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Sumi Rabindrakumar, Gingerbread’s research officer, says that the upturn in employment may be good news for some, but few single parents are reaping the benefits

 

Work, for single parents, isn’t easy at the best of times. As both the main carer and main earner supporting their family, it can be tough to find a job that allows single parents to juggle childcare as well as pay the bills. But new research from Gingerbread shows that single parents are now also battling low pay, insufficient hours and job insecurity in today’s job market. The end result is that work is failing to provide the majority of working single parent families with the income they need.

 

No pay, no gain

 

Our latest report, The long road to recovery, reveals the gulf between a recovering economy and the real-life experiences of working single parents. Around two in five working single parents surveyed are low-paid.  A quarter had experienced a wage cut in the last six months alone.  And 30 per cent had experienced unpaid overtime in the last two years, for the first time.

 

“I am earning less per hour than I was four years ago”

 

Pay aside, many single parents simply can’t find the working hours they want and need – the proportion of single parents working part-time when they want full-time hours has doubled since 2007. Over half of non-working single parents surveyed said inflexible hours stopped them from applying for jobs all or most of the time.

 

And now single parents must deal with the job insecurity that has emerged since the recession. Around a quarter of non-working single parents said they’d left their last job due to hours or wage cuts, a temporary job ending or redundancy. And once out of work, the support provided is often focused on job search targets, rather than meaningful support to help single parents back into sustainable employment.

 

“I found myself just applying for jobs…that I’d already been rejected for, just to meet the quota they had set me”

 

Single parents are doing all they can to keep their heads above water, with many working multiple jobs and long hours to cover their bills. But, in the face of a long-term fall in wages, rising living costs and recent welfare cuts, it can feel like a losing battle. And no wonder, when single parents now need to earn more than twice as much as they did in 2008 to meet a basic standard of living.

 

A call for action

 

It’s clear that work is no golden ticket out of poverty. We cannot dismiss the problem of low-paid and insecure jobs as a rite of passage, just the first step on a long-term career path. As the Resolution Foundation found, people are too often trapped in jobs that offer little pay and no progression.   Single parents have been disproportionately hit by welfare cuts and there may be more on the horizon. As the safety net is pulled away, we need action now to ensure single parents can support their families.   Gingerbread wants to see the government improve support for single parents getting back to work, moving away from the ‘work-first’ approach that pushes single parents to take any job. We need stronger in-work financial support to soften financial barriers to work. And the government must work with employers to promote flexible working and tackle low pay and job insecurity.   The government wants to ensure the economy grows and to reduce welfare spending – when getting just 5 per cent more single parents into the workforce could save over £400m, why not make them part of the solution rather than risk isolating them further?

 

“I work 24-hour shifts and longer very often…I’m missing all the little important parts of my little girl growing up and it breaks my heart!  All this and I still fail to make ends meet…my cupboards are bare”

 

Sumi Rabindrakumar is Gingerbread’s Research Officer. Paying the Price is a research project being carried out by Gingerbread, with funding from Barrow Cadbury Trust and Trust for London.  The Long Road to Recovery is the second report from the project; you can read the report at www.gingerbread.org.uk/payingtheprice.

Focus on Labour Exploitation (FLEX) will be co-sponsoring a briefing session in the House of Lords this Wednesday, 16 July, from 5-7 pm.  The session is being chaired by Baroness Young of Hornsey, with speakers including Diana Johnson MP, Kathryn Cronin (Garden Court Chambers), Klara Skrivankova (Anti-Slavery International) and Caroline Robinson (FLEX). 

 

In this blog Caroline Robinson, co-director and founder of Focus on Labour Exploitation (FLEX) makes the case for a more effective response to human trafficking for labour exploitation.

 

As the public’s response to recent strike action on the part of public sector workers shows, it is not always easy to convince people of the need to protect the rights of all workers, British or migrant.  It is particularly hard in the face of high unemployment and a struggling economy, when the argument is put that migrant workers are filling roles British workers could take.

