England & Wales Press Releases

Councils must take the lead in tackling the personal debt crisis

21 January 2014

Local government think tank LGiU has called on local authorities to use their role as community leaders to tackle the root causes of personal debt.

An LGiU survey reveals that 77% of councils believe that personal debt is increasing or significantly increasing in their authority. 59% of authorities surveyed reported a rise in council tax arrears.

Councils highlighted the key drivers of personal debt as changes to the welfare system, high fuel costs, as well as the rising cost of living more broadly, easy access to credit, low wage growth and unemployment.

In light of this, LGiU have asked what councils can do to get to the bottom of the problem. Examples from across the country highlight ways in which councils can tackle the personal debt problem:

  • Early identification of potential debtors – through swift intervention with rent and council tax arrears, as well as effective partnering with housing associations and voluntary sector
  • Engaging with high street banks and demanding an improved provision of those financial products in demand
  • Working with credit unions to increase capacity to meet a growing client base
  • Improving access to financial advice and information through council funded awareness schemes as well as partnerships with local CABs and the voluntary sector
  • Limiting the spread of payday loans companies through a ban on advertising in council properties, including online advertising, as well as banning payday loan companies within council owned properties
  • Combating illegal loan sharking through use of licensing powers, awareness campaigns and partnerships with the voluntary sector and projects such as the Illegal Money Lending Team

These tools will be explored in greater depth at The Debt Summit, LGiU and StepChange’s national policy conference, which is taking place today in London.


Commenting on the findings, Jonathan Carr-West, Chief Executive of LGiU, said:

“Personal debt is an issue which has been growing and councils are often the first public bodies to see the effects.  But they are also the arm of government which can do the most. From using licensing powers to halt the spread of illegal loans, to an understanding approach to debt repayment, councils can help people to grapple with debt before it gets too bad.

“With budgets shrinking – especially in 2015/16, councils need to up the ante by maintaining debt advice provision and working with residents to take an understanding and progressive approach to repayment of council tax and rent.

“Across the country, we are already seeing forward thinking councils using their role as place shapers to work with local high street banks and loan providers to highlight the lack of capacity for basic bank accounts, as well as partnering with housing associations and the voluntary sector to provide early support to the financially vulnerable. The LGiU is calling on all councils to use their role as community leaders to take the lead in tackling the personal debt crisis.”
ENDS

 

Notes for Editors

 

For all press enquiries, including arranging to speak to a spokesperson, please contact Lizzie Greenhalgh, LGiU, 07771 374602, [email protected]

The Debt Summit is taking place today – Tuesday 21 January – at Coin Street Conference Centre, 108 Stamford Street, London SE1 9NH. Please see www.debt-summit.co.uk for more information.

 

Survey

56 councils participated in the survey. 48% of those surveyed were councillors and 52% were officers. The survey targeted councils leaders, chief executives, senior finance officers, senior housing officers, senior planning officers and cabinet members with a responsibility for this area.

 

About LGiU
The Local Government Information Unit (LGiU) is a think tank which works to strengthen local democracy and put citizens in control of their own lives, communities and local services. It works with local councils and other public services providers, along with a wider network of public, private and third sector organisations. lgiu.org.