The latest Real Life Reform report has painted a gloomy picture of life in northern households affected by the Government’s changes to the benefits system. Launched in 2013 in partnership with 10 social housing organisations, the Real Life Reform study is tracking the effect of welfare reform on 100 northern households – and the results from the sixth report make for grim reading.
Household debt spiralling
Since the first report in September 2013, the average amount owed by the households involved in the study has rocketed from £2,288 to £3,554 – an increase of 55%. Based on interviews with 70 households conducted in November 2014, the study also found that:
- The actual number of households with debt problems has fallen from 74% to 64%. However, some families have taken positive action to tackle their money problems, such as using Debt Relief Orders to cancel out unsecured debts.
- Unemployment has risen amongst participating households, with just 23.5% having one or more family members in work. This is the highest rate of unemployment since the study began.
- For those who do work, more than 80% are working zero-hours contracts or other forms of unsecure employment, or are part-time. (This goes against the national trend).
- Not surprisingly, disposable incomes are falling amongst this group. On average, the study found that these households have just £16 a week to live on after food and essential bills have been covered.
Andy Gorton, Managing Director of debt advice firm, Fresh Finance Ltd, comments on the findings: ‘Whilst the lower number of indebted households may look like a positive for this report, the reality is that some of these families have only managed to get free of their debts by using Debt Relief Orders (DROs).’
‘Two of the key criteria for qualifying for a DRO are that your disposable income must be £50 or less, and that you can’t own any assets worth more than £300, except a car which can be worth up to £1,000. When you look at it this way, it becomes clear that these families are living well below the poverty line – and some have, quite literally, nothing to lose.’
A pattern repeated
The north of England may include some of the poorest areas in the whole of the UK, but the Real Life Reform households certainly aren’t alone when it comes to debt problems, poverty and employment issues. According to the latest Money Charity statistics, British households owed an average of £6,346 in consumer debt at the end of January 2015, up from £6,322 in December 2014.
Between October and December 2014, more than 1,100 people were made redundant every day, and 377 landlord possession claims and 298 landlord possession orders were also made. Meanwhile, Citizens Advice Bureaux in England and Wales dealt with 6,389 new debt problems every working day in the year ending September 2014.
Says Andy: ‘According to the Money Charity, someone is made insolvent in England and Wales every 5 minutes and 55 seconds. More and more households are falling into the poverty trap and debt is fast-becoming a national crisis. Yes, the national averages for employment are better than those indicated in the Real Life Reform sixth report, but there’s still a long way to go before the economy pulls clear of the recession.’
Debt help is on hand
If you’re struggling to repay your debts, or turning to payday loans to make ends meet, it’s time to get expert help. Fresh Finance can help. We’ll look at the amount and type of your debts, plus your income and outgoings, before explaining the debt management options that are open to you.
If your disposable income is very low and you have few or no assets, you might find that a Debt Relief Order or bankruptcy is the way forward. On the other hand, if you can spare some money each month to put towards your debts, your options might include a Debt Management Plan or an Individual Voluntary Arrangement.
Why not take a look at our website to find out more about these solutions before you give us a call? You’ll find clear, honest information about the fees we charge, too.
Contact Fresh Finance
Call us today on 0808 168 8262 – our friendly advisers are waiting to help you. Or see if you qualify for our help and an adviser will get back to you shortly.