 

Yet, when it comes to debates about modern slavery, there is widespread sympathy and support for the victims, the majority of whom are migrant workers exploited for their labour. This paradox arises, simply put, because victims are viewed as deserving protections whereas potential victims are not. Our job is to make the argument that protections are most useful before someone becomes a victim and therefore should be applied to all workers regardless of migrant status.

 

In debate on this question, people often suggest that greater labour protections would act as a pull factor towards the UK. Yet, the recent Migration Advisory Committee report on low skilled migration suggests that in fact the opposite is true – that the absence of labour protections creates the demand for migrant workers, ergo labour protections reduce that demand.

 

But it is not just public opinion that is contradictory: migrant workers also face a confusing policy landscape. On the one hand there are increasing checks on immigration status at work and home provided for in the new Immigration Act and reduced labour protections as a result of the Government’s ‘red tape challenge’; then on the other hand there is Theresa May’s high-profile campaign against  ‘modern day slavery’.

 

Only last month the UK government, in adopting a new Protocol to the international Forced Labour Convention, recognised that greater labour protections serve to prevent acts of modern slavery from taking place. This supports the case made by Focus on Labour Exploitation (FLEX) in our working paper on Preventing Trafficking for Labour Exploitation, that the UK needs a much stronger labour inspection system to prevent people from being exploited for their labour. We know that where gaps in the enforcement of labour protections exist, unscrupulous employers will take advantage of such gaps and exploitation will snowball from minor infringements of employment law to severe exploitation that constitutes modern slavery.

 

The Modern Slavery Bill offers an opportunity to improve labour protections for vulnerable workers as a means of preventing acts of severe exploitation. The debate around the Bill should focus on why, in modern Britain, workers are still being exploited for their labour in the restaurants we visit, hotels we stay in and on the construction sites all around us.

 

Yet, so far the Home Secretary has resisted calls for an expanded Gangmasters Licensing Authority (GLA) in this Bill that could serve as an effective labour inspectorate, particularly in high-risk sectors where exploitation is rife. Instead the GLA has been moved into the Home Office, placing in great jeopardy its role to protect all workers regardless of status.

 

As politicians of all parties declare their support for ending slavery in the UK, there is a unique opportunity to put in place measures that would ensure no worker ends up in exploitation. But this opportunity will be missed if our leaders continue to talk tough on modern slavery without recognising that labour protections for all workers is the first line of defence in this fight.

 

Caroline Robinson is co-Director and founder of Focus on Labour Exploitation (FLEX). FLEX promotes effective responses to human trafficking for labour exploitation that prioritise the needs and voice of the victims and their human rights. Caroline is also a founder and Editorial Board Member of the Anti-Trafficking Review, an international open access journal that offers an outlet for dialogue between academics, practitioners, trafficked persons and advocates on anti-trafficking issues.

 

Sunder Katwala, Director of think tank British Future, responds to the British Social Attitudes survey 2014

 

A cultural polarisation over attitudes to immigration, according to the authors of the new British Social Attitudes (BSA) survey chapter on immigration published today, could generate long-term political headaches for politicians who adopt a tough anti-immigration agenda in search of public support.

 

‘Responding to the concerns of voters worried about immigration today risks alienating the rising sections of the electorate whose political voice will become steadily louder in elections to come’, say authors Anthony Heath and Rob Ford. Their BSA report shows that levels of education are a strong predictor of attitudes towards immigration, with an especially stark polarisation between the attitudes of graduates and those with no qualifications. Sixty per cent of those with a degree believe that immigration is beneficial for the economy, and another 16 per cent see it as having neutral impacts, leaving just 22% of graduates who believe that the economic impacts of immigration are negative.

 

Yet this three-to-one margin in favour of the economic benefits of migration among graduates is reversed among Britons who left school with no educational qualifications: where 61 per cent believe that the impact is negative, 21% see it as neutral, and just 16 per cent believe that the economic benefits are positive.

