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A new scheme to help thousands of families regain control of their finances has received the backing of Dave Anderson MP for Blaydon.
Data from the Bank of England shows unsecured household debt is rising at its fastest rate since the financial crisis. Debt often strikes when people experience sudden changes in circumstances such as job loss or ill health. Aggressive action from creditors and pressure to repay debts at an unaffordable rate can lead families to cut back on everyday essentials like food, take out other, expensive loans or fall further behind on essential bills.
The rise in personal borrowing has led to mounting concern that households who get into debt need safer ways to manage financial difficulties.
In Blaydon alone, an estimated 2890 families with children are living with problem debt. Analysis from The Children's Society shows that children in low-income families with multiple debts are five times more likely to suffer from mental health problems than equivalent families with fewer debts.
Dave Anderson MP has joined calls in parliament to introduce a 'Breathing Space' scheme - supported by The Children's Society and StepChange Debt Charity - that would offer people seeking debt advice a 12-month legal protection from mounting interest, charges and enforcement action. It would build on protections offered under the Debt Arrangement Scheme in Scotland, which has made sure that families sticking to an affordable repayment plan agreed with their creditors are not harried or hassled for the duration of that plan.
Dave Anderson MP for Blaydon said:
"It can't be right that children's mental health and happiness is suffering as a result of creditors unfairly escalating people's debt problems.
"Families in problem debt need time and space to get back on their feet. By providing a period free from additional interest, charges and enforcement action, a new Breathing Space scheme would help families recover their financial situation and put in place a plan to affordably repay their debts.
"I'm pleased that the Breathing Space proposal has widespread cross-party support, including from the Work and Pensions Select Committee and the APPG on Debt and Personal Finance. The Government now needs to act by putting a comprehensive Breathing Space scheme in place."
The Government has been looking at the issues around how a statutory Breathing Space scheme would work since its response to the Farnish Review in March 2015. The Government has stated they are exploring whether some form of "breathing space" would be a useful and viable addition to the range of formal and informal debt solutions available to consumers and creditors.
The Debt Arrangement Scheme in Scotland is a statutory debt repayment scheme supported by the Scottish Government. It provides a limited period of protection when people apply for help with their debts as well as protection for the duration of time when people are making agreed affordable repayments.
Bank of England Money and Credit Bulletin, 4 January 2017 http://www.bankofengland.co.uk/statistics/documents/mc/2016/nov/moneyandcredit.pdf The new data shows that personal unsecured debt, for instance on personal loans and credit cards grew by 10.8% in the year to November 2016 reaching £192.2bn. This is the fastest rate of growth in unsecured debt since before the financial crisis in 2006.
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A North East co-operative offering affordable finance has today been awarded a £50,000 grant by Lloyds Banking Group to enable it to lend more to its members.
NEFirst Credit Union offers safe savings accounts and affordable loans to anyone who lives or works in the North East, including County Durham, Northumberland and all of the boroughs that make up Tyne and Wear. The money will allow the credit union to provide more services to their members and increase their outreach activities.
Dave Anderson MP for Blaydon said,
"I am delighted by the news that Lloyds Banking Group have awarded £50,000 to NEFirst Credit Union. This grant will help them to provide more ethical and affordable finances to people in our region."
"NEFirst have led the way in ensuring that people from all backgrounds can access safe and secure savings accounts and take out loans at interest rates that are much lower than many other providers. Credit unions are run by their members, for their members and provide a good alternative to the door stop lenders and pay-day loan companies that seek to exploit people."
"I would like to congratulate all of the volunteers that contribute their time to this not-for-profit organisation and I encourage everyone to sign up as members of NEFirst. Credit unions are a safe, ethical alternative to high street banks and pay-day lenders and have been endorsed by local councils, faith groups and community organisations."
For more information please contact:
The funding programme is designed to strengthen the financial position of credit unions and give them the capacity to develop new strategies for sustained and effective growth. The funding programme offers two grant options: large awards between £50,000 and £100,000 and seed funding awards between £10,000 and £20,000.
Eleven credit unions will receive large awards, intended to provide a contribution to a their reserves and help remove barriers to growth and innovation, with another ten receiving seed funding awards to help make the changes they need to apply for a large award in a subsequent year or to pay for the costs of merger.
As well as Lloyds Banking Group's £4 million investment over four years, it also signposts customers it is unable to help, where appropriate, to their local credit union and provides volunteering support.
Helping Britain Prosper:
In March 2014, the Group published its Helping Britain Prosper Plan, setting out seven separate and significant public commitments to do even more to help address some of the big issues facing its customers and Britain today. As part of the Plan, the Group has committed to take a lead in financial inclusion to enable all individuals to access and benefit from, the products and services they need to make the most of their money.
To find out more about Lloyds Banking Group's commitment to Help Britain Prosper, please visit http://www.lloydsbankinggroup-cr.com/
1 Credit unions can lend multiple of their reserves. By increasing their reserves we enable them to do more lending. ABCUL confirmed that based on the leverage that our 2014 programme created, this could enable credit unions to lend an additional c.£20m over the full term of our programme.
About the Credit Union Foundation
The Credit Union Foundation is an independent charity dedicated to creating wealth and financial independence through credit unions by providing investment, education and community support.
The Foundation provides grants and other support to allow all credit unions to extend their services to people in need. The Foundation also aims to build the skills of credit unions to better serve their communities and to educate the public about credit unions and how they help to relieve poverty and need.
About Credit Unions
Credit unions, although not widely publicised, are a fast-growing alternative to banks, building societies and doorstep/payday lenders. They offer a range of savings accounts, current accounts and loans to their members.
A credit union is a form of co-operative. It's "run by the members, for the members". They are not-for-profit, and are formed by people who have something in common. This 'common bond' could be the same:
Credit unions are authorised and regulated by the Financial Conduct Authority (FCA), meaning that they are also covered by the Financial Services Compensation Scheme (FSCS). The FSCS will protect the first £75,000 that each individual has with a credit union.
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|Promoted by Chris McHugh on behalf of Dave Anderson, both of St Cuthbert's Community Hall, Shibdon Road, Blaydon, NE21 5PT|