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The rise of personal debt in London Dolly Galvis Head of Advice Services Toynbee Hall. Capitalise London Debt Advice Partnership.
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The rise of personal debt in London Dolly Galvis Head of Advice Services Toynbee Hall
Capitalise London Debt Advice Partnership • Toynbee Hall is the lead partner of Capitalise, a London-wide partnership of organisations funded by the Money Advice Service to provide free face-to-face debt advice to Londoners who are experiencing or at risk of financial exclusion and debt • 26 organisations are part of the Capitalise partnership, including Citizen Advice Bureaux, Law Centres and independent charities. • Supports more than 21,000 service users every year.
Capitalise Number of Clients Seen Apr - Oct 2012 and Apr to Present 2013 comparison
Most common debt type Priority Debt • Council Tax Arrears • Rent Arrears • Mortgage Arrears • Utility Bills/Electricity & Gas • Magistrates / Sheriffs Court Fines • Maintenance or Child Support • Other Secure Loans Arrears • Parking Penalty Charges Non-priority Debts • Benefits Overpayment • Water Bill Arrears • Business Debts • Hire Purchase • Income Tax and NI debt • Social Fund • Student Loan • Debt Unsecured • Credit Products Arrears
Context for families • Rising costs, static income = financial instability • Growing incidence of income shock - loss of overtime, reduction in hours, unemployment, sickness • Income shock triggers unmanageable debt • Poverty premium – utility costs, access to credit • Impact of isolation - shortage of money & short-term/payday loans • Rational choices – food, bills or heating • Highest risk appears to be for lone parents
External context • Funding cuts – especially benefits, employment & housing advice – emergence advice deserts • Work appears to be deteriorating, not just wages but also conditions • Welfare reform – bedroom tax, Social Fund, benefit cap = income trigger & forecast to increase instability • Private rented housing sector growth and rent increases – the most isolated and vulnerable households , situation likely to be exacerbated by cap-flight from 2014 onwards
The grim reality • Family with two children – Private rented • Income £1,243.76 (monthly) • £643.76 Wages + Child Benefits £134.00, CTC £470.00, they also received CTB and HB • Expenses (monthly) • £270.00 Rent • £55.00 Council Tax • £60 Gas • £60 Electric • £12.20 TV License • £55 Telephone (mobile and broadband) • £100 Travel • £25.56 Water • £20.00 debt repayment (Total debt £7,263.52 – 5 creditors) • Total = £657,76 • Amount left for housekeeping, food and other expenditure = £586pm (TF£729)
The grim reality • Single parent with two children • Income £362,00 (monthly) • £228 JSA (after £61.60 Social Fund repayment) + Child Benefits £134, she also receives CTB and HB – CTC suspended • Expenses (weekly) • £53,82 Rent • £11.66 Council Tax • £40 Gas • £40 Electric • £12.50 TV License • £40 Telephone & Mobile • £20 Travel • Total = £217.92 • Amount left for housekeeping, food and other expenditure = £144.08pm (TF £507)
Destitution equation • Triple whammy - rising costs, falling income, diminishing safety nets leading to increasingly individualised solutions; • Food bank growth • Pay day loan growth • Grants for people in need growth
We could do more together nationally • Evidence • Local leadership and change • Campaign for national change • Sharing impact and best practice