 

The political dilemma, according to academics Anthony Heath and Rob Ford, co-authors of the BSA study, arises from how short-term and longer-term political pressures pull in opposite directions.

 

“Although UKIP competition creates a short-term demand for restrictive migration policies, such policies may cause problems in the longer run. Advocating strongly restrictive immigration policies risks alienating the more liberal third of the population – and given constraints on policy and high political distrust, may not convince the most anti-immigration voters anyway. Moreover, long-term demographic change is moving society in the opposite direction, because the most pro-migration social groups – university graduates and professionals – are steadily growing while the most anti-migrant groups – unskilled  manual workers and those with no qualifications – are in sharp decline,” the authors write.

 

They note that, in 1989, just 7 per cent of BSA respondents were graduates, while 44 per cent had no qualifications. Now graduates (25 per cent) outnumber those without any qualifications (20 per cent), according to the BSA study. It also reports that those whose parents were migrants to Britain see both the cultural and economic impacts of migration as positive, as do Londoners.

 

The challenge to business

 

If the BSA study presents dilemmas for politicians, it presents a significant challenge for business advocates of the economic benefits of migration too. The BSA survey presents clear evidence that graduates have been convinced, while those who didn’t go to university have not, leaving the public as a whole sceptical that migration will have a net benefit to Britain’s economy.

 

Yet both the content and style of economic advocacy about migration – which often focuses on the factual evidence about positive net contributions – remains pitched primarily to the more elite, educated audience which is already onside. A focus on the arguments and messengers who could connect with those who didn’t go to university –engaging their concerns about migration constructively – will be important if business advocates want to preach beyond the converted, and to seek majority public support.

 

Joining the club

 

BSA respondents were also asked how long it should be before migrants have full and equal access to the same welfare rights as British citizens. Most people believe that citizenship is a ‘club’ and that people need to earn entitlements to it. But the BSA findings show that the majority are pragmatic about how this works in practice: only a fairly small niche take a highly restrictive view.
One per cent say that migrants should ‘never’ have the same access to welfare as British citizens. Only a minority of around a quarter believe that the qualifying period for full welfare access should be five years or more. (18 per cent proposed a five-year wait for EU migrants, and 25 per cent proposed that this would be the right approach for non-EU migrants).

 

Around one in four (37 per cent) of respondents believe EU migrants should have full and equal access immediately (14 per cent) or after one year (23 per cent). In the BSA findings, most people would see two to three years as fair. Citizenship usually takes five years from those outside the EU, but EU membership constrains governments from discriminating between EU citizens.

 

This belief, that the willingness to contribute is important, goes with another feature of ‘fair play’ – which is that those who do contribute and play by the rules have to be accepted as fully and equal members of the club.

 

Lack of knowledge

 

Public attitudes may not always prove highly responsive to policy changes on immigration, where there is a lack of public knowledge, or low trust about policy. Respondents to the BSA survey were asked whether it was true that ‘there is a limit on the number of work permits the government issues each year to migrants to Britain coming from outside the EU who want to come and work in Britain. Most of these permits are reserved for those with better qualifications and English language skills’.

 

Forty-five per cent knew this was true, but 42 per cent thought it was false, while 14% didn’t know. Those who were most sceptical about immigration were more likely to give an incorrect answer about work permits.

 

Contact matters

 

The BSA report also shows that contact with migrants is associated with more positive, rather than negative views, about the impacts of immigration. ‘While socially marginal groups worry the most about the impact of immigration, those most likely to be directly exposed to migration in their daily lives have much more positive views. Londoners, those with migrant heritage and those with migrant friends (all of whom are more likely to have regular direct contact with migrants) have more positive than negative views about immigration’s effects. The most intensely negative views are found among the oldest voters, and those with no migrant friends’, Heath and Ford conclude.

