UK families are being forced to cut back on Christmas presents and basic essentials such as heating, and are falling into debt to buy warm clothes and food in a bid to make ends meet this winter.
Monday 30 November 2009
A new survey by Save the Children, conducted by YouGov, has revealed that the majority of parents (65%) earning below £30,000 (£8,000 above the average UK income) are going to struggle to get by this winter with over half (52%) turning to high interest debt, such as doorstep lenders, in order to cover the costs. Over half (56%) say they will buy fewer Christmas presents for their children.
The majority expect to borrow up to £500 to cover the costs of winter and say that it will take them more than a year to repay it. For many families their greatest worry is that they will struggle to pay it back (32%), and that it will push them further into debt (26%).
For those living in poverty (earning less than £12,000), almost 80% say they will struggle to get by this winter and 55% say they are going to borrow money from high interest lenders in order to get by. Many families, particularly those on a low income, are excluded from mainstream credit, such as banks and building societies, and instead are turning to high interest alternatives.
"It is shocking that so many families have to borrow money to pay for day-to-day essentials such as heating and food," said Fergus Drake, Save the Children’s UK Director: "For some families even borrowing alone isn’t enough, with many parents forced to cut back on Christmas presents, as well as winter clothes. Even worse, many parents, especially those on a low income, have little choice but to borrow from high interest lenders pushing them further into debt and poverty. Families cannot continue to scrape by like this."
"The government cannot allow high interest lenders to plug the income gap of families who are struggling to get by. We want to see new rules obliging banks to do more to help the poorest families who are excluded from mainstream credit have a source of affordable borrowing. It's about time that the banks, whose industry has been saved by the taxpayer, put something back and it should be Britain's poorest children who benefit."
Parents also said they were borrowing more money this year than last year because of the recession (16%).
Save the Children is calling for the Government to introduce new rules that would oblige high street banks to invest money in providing affordable loans to families who are excluded from mainstream credit. Drawing on the US's Community Reinvestment Act, banks would benefit in business terms if they provide resources to credit unions who give affordable loans to the poorest families.
Save the Children is calling for:
- The government to introduce a Community Reinvestment Act to ensure that high street banks have to help provide affordable credit to the UK’s poorest families.
- A reform of the Social Fund to ensure that it is more accessible to the people who need it and that it has enough resources to do so.
People can show their support by texting DEBT to 84880 (charged at normal standard rate) or adding their name to Save the Children's online petition.