Strength Against Shocks: Low income families and debt

[Legal Beagles]

IPPR research shows that the main cause of a household falling into problem debt, arrears and repossession is a drop in income.
The Institute for Public Policy Research (IPPR) has published 'Strength Against Shocks: Low income families and debt', which explores what the expansion of household debt has meant for the lives of low income families. In the decade to 2008, average household debt in the UK increased from 93 to 161 per cent of disposable income. The profile of borrowers widened to include lower income groups, but low-income households are the ones that are most vulnerable to debt problems.
Research was conducted with 58 low-income families in London, Newcastle, Nottingham and Glasgow, whose expenditure was tracked over a four month period to investigate patterns of income, spending, and borrowing. Amongst findings, IPPR research shows:

• The main cause of a household falling into problem debt, arrears and repossession is a drop in income.
• Not all low income families use consumer credit or get into debt but poverty and job insecurity increase vulnerability to debt problems.
• Saving in advance can help families deal with fluctuations in income and expenditure.
• Mortgage holders are particularly vulnerable when there is a fall in household income.

The report concludes that debt problems are rarely a result of ill money management, makes a number of policy recommendations to address this.
Further information about the report is available on the IPPR website.


More...