 

Reaching the pragmatic middle

 

The challenge for those who seek to make the positive case for immigration – whether they are political parties, business interests, migrants’ rights advocates or universities seeking continuing openness to international students – is to reach beyond these groups who already agree with them and engage the ‘pragmatic middle’ that the BSA survey identifies.

 

A rejectionist rump would pull up the drawbridge tomorrow. They are unlikely to ever engage with any argument that would still hold some appeal to the growing group who hold liberal attitudes already. Many have found their political home with UKIP, though it remains to be seen how many will stick with Nigel Farage right through to May 2015’s general election.

 

The BSA survey echoes existing analysis of public attitudes on immigration. This identifies, sitting between the liberals and rejectionists, a ‘pragmatic middle’ who have reasonable anxieties about the pace of change in Britain and what this means both economically and culturally, but who acknowledge that pulling up the drawbridge is not the answer. It is this group who will accept that migrants can ‘join the club’ and be ‘one of us’ – including accessing the British welfare system – but only if they first show their willingness to play by it’s rules: working hard and paying taxes, learning English and joining in with the community.

 

It’s this group that politicians and others need to engage. Like others, they have had enough of ‘tough’ promises that can’t be kept. As the issue of immigration becomes increasingly salient in the lead-up to May 2015, they will listen to those who make a pragmatic offer on immigration, one that acknowledges and engages their worries but which is both principled and achievable.

 

This blog was posted initially on the British Future website

 

Paul Hunter, Head of Research at the Smith Institute,  discusses the changing face of suburbia and the findings of a new report ‘Poverty in Suburbia’

From Abigail’s Party to Keeping Up Appearances, suburbia has long been synonymous with relative comfort and cheery affluence. Yet the stereotype of suburbs as places inhabited solely by the upwardly mobile middle classes belies the number of those in poverty who live on the edges of our cities and towns. Indeed, as our new report, Poverty in Suburbia, demonstrates, an increasing number of people  in suburbs are now living in poverty.  There are approximately 6.8 million people in poverty in the suburbs of England and Wales – or put another way – 57% of those in poverty live in the suburbs.

 

To date tracking poverty in suburbs has not taken place. There have been occasional interventions, such as Boris Johnson arguing that welfare reform would result in a social cleansing of inner London and a flight to the suburbs, as well as growing interest in the issue from the US – but there have been few studies in the UK. Indeed, there are no official statistics on suburbia.

 

To help fill this information gap we used a range of indicators to map poverty and evaluate which ‘at risk’ groups are most common in suburbs. We looked in detail at incidences of poverty in eight major cities and found that there are significant socio-economic trends in the suburbs which have been largely ignored and which may worsen with continued budget cuts and pressure/reductions in services. For example, of those at risk of poverty there were higher concentrations of lone parents, part-time workers, people with a disability, and pension credit recipients in the suburbs than the rest of the country.

 

What is more many of the risk factors appear to be increasing in suburbs and the number of suburban neighbourhoods with above average levels of poverty has risen by 33% over the last decade. In addition, more people per head are on benefits (pension credit, job seeker’s allowance, income support and disability living allowance) in the suburbs than the rest of the country. And the claimant rates have increased more per head (or decreased less) in the suburbs since the recession.

 

These findings suggest the need for a greater focus on the suburbs by government (both local and central), policy makers and anti-poverty campaigners. This is even more of an imperative given that higher housing costs and a lack of affordable housing in inner cities is thought to be forcing poorer tenants out to the suburbs. This phenomena, combined with predicted rises in child poverty rates, could mean that poverty becomes even more prevalent in suburbia.

 

Poverty in suburbia has been ignored for too long. With a majority of people in poverty living in suburbs there needs to be a much better understanding of the issue. Many suburban areas have been badly affected by reductions in local authority and central government spending.

