Debt in the UK is becoming a serious problem with 1.4 million households (with almost 2.5 million dependent children living within), are struggling with debt. A further 2.9 million households, also with dependents are on the edge of slipping into debt. These shocking statistics have been found in the Debt Trap report, a report from the debt charities Children’s Society and StepChange. This report suggests that a staggering 18% (almost a fifth) of the households within the UK are suffering with debt problems, each of these with an average debt of £3437.00.
Forced to get loans
These debts are leaving many families forced to commit to loans in a temporary bid to ease the financial situation, loans which are taken out just to cover the daily essentials and energy bills. Many families believe that taking out a loan is their only way to make ends meet. This leaves families in an “extremely precarious” position say the debt charities Children’s Society and StepChange.
Keeping up with the loan payments places further spiralling financial worry and turmoil, and places emotional and physiological distress on the families and the children. Nine out of ten parents say that as part of tackling their debt they have had to cut back on many essentials such as clothing, food and heating. Families caught in the cycle of debt mainly feel that authorities fail them, and many stating that councils were unhelpful.
Children feeling the struggle
Some children are actually suffering anxiety, and also bullying at school as a direct result of not having daily essentials as their parents struggle to cope. Just over half of the children admit to being embarrassed by their lack of money and say the financial pressures placed on the family causes arguments.
More than half of children between 10 to 17 years old said that they have seen advertisements of payday loans “often” or “all the time”, with only one if five children saying that they are taught about money and debt management in school. The Debt Trap report calls for tighter restrictions on advertising seen by children, stating that the “barrage” of advertising underplays the risks of debt. The Debt report also calls for families to teach their children about borrowing.
Matthew Reed of the Children’s Society believes families are increasingly relying on debt and it is having an impact on children now and in the future. He says “We cannot allow children to pay the price of debt.” Mike O’Connor, Chief Executive of StepChange said that the report was a “stark” warning of the wider devastating effects debt has on children. The Arch Bishop of York, Dr Sentamu, backs the campaign, and believes that we need to make sure families living in poverty have somewhere else to turn other than “usury –lenders”. The report recommends says that governments and creditors should work together to develop plans allowing “breathing space” for those who default on debts.