Indebtedness in Wales…
The Wales Co-operative Centre runs a number of projects that promote financial inclusion and that provide advice on money management. These projects are a key part of the Centre’s role in developing and implementing solutions to strengthen communities and promote inclusion in Wales. Jo Lovell, who manages one of these financial inclusion projects, blogs about a recent review of Indebtedness in Wales….
This month, we saw the publication of a report “Overview of indebtedness, low income and financial exclusion” by the Bevan Foundation, on behalf of Public Policy Institute for Wales.
What it told us, was whilst some surveys suggested “that credit was less widely used in Wales” and statistically the financial liabilities of households in Wales using credit was the lowest in the UK. The report did indicate that parts of Wales, in particular the central and eastern valleys had exceptionally high levels of indebtedness linked to socio-economic disadvantage. The North Wales coast also has a higher level of debt related problems.
From this and other report’s, we know that indebtedness isn’t isolated to low income households, but the evidence suggests that they are more likely to be affected. Our own work at the Wales Co-operative Centre through the Tackling Homelessness through Financial Inclusion (THFI) project and Financial Inclusion Champions has shown that low income households are less likely to be able to access affordable and responsible credit, often leaving them with no other option than high interest and sometimes illegal money lenders.
Nearly all households will use credit at some time or another, and for many, it remains manageable even when interest rates rise or the cost of living increases. But circumstances beyond our control, losing your job or becoming unable to work because of their health, can rock and even sink the steadiest of ships.
The current landscape suggests that 16% of adults in Wales are already over indebted and struggling/failing to make repayments, of which 50% are on low incomes. It seems only fair to suggest that things can only get worse, given the recent speech from Mark Carney, Governor of the Bank of England, that interest rates may rise sooner than predicted.
Debt is a very emotive subject, and for many people it brings with it a sense of failure and lack of control. Until we change this perception, people will continue to “bury their heads in the sand” (Bevan Foundation report: Overview of indebtedness in Wales, May 2014). Not withstanding the many good campaigns and posters promoting free debt advice and support, more needs to be done so people feel able to talk about the debt without being ashamed.
This is where we all have a role to play:
- Being able to spot the signs that somebody may be in financial difficulty
- Knowing what free debt advice and support is available locally for people to access
- Not to be judgmental, be supportive in helping people seek advice
- Promote greater awareness of debt, let’s make it the norm that people can discuss debt without feeling ashamed.
- Promote self help where possible using websites like:
- Money Made Clear Wales
- StepChange Debt Charity