Many Britons ‘in too deep’
The personal debt crisis that is crippling Britain has been highlighted today by new figures, which show that the number of reported consumer debt problems has dramatically increased over recent years.
Research from the Citizens Advice Bureau (CAB) reveals that its advisers across the UK have reported a 47 per cent increase in the number of new consumer credit debt problems over the last five years.
The study, ‘In too deep: CAB clients’ experience of debt’, was based on 8,000 debt case studies and revealed that the average level of debt owed is £10,700 – approximately 14 times the average income of the sample population.
CAB states that its debt clients are ‘generally much poorer than the population at large’ and often ‘socially and financially excluded’.
It found that it would only take a ten per cent drop in earnings to seriously impinge on its clients’ ability to make repayments and cause real hardship due to the level of credit commitments those seeking advice had.
Researchers concluded that a change in circumstances such as ill health or a relationship breakdown, is a key trigger for debt problems amongst people on low earnings – a quarter of those surveyed were receiving treatment for stress, depression or anxiety.
CAB also expressed concern at the finding that nearly half of the people who seek its advice have attempted to solve their financial problems by borrowing more money.
David Harker, chief of Citizens Advice said: ‘The credit boom of recent years has brought great advantages to many individuals and families and helped raise standards of living generally, but it is also taking a huge toll on the lives of those who have found themselves on the wrong side of the very narrow dividing line between successfully managing credit commitments and plunging into serious debt.’
‘Our research shows that we are at a critical stage where personal debt problems threaten to overwhelm large numbers of people in this country, with potentially devastating personal and social consequences, including a hugely detrimental impact on people’s health, homes, family life and ability to work.’
CAB is calling for a wide-ranging Government review of initiatives to prevent over-indebtedness and resolve debt problems.
Mr Harker said: ‘Despite a multitude of governmental and other initiatives to tackle debt problems, these are piecemeal, poorly co-ordinated, still far from implementation, or not wide-ranging enough.’