 

Suburbs may not be looked upon with great affection by some, yet they remain places where people want to live.  It is important to ensure that what attracted people to suburbia in the first place is not eroded.  This is not to say suburbs should be only for the relatively wealthy, but rather that particular suburbs most in need of support should not be overlooked.  This requires not only renewal and investment in the built environment but also greater understanding of the resilience of their local economies and social infrastructure.  We need to reimagine how we view suburbia and rethink how we support poorer suburbs.  Failure to do so risks overlooking the majority of people in poverty.

A new report by independent think tank the Smith InstitutePoverty in Suburbia, finds that there are approximately 7 million people in poverty (57% of all those in poverty) living in the suburbs of England and Wales. The report also shows that the number of suburban neighbourhoods with above average levels of poverty has risen by 33% over the last decade. In many major cities there is also a narrowing gap in concentrations of poverty between urban centres and their suburbs.  The Smith Institute is an independent think tank.

 

The report challenges traditional notions of suburbs being places of relative affluence and wealth and shows that:

 

  • More people per head of population were on benefits (pension credit, job seeker’s allowance, income support and disability living allowance) in the suburbs than the rest of the country. The claimant rates have increased more per head (or decreased less) since the recession in the suburbs.

 

  • The gap in concentrations of poverty between cities and their suburban areas has narrowed. The report showed that incidences of poverty in the suburbs of eight major cities narrowed most in London (by 4 percentage points), Manchester (3 percentage points) and Newcastle (3 percentage points).

 

The report highlighted that:

 

  • Over half of those in overcrowded homes now live in suburbia.

 

  • Suburbs are home to more lone parents than the rest of the country.

 

  • In the decade to 2011 suburbia experienced a 25% increase in unemployed households – compared with a 9% increase in the rest of the country.

 

  • Around 60% of those claiming pension credit live in the suburbs.

 

  • The number of people with a disability was higher in suburban areas than the rest of the country.

 

Poverty in Suburbia calls for a greater focus on the suburbs by government (both local and central), policy makers and anti-poverty campaigners. It warns that higher housing costs and a lack of affordable housing in inner cities may force poorer tenants out to the suburbs. This alongside predicted rises in child poverty could mean that poverty becomes even more prevalent in suburbia.

 

Paul Hunter, the report’s author and head of research at the Smith Institute said:

 

“Poverty in suburbia has been ignored for too long. The evidence shows that an increasing number of people in poverty live in our suburbs. There needs to be a much better understanding of poverty in suburbia. Many suburban areas have struggled with the impact of austerity measures, and there is now a pressing case for a suburban renaissance.”

 

 

 

 

 

 

Cross-party think tank Demos has launched a new report making an important contribution to the debate about different types of personal debt.  The Borrowers, supported by Barrow Cadbury Trust, reveals £5bn of hidden debt and calls for a ‘Harm Index’ – which would include payday loans, council tax and rent arrears, and overdue utility bills – to measure the impact, as well as recommending the FCA introduces a food packaging-style traffic light system on all credit products and adverts to improve borrowers’ awareness of risks.

 

A change to the levy system is also one of a number of proposals put forward as part of a ground-breaking analysis of Britain’s household debt crisis. It comes just days before the FCA takes over as regulator for the consumer credit industry on 1 April – overseeing credit cards, payday loans and debt collection firms.  Under current FCA regulations mortgage providers pay the highest levy, used to fund financial education and debt advice for struggling borrowers, due to their lending the most amount of money.

 

However, a new ‘Harm Index’ developed by Demos to reveal the true impact of various debts – combining financial, emotional and social consequences – finds that mortgages are relatively stress-free when compared with other more harmful forms of borrowing.  Demos asked people to rank each of their debts based on their negative impact such as legal consequences, mental wellbeing and affordability. Mortgage debts were given a Harm Rating of just 23 out of 100. By comparison the types of debt that people felt had the greatest negative impact included Payday Loans (68), Council Tax Arrears (62), Utility Bills (57) and Doorstep Lending (50).

