Citizens Advice Scotland (CAS) have backed a report issued today (Thursday) by the House of Commons’ Public Accounts Committee which calls for action to help the growing numbers of people who are struggling to cope with debt.
The report says that the total amount of consumer debt in the UK is some £1,500bn, and that 11% of the UK population struggle to cope with their debts. It also says the government’s efforts to deal with the problem has been ‘a complete failure.’
In response, Citizens Advice Scotland spokesman Keith Dryburgh said,
“This report is a wake-up call. It confirms what the CAB movement and other advice groups have been saying for some time: levels of personal debt are reaching crisis point - not least here in Scotland. Last year Scottish CABs collectively dealt with over £270million in debt.
“The problem is not just the number of people who are in debt – which this report reveals. It’s the extent of the debts that those people have. Last year we analysed the debts that people were bringing to the CABs across Scotland, and we found that the problem is much worse than ever before. On average, Scottish debtors have debts that are 50% higher than they were five years ago. And for every £1 they earn per month, the average Scottish debtor owes £28 in debt. That’s an astonishing figure, and it’s no surprise that people under such pressure are finding it difficult to cope.
“Nine out of ten debtors in Scotland told us their debts have adversely affected their health, and two in five have admitted that they have gone without essentials, like food or heating, in order to try and pay off their debts. The problem is that debt breeds debt. People who get into debt will often panic and take out one loan to pay off another. Before they know it, their debts are all spiralling out of control, and they need somewhere to turn. They need good quality impartial advice.
“Under the recession, the combination of rising prices and falling incomes has made it very difficult for people – particularly those who were on low incomes to start with. The banks and credit card companies have not helped the situation over the last few years. First they were offering credit too freely and giving loans to people regardless of whether they could repay them. Then, when the credit crunch hit, they started refusing to offer credit at all to those who needed it just to get by, and this forced many people to turn to less reputable lenders, who hit them with high rates of interest and increasingly aggressive demands for repayment.
“This new report, together with the evidence that we have presented over the last year or so, should force government to act. We want to see greater provision of responsible lending options – like Credit Unions. We urge banks and credit card companies to clean up their act and offer more socially responsible policies. And we call on all political parties in the election campaign to commit to making sure that good quality money advice will be available free to everyone who needs it.
“Whichever government is in place in Westminster after May 6th should make it a priority to tackle this problem – with a more strategic co-ordinated approach, and tougher regulation if necessary. And anyone who is struggling with debt should contact their local Citizens Advice Bureau as soon as possible, where they will receive the free, impartial and confidential advice they need.”
For more information please contact Tony Hutson on 0131 550 1010 or 077774 751655.