By Marcus Leach
A series of recommendations to improve debt advice services and help Londoners struggling with their finances were set out in a report by the London Debt Strategy Board.
The Board was established by Deputy Mayor Richard Barnes in 2009 as a direct response to the recession. For the first time, it brought together a range of relevant agencies with the aim of exploring how the capital’s debt services and advice provisions could be improved.
The report, entitled Treading Water, found many people struggling with debt can fall into a spiral of mental health problems which in turn impact on their ability to find or keep a job, while high levels of debt amongst young people and those with mental illness in the capital are putting increased pressure on advice services, health providers and legal support as a result of the economic downturn.
Recommendations set out in the report include more consistent use of client assessments across all free debt service providers, such as the Citizens Advice Bureau; increased lobbying to secure funding for free advice in the capital and better co-ordination between debt advice agencies.
Key statistics published in Treading Water include:
- In London there has been a 75 per cent increase in average debt levels amongst 17-24 year olds since 2008 (Capitalise, 2010) from £3,500 to over £5,500.
- Data from the Legal Services Commission (LSC) shows a 140 per cent rise in the numbers of young people accessing debt advice through the LSC between November 2007 and December 2009, although this remains low at five per cent of total client numbers.
- There are more people in arrears with their debts in London than in any other region even though London does not have the highest level of JobSeekers’ Allowance claimants amongst its workforce. This suggests that the high level of debts amongst London’s jobseekers is increasing the demand for debt advice in the capital.
- People with a long-term illness or disability have three times the level of debt problems, compared to the population as a whole. Evidence from research suggests that, in addition to those with long-term illness, the key groups likely to benefit from debt advice services are people with mental health problems, carers, working households on low incomes, people living in social housing, lone parents, black and minority ethnic communities, and self-employed people in urgent need of debt advice.
- 13 per cent of Londoners were in arrears with their debts as compared to the national average of 10 per cent. This suggests that both demand and need for debt advice in London are likely to be at a higher level than nationally.
“Falling into debt is not just a financial problem for many people - it can easily become a crisis which affects their health, their families and their ability to work," Deputy Mayor Richard Barnes said.
“Finding a way to ease that pressure was paramount when I launched the London Debt Strategy Group, at a time when more and more people were falling into arrears.
“There continues to be unprecedented demand on the capital’s support network and it is vital that we find a way for everyone who has fallen into debt to get the help they need."