 

Demos polling of 1,775 adults also revealed:

 

  • 88% of adults were in some form of debt, but the majority have never accessed any support to help with their money worries.
  • The most common reasons for borrowing money were a one-off purchase (36%) and to cover an unexpected expense (34%). Almost a quarter of people (23%) had used debt to afford everyday essentials.
  • Over three times as many young people than pensioners are bearing the brunt of increasing debt. 55% of 18-24 year olds, and 48% of 25-34 year olds, said that their debt had increased over the past five years, compared to only 13% of over-65s.

 

Britain’s £5bn of hidden debt

The Demos analysis reveals that total arrears, combining unpaid rent and council tax, and overdue utility bills such as gas and electricity, comes to £4.7bn – almost £200 per household. However, official debt figures for the UK currently ignore arrears, which Demos’s Harm Index classes as a high-impact debt, instead choosing to calculate only consumer credit such as credit cards and bank loans.

 

Figures show that 9% of people face rent arrears while 11% are behind on their utility bills – almost double the number who have turned to payday loans (6%). The findings led Demos to call for the official measure to acknowledge arrears in order to achieve a complete picture of the nation’s debt problem and ensure those struggling with arrears receive targeted advice.

 

The report also recommends:

 

  • Giving borrowers a legal right to negotiate directly with their creditors before missing payments or reaching crisis point – something current lending systems often don’t allow.
  • The FCA and OFT should replicate best practice used by utility companies to implement a ‘three strikes’ approach on less flexible forms of debt such as arrears and mortgages.

 

Jo Salter, a researcher at Demos and author of the report, said:

 

“It is only fair that lenders whose practices cause the most harm to individuals should either contribute the most to funding debt advice or take steps to minimise their negative impacts.

 

“There is a £5bn black hole in official debt statistics and our research shows just how arrears on rent, council tax and utility bills often have just as big a negative impact on people as payday lending.

 

“Deciding which forms of debt are ‘bad’ and need stronger regulation should not be based on industry definitions. It should be judged by looking at what types of debt cause people the most stress, disrupt their relationships with those around them, and undermine their capacity to help themselves – because this is the reality of debt problems.” You can read a blog by Jo Salter about The Borrowers report here.

 

Sara Llewellin, Chief Executive at Barrow Cadbury Trust, said:

 

“The Barrow Cadbury Trust welcomes this timely report on debt from Demos, particularly the focus on the individual and the recommendation that debt statistics should include unpaid rent, council tax arrears and overdue utility bills.

 

“Also of concern to the Trust is the impact of debt on an individual’s emotional resilience and quality of life as well as the communities in which they live.”

 

Policy Network and Barrow Cadbury Trust have launched a two year programme of investigation into ‘Understanding the Populist Signal’.  The project will explore the drivers of populism through an events programme and think pieces.

 

Two new essays on the Policy Network Political Observatory open the project.  The first by Michael McTernan and Claudia Chwalisz ‘The rise of the populists: threat or corrective to the political establishment? looks at the rise of populism across Europe as a symptom of the contemporary crisis of governance and democracy.  The second by Tim Bale ‘Picking up on populism; playing with fire, or putting out the flames? investigates the signals the rise of populism sends to the mainstream.

 

The launch event ‘Beating populists in populist times’ is on 6 February in London with sessions on ‘understanding the populist signal’ and ‘The power of cities and community-building in the fight against populism’.  Speakers include: Tim Bale, Queen Mary University of London; Ernst Hillebrand, Friedrich-Ebert-Stiftung, Berlin; Alexandra Jones, Centre for Cities; David Marquand, University of Oxford; Alison McGovern, Labour MP; Matthew Taylor, The RSA; Frank van Erkel, City Development Director, Amsterdam.

 

 

The report released today proposes that a radical review of Big Society thinking is needed in light of millions of people being excluded from the Big Society, whilst the charities that support disadvantages people are themselves experiencing cuts to their funding.

