England & Wales Finance

In hock: the personal debt summit


Photo Credit: Lawrence OP via Compfight cc

When I was at university I had a flamboyant economics professor who told us only the rich  can truly save, the rest of us just create cushions against hard times.  I’m not sure if that’s true, but in today’s economy too few of us have any cushion left at all. According to Stella Creasy, MP and Shadow Minister of Business, Innovation and Skills who’s been campaigning on matters of personal finance around a third of British families have no savings at all and thousands are facing a personal debt crisis.

The LGiU along with StepChange and the Consumer Finance Association held the first personal debt summit earlier this week for local authorities and their partners.  We heard stories of families with crushing debt in a cycle endless consumer loans and facing hard choices about whether to pay the rent, the ‘leccy or eat.  We heard stories about people in cycles of depression and debt who showed up to Citizens Advice Bureaus or to debt advice charities like StepChange with carrier bags full of un-opened red letter bills or who only sought advice when the bailiffs – sometimes sent by the council – were at the door.

We know that councils have a vital leadership role in supporting the wellbeing of communities and the individuals who live there, and so many councils do great things. But perhaps too little attention has been paid to the financial wellbeing of local people and how councils can contribute both as guardians of the community and as creditors.  Without a stable financial position, the good things in life; education, family, fun and health become precarious, too.

Some of the great things we heard about at the Personal Debt Summit was how Lambeth is using their access to a wealth of data about citizens who owe them money and proactively seek them out to support them with debt counselling.  Although this programme has some upfront costs, they believe the business case is clear – not only is the council more likely to get its money but these families who others money, too can start to achieve a more stable economic position and a less stressful life.

I was also mightily impressed by the loan shark busting work of the Illegal Money Lending Team hosted by Birmingham’s trading standards unit.  Loan sharks are the illegal and informal lenders of money who often use threats and intimidation to collect extortionate returns on original loans.  Cath Wohlers and her colleagues have an impressive record of gathering grass roots information to remove these blights from the community.  The Illegal Money Lending team offers training and to councils and other groups across the country on how to spot people who are prey to these sharks and how to help communities which are suffering from the effects.

LGiU chief exec Jonathan Carr-West has highlighted five steps councils can take to help residents ease debt in The Guardian and the LGiU will be pulling together the lessons and good practice from this conference. We’d be very interested in hearing about other good practice in debt management and financial wellbeing and successful community innovations.
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