The rise of personal debt in London
Dolly GalvisHead 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
1. Rising costs, static income = financial instability2. Growing incidence of income shock - loss of overtime,
reduction in hours, unemployment, sickness3. Income shock triggers unmanageable debt4. Poverty premium – utility costs, access to credit5. Impact of isolation - shortage of money & short-term/payday
loans 6. Rational choices – food, bills or heating7. 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
Questions