 

The Big Society Audit, released by Civil Exchange and supported by  the Barrow Cadbury Trust, Joseph Rowntree Foundation and DHA points out that despite the rhetoric surrounding the Big Society, some of the most vulnerable are adversely affected by the policy. People with disabilities will experience 29% of the cuts, whilst 500,000 people in the UK are now dependent on food aid.

 

The report highlights stark differences between communities with regard to how they have been affected by the Big Society. The Big Society is at its healthiest in affluent and rural communities. Those living in the most deprived 10 per cent of the country were less likely (52%) to  agree that people pulled together to improve things than those in the least deprived 10 per cent (79%). Charitable giving and formal volunteering were more common in affluent areas and those living in affluent areas were more likely (73%) to say people in their neighborhood could be trusted that those living in disadvantages areas (22%).

 

The voluntary sector, despite an increased demand for its services has been largely left out in the cold. Many voluntary sector organisation, particularly those that work with vulnerable people, often in disadvantaged areas have experienced cuts to sources of income that they relied on. Many are now ‘running on empty’ with further funding cuts in the pipeline.

 

There are, however, positives to report. Communities are taking over vital assets and local services, greater transparency and accountability, and higher levels of volunteering, particularly amongst young people.

 

Read the full report here.

The Fairbanking Foundation’s latest report looks at how well British banks serve their customers, and argues that the people leading Britain’s banks have the potential to change their industry for the better.

 

A Better Kind of Banking, supported by the Barrow Cadbury Trust, proposes that the main banks’ business model based on ‘free banking’, alongside a banking culture that has encouraged managers to pursue profits at the expense of their customers’ needs, is greatly flawed. The report highlights alternatives to this approach that illustrate how banks can work with customers to enable them to manage their money more carefully and intelligently.

 

Authors Charles Leadbeater and Antony Elliott look at four banking innovators that could transform the banking industry if they were taken into the mainstream. thinkmoney has a customer base of 100,000 who pay a monthly fee for a service which guarantees that they will not go overdrawn, ensuring that they do not pay charges for unauthorised overdrafts. Secure Trust Bank help customers set up a current account which is used to pay direct debits and standing orders for regular bills, but no debit card is provided. Customers are instead given a prepaid Mastercard which they can upload their spending money onto. Saffron Building Society encourages people on modest incomes to save by allowing them to track progress toward a goal and get regular encouragement to do so. And the Capital One Progress Card rewards people with lower interest rates on their debt as they pay more money off.

 

The report points out that these innovations come out of the margins as opposed to the mainstream. It argues that banks need to alter their business models and adopt higher standards to create a better banking system.

 

Read the full report here.

A new report by the Centre for Social Justice, supported by the Barrow Cadbury Trust, finds that personal debt in the UK is on the rise, and households are increasingly turning to short-term high-cost credit.

 

The report, Maxed Out: Serious Personal Debt in Britain, finds that personal debt in the UK is close to its all-time high, currently standing at £1.4 trillion. Average household debt is £54,000, almost twice the level it was decade ago.

 

In the poorest ten per cent of the country, indebted households have average debts that make up more than four times their annual income, whilst average repayment amount to nearly half their gross monthly income. The rising cost of domestic energy and other household bills has led to fears that more households will be pushed into personal debt.

 

Alongside increasing household debt, the report finds increasing use of short-term high-cost credit such as payday loans, pawnbrokers, rent-to-buy and doorstop lenders. The market for such sources of credit is now worth £4.8 billion a year. Payday loans have received a particularly marked increase in business, increasing from £900 million in 2008/09 to over £2 billion in 2011/12.

 

Maxed Out highlights vulnerable groups who are disproportionately affected by large amounts  surge of personal debt, such as the elderly, ex-offenders, single parents, the unemployed, people dependant on benefits, households with the lowest incomes and young people classed as Not in Education, Employment or Training (NEET). People in these groups often find themselves in cycles of debt due to low financial resilience and a lack of savings.

 

Read the full report here.