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Report shows government policies are leading to move family debt

26 Apr 2011

Citizens Advice Scotland have said today’s report by the Office for Budget Responsibility is official proof that the government’s welfare reforms will lead to increased debt in many households.

CAS Chief Executive Lucy McTernan said,

“We now have official confirmation of what we have been saying for months. The report shows that household debt will rise from £1.6 trillion in 2011 to £2.1 trillion in 2015 (or from 160% of disposable income to 175%). In addition, they predict that wages will not keep up with inflation.

“The report expects households to adjust their source of income to protect their standard of living. In other words that they will borrow more rather than cut their spending. However, we know that credit is tight at the moment, so we are concerned about where this borrowing is going to come from. CAB evidence shows that many families in this position will turn to loan sharks or high interest lenders.

“The government needs to take heed of this report, and accept that its policies are pushing people into debt. They need to reverse those policies which are doing the most harm, or at least introduce measures to protect the most vulnerable from suffering even more.”

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ENDS