressants or other medical treatments.”

A Department for Work and Pensions spokesperson said: “Our welfare reforms will improve the lives of some of the poorest families in our communities, with the Universal Credit making three million households better off.

“We have also expanded the ESA Support Group so greater numbers of people with a mental health condition now qualify for the benefit.

“We are transforming the lives of the poorest in society and bringing common sense back to the welfare system – so that we can continue to support people when they need it most right across Britain.”

> But then, they always say that… whatever the question was.

Source –  Newcastle Evening chronicle  20 April 2014

Inflation drop doesn’t mean wages will rise

Vox Political

'For the privileged few': If you're earning the average wage of £26,500 per year, or less, then nothing George Osborne says will be relevant to you. ‘For the privileged few’: If you’re earning the average wage of £26,500 per year, or less, then nothing George Osborne says will be relevant to you.

Why are the mainstream media so keen to make you think falling inflation means your wages will rise?

There is absolutely no indication that this will happen.

If you are lucky, and the drop in inflation (to 1.7 per cent) affects things that make a difference to the pound in your pocket, like fuel prices, groceries and utility bills, then their prices are now outstripping your ability to pay for them at a slightly slower rate. Big deal.

The reports all say that private sector wages are on the way up – but this includes the salaries of fatcat company bosses along with the lowest-paid office cleaners.

FTSE-100 bosses all received more pay by January 8 than average workers earn in a year. Their…

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Bedroom tax is a disaster, MPs warn Ministers amid Newcastle Council complaints

A Commons inquiry has backed warnings from Newcastle City Council that cuts to housing benefit are causing hardship for families with children and disabled people – while failing to free up housing stock.

MPs are warning that cuts in benefits paid to social housing tenants who are considered to have a spare bedroom has caused “severe financial hardship and distress to vulnerable groups”.

The policy, known by critics as the “bedroom tax”, was designed to free up larger properties for families who need them most by encouraging council or housing association tenants with spare rooms to downsize.

But the Commons Work and Pensions Committee – which has Labour, Conservative and Lib Dem members – highlighted warnings from Newcastle City Council that there simply aren’t enough smaller properties for people to move into.

The Committee published its findings after hearing evidence from a range of witnesses including Coun Joyce McCarty, Newcastle Council’s deputy leader.

The Government has published figures showing that the cost of paying housing benefit in the North East had fallen by £25m as a result of the reforms.

Housing benefit rules introduced last year allow tenants to have one bedroom for a single adult or couple, for any two children under 15 of the same gender and for any two children under nine of either gender.

Housing benefit is cut by 14% of the property’s assessed rent if they have one room deemed to be a spare bedroom and 25% if they have two.

In the North East, 50,000 households had their benefit cut, or 440 households for every 10,000 in the region – a higher proportion than any other part of the country.

MPs highlighted evidence from Newcastle, which told the inquiry that 3,233 of its tenants were on the waiting list for a one-bedroom property but only around 800 one-bedroom properties were becoming available each year, including bedsits.

Referring to the policy as the social sector size criteria (SSSC), the MPs said: “Newcastle City Council questioned whether the SSSC policy was likely to succeed in encouraging better use of social housing stock. It pointed out that in Newcastle overcrowding was not a significant issue”

“Coun McCarty made the point that the SSSC had actually led to very few overcrowded families being rehoused.”

They warned: “We understand the Government’s wish to use social housing stock more efficiently and to reduce overcrowding. However, the SSSC so far seems to be a blunt instrument for achieving this. In many areas there is insufficient smaller social housing stock to which affected tenants can move, meaning that they remain in housing deemed to be too large and pay the SSSC.”

But ministers said housing benefit reforms and the welfare cap – which means no household can receive more than £26,000 in benefits – were needed to manage soaring welfare spending, which grew by 50% in Britain in just 10 years and saw the housing benefit bill exceed £1bn in the North East alone.

Secretary of State for Work and Pensions Iain Duncan Smith said: “It was absolutely necessary that we fixed the broken system which just a year ago allowed the taxpayer to cover the £1m daily cost of spare rooms in social housing.

“We have taken action to help the hundreds of thousands of people living in cramped, overcrowded accommodation and to control the spiralling housing benefit bill, as part of the Government’s long-term economic plan.”

“And all the stress, debt, homelessness and suicide  resulting from this policy is actually good for them, they thrive on it. I’ve got figures to prove it”,  he might have added…

Source – Newcastle Journal,  02 April 2014

Poor Families Hit By Welfare Reforms ‘Running Up £52 Of Debt Every Week

This article  was written by Patrick Butler, social policy editor, for theguardian.com on Wednesday 26th March 2014

Low income families hit by welfare reforms are running up personal debt at the rate of £52 a week to cope with the rising cost of living, with many saying they have no idea if they will be able to pay it back, according to the latest instalment of a poverty research project.

The project found that the average household debt stood at just under £3,000, up by 29% since October, equivalent to £670. Families were typically spending £34 a week repaying debts, from an average income among those surveyed of £176 a week.

 The poorest families are also spending nearly four times the national average on heating and fuel – equivalent to a fifth of their income – while nearly a third of households spend less than £40 a week on food.

Almost half of the participants in the survey, all of whom have been affected by welfare reforms such as the bedroom tax, report that they have no money left to live on each week once rent, food and bills are paid for.

The findings emerged in the third of six planned reports by a group of housing associations, which are tracking how families living in social housing in the north-west of England are coping with cuts to their income as a result of welfare changes and recession. The Real Life Reform project examines in detail the finances, views and behaviours of a group of up to 100 households.

Andy Williams, director of neighbourhood services at Liverpool Housing Trust and chair of the Real Life Reform steering group, said: “Householders are falling into more debt, including some taking money from loan sharks, and it’s a real concern that people are having to borrow to cope with the cost of everyday living.

“In our first report in September, people said they’d resist falling further into debt, yet just six months later this picture has emerged.

“Nearly eight out of 10 people in the study owe money. With an underlying average debt of £2,943, some may never pay this off given that they have, on average, as little as £3 left at the end of each day for food.”

The survey found that the number of households in debt was up four percentage points since the autumn. Over half of families said they did not know how long it would take them to repay the debt or that they would never be able to repay it. Nearly one in seven households had debts that would take more than four years to pay back.

One participant told the project: “I have just taken out a new loan from a loan shark for Christmas. It will never go down but it just about keeps my head above water.”

The report said that poorer families were increasingly reliant on debt to make ends meet. “The consequences of weekly repayments, which have more than doubled since the start of this study, alongside increasing costs in all areas, is really placing financial strain and hardship on our households.”

Household food spending by Real Life Reform participants, which had dipped to an average £2.10 a day in October rose to £3.08 in January, an increase attributed to bigger-than-usual grocery shopping bills over the Christmas holidays.

Fuel spending had gone up by 8% since the last survey was carried out in October while household fuel bills had risen by an additional £7 a week since the summer. Participants were spending an average of £141 a month on energy, compared with the UK average of £106, in part because many were on expensive payments meters charging 27p per kilowatt hour compared to 17p for those not on meters.

Source – Welfare News Service, 26 March 2014

http://welfarenewsservice.com/poor-families-hit-by-welfare-reforms-running-up-52-of-debt-every-week/