Report attached - Tomorrow's Borrowers - personal debt by 2025 and the policy response (Smith Institute and StepChange) ( I think Stella Creasy in 'launching' it today)
Part of the problem seems to be that Britain has not had a meaningful public conversation about credit dependency. It has become an unspoken part of our national
life. This surely needs to change.
There needs to be a concerted national campaign designed to bring the issue out into the open and change attitudes and behaviour. This
campaign needs to be on a par with the AIDS awareness campaign of the 1980s or the “five a day” fruit and vegetable campaign that began in the 1990s.
Most effective would be a generic message that stops debt problems escalating, using role models and case studies. Possible themes could be around seeking help early, or having a plan
to repay debt, or ensuring that the length of term of the debt does not exceed the term of the benefit for which the loan was originally taken out.
Messages could be tested among target audiences and backed up by debt support agencies. Where local face-to-face services are available, signposting should also be provided through public
agencies such as schools, housing associations and the NHS. The evidence presented in this report – of one in four households having a negative cash
position, and one in ten having net debts of over £5,000, with households in this category owing half their debts to high-interest creditors – seems consistent with a significant
proportion of people in Britain having unsustainable levels of debt.
This presents a serious problem, which (as we highlight in the report) has negative consequences for the individuals concerned and for society as a whole. Preventing an increase in unmanageable personal debt must then surely be in the public interest.
However, curbing the market for consumer credit, and specifically reducing the number of transactions conducted by people who are unable to repay, is far from easy and requires
determined action by government and the regulators. It also demands changes in policies affecting where we live and the world of work, as well as a much bigger effort at improving
financial literacy, especially among the young.
Tackling problem debt in society is a huge and interconnected policy challenge, but given what we know about tomorrow’s borrowers
it is a task that government, the regulators and the financial services industry itself cannot afford to ignore.
Part of the problem seems to be that Britain has not had a meaningful public conversation about credit dependency. It has become an unspoken part of our national
life. This surely needs to change.
There needs to be a concerted national campaign designed to bring the issue out into the open and change attitudes and behaviour. This
campaign needs to be on a par with the AIDS awareness campaign of the 1980s or the “five a day” fruit and vegetable campaign that began in the 1990s.
Most effective would be a generic message that stops debt problems escalating, using role models and case studies. Possible themes could be around seeking help early, or having a plan
to repay debt, or ensuring that the length of term of the debt does not exceed the term of the benefit for which the loan was originally taken out.
Messages could be tested among target audiences and backed up by debt support agencies. Where local face-to-face services are available, signposting should also be provided through public
agencies such as schools, housing associations and the NHS. The evidence presented in this report – of one in four households having a negative cash
position, and one in ten having net debts of over £5,000, with households in this category owing half their debts to high-interest creditors – seems consistent with a significant
proportion of people in Britain having unsustainable levels of debt.
This presents a serious problem, which (as we highlight in the report) has negative consequences for the individuals concerned and for society as a whole. Preventing an increase in unmanageable personal debt must then surely be in the public interest.
However, curbing the market for consumer credit, and specifically reducing the number of transactions conducted by people who are unable to repay, is far from easy and requires
determined action by government and the regulators. It also demands changes in policies affecting where we live and the world of work, as well as a much bigger effort at improving
financial literacy, especially among the young.
Tackling problem debt in society is a huge and interconnected policy challenge, but given what we know about tomorrow’s borrowers
it is a task that government, the regulators and the financial services industry itself cannot afford to ignore.
Comment