Home London News Capital of debt: Londoners more likely to be in the red

Capital of debt: Londoners more likely to be in the red

by LLB Reporter
4th Sep 18 1:46 pm

Londoners are more likely to be struggling with debt than the rest of the UK despite average higher incomes. That is according to London in the Red, a new report from StepChange Debt Charity, that reveals 100,000 Londoners sought their debt advice, meaning one in six of its clients last year came from London.

The charity estimates that over half a million Londoners are in problem debt, driven by many having to spend a higher proportion of their incomes on essentials such as housing and fuel.

The capital was the region with the highest demand for the charity’s services (17% of all contacts). Londoners also owed more on credit cards, overdrafts and payday loans than those elsewhere, and had higher arrears on essential bills. Higher housing costs in London mean they spent a higher proportion of income on priority bills. Home ownership and mortgage borrower levels were lower in the capital than the rest of the country.

The report is based on in-depth analysis of over 13,100 of the charity’s telephone clients and shows that debt is a widespread problem across the capital, creating a social cost of at least £1.5 billion per year.

The charity is calling for London-wide improved access to and earlier signposting of free debt advice, as well as urging London local authorities to adopt better debt recovery practices and minimise bailiff use. Evidence shows that good debt collection practices result in increased collections over time and reduced operating costs, as well as reducing the harmful impact on individuals.

Phil Andrew, Chief Executive of StepChange Debt Charity said:

“Despite earning more on average than the rest of the country, Londoners have to fork out more to cover essential costs, pushing over half a million people living in the capital into problem debt. We found that higher housing costs are responsible for leaving Londoners with less money in their pockets after paying for household bills.

“As around one in six of our clients come from London, we call on the Mayor of London to work with local authorities and debt advice providers to ensure debt advice is sufficiently and efficiently resourced, as getting help as soon as possible and tackling the problems early on are key to financial recovery. Boroughs and councils need to implement fair debt collection processes so that people in financial difficulty are able to make affordable repayments that don’t make their existing problems worse.”

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