The rise of personal debt in London Dolly Galvis Head of Advice Services Toynbee Hall

1. The rise of personal debt in London Dolly Galvis Head of Advice Services Toynbee Hall

2. Capitalise London Debt Advice Partnership • Toynbee Hall is the lead partner of Capitalise, a London-wide partnership of organisations funded by the Money Advice Service to provide free face-to-face debt advice to Londoners who are experiencing or at risk of financial exclusion and debt • 26 organisations are part of the Capitalise partnership, including Citizen Advice Bureaux, Law Centres and independent charities. • Supports more than 21,000 service users every year.

3. Capitalise Number of Clients Seen Apr - Oct 2012 and Apr to Present 2013 comparison

4. Most common debt type Priority Debt • Council Tax Arrears • Rent Arrears • Mortgage Arrears • Utility Bills/Electricity & Gas • Magistrates / Sheriffs Court Fines • Maintenance or Child Support • Other Secure Loans Arrears • Parking Penalty Charges Non-priority Debts • Benefits Overpayment • Water Bill Arrears • Business Debts • Hire Purchase • Income Tax and NI debt • Social Fund • Student Loan • Debt Unsecured • Credit Products Arrears

5. Context for families • Rising costs, static income = financial instability • Growing incidence of income shock - loss of overtime, reduction in hours, unemployment, sickness • Income shock triggers unmanageable debt • Poverty premium – utility costs, access to credit • Impact of isolation - shortage of money & short-term/payday loans • Rational choices – food, bills or heating • Highest risk appears to be for lone parents

6. External context • Funding cuts – especially benefits, employment & housing advice – emergence advice deserts • Work appears to be deteriorating, not just wages but also conditions • Welfare reform – bedroom tax, Social Fund, benefit cap = income trigger & forecast to increase instability • Private rented housing sector growth and rent increases – the most isolated and vulnerable households , situation likely to be exacerbated by cap-flight from 2014 onwards

7. The grim reality • Family with two children – Private rented • Income £1,243.76 (monthly) • £643.76 Wages + Child Benefits £134.00, CTC £470.00, they also received CTB and HB • Expenses (monthly) • £270.00 Rent • £55.00 Council Tax • £60 Gas • £60 Electric • £12.20 TV License • £55 Telephone (mobile and broadband) • £100 Travel • £25.56 Water • £20.00 debt repayment (Total debt £7,263.52 – 5 creditors) • Total = £657,76 • Amount left for housekeeping, food and other expenditure = £586pm (TF£729)

8. The grim reality • Single parent with two children • Income £362,00 (monthly) • £228 JSA (after £61.60 Social Fund repayment) + Child Benefits £134, she also receives CTB and HB – CTC suspended • Expenses (weekly) • £53,82 Rent • £11.66 Council Tax • £40 Gas • £40 Electric • £12.50 TV License • £40 Telephone & Mobile • £20 Travel • Total = £217.92 • Amount left for housekeeping, food and other expenditure = £144.08pm (TF £507)

9. Destitution equation • Triple whammy - rising costs, falling income, diminishing safety nets leading to increasingly individualised solutions; • Food bank growth • Pay day loan growth • Grants for people in need growth

10. We could do more together nationally • Evidence • Local leadership and change • Campaign for national change • Sharing impact and best practice

11. Questions