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Ten years on from the credit crunch: it’s about survival not spending

calendar09 August 2017

Marianne Clough's avatar Marianne Clough

Ten years on from the credit crunch: it’s about survival not spending

It’s not the kind of anniversary that requires a party but ten years ago, following too much borrowing in the US amid soaring interest rates, the first ripples of the credit crunch crossed the pond and the UK began to suffer.

By September 2007, queues were forming outside Northern Rock as we witnessed the first run on a high street bank since the 1860s.

“Financial crisis” became “Credit crunch”, then “economic downturn” and then “recession” – all delivered by the now familiar drawl of TV journalist Robert Peston.

While there have been significant reforms in the banking sector since then – notably the crack down on easily available high cost credit - the FCA and the Bank of England are again concerned that unsustainable levels of consumer borrowing are driving economic growth.

The level of unsecured debt in the UK is now £200.9 billion – the highest since 2008.

Meanwhile, average weekly earnings are stagnant at best and benefits frozen – a problem for so many families with inflation at 2.6%.

Looking back at the last ten years, we’ve seen big changes here at Christians Against Poverty, not least in our network’s growth to meet the need, thanks churches across the UK.

The nature of clients’ debt has substantially altered too.

In 2006, secondary debt (credit cards, store cards and loans) made up 85 per cent of the whole. On average, people had just £1,411 of priority debt (bills, rent or mortgage) of a total £16,260 debt per household.

Figures from 2016 show the amount of priority debt has tripled in the past decade. Arrears on essential household bills now account for 32p in every £1 of debt owed. Average priority debt per household is now £4,582 from a total debt of £14,298.

On top of that, nine in ten CAP clients report that they took out credit to pay for a household bill or serve another debt.

Our concern is this increase in consumer credit is driven by households using credit they can’t afford as they struggle to keep up with essential household costs.

In short, for the people we’re helping, this isn’t about too much shopping - it’s survival.

The Financial Conduct Authority (FCA) says 2.1 million card holders have persistent high levels of credit card debt which they may be struggling to repay, a further 1.6 million are making minimum payments. We have to ask why? What is happening in their lives that is causing this?

Unless we first address the difficulty many face paying for their basic living needs, we will continue to see unsustainable credit use and problem debt grow.

While the credit crunch began with big banks, the impact was felt among families who saw jobs lost, businesses go under, homes repossessed. It's this human cost that must not be forgotten - people's physical and mental health, the relationships that suffer and the children.

New CAP clients are being chased for ten separate debts, on average. That’s ten companies trying to collect in person, or by phone, letter or email. It's a hugely stressful way to live.

The result is stories like that of Pete, who struggled to pay rent, council tax and other debts; hid himself away and, tragically, was beginning to think suicide was his only option.

Thankfully, he was able to contact CAP and rather than being evicted, he was able to keep his home and, supported by his local debt centre, become debt free through a Debt Relief Order.

Pete has now trained to deliver our CAP Money Courses to help others prevent their own personal credit crunch. Let’s hope others can take his lead.

Eee by gum, it’s Yorkshire Day

calendar01 August 2017

Joseph Allison's avatar Joseph Allison

Eee by gum, it’s Yorkshire Day

What were you doing way back in 1996? How old were you? Were you even born? Well, that year Bradford boy John Kirkby was busy bringing an idea to life – an idea to tackle the crippling debt he was seeing in his home community, and had experienced in his own world. In 1996, Christians Against Poverty was born.

From his spare room in Great Horton, Bradford, armed with nothing but a £10 donation and a passion to see the poor set free, John set about helping families who, like him, had been through crushing financial difficulties.

Today, CAP helps more than 21,500 people every year from all over the UK, but CAP HQ still lives in Bradford, in a restored paper box mill called Jubilee Mill. It’s something we’re very proud of.

So, as 1 August marks Yorkshire Day, we thought we’d celebrate all the great things going on through CAP in this fabulous county.

CAP has 19 debt centres across Yorkshire – all run through local churches, of course.

We couldn’t do it without them! Each of these centres has a team of wonderful local Christians and volunteer befrienders who go out to see clients in their homes, often armed with a packet of biscuits and some tea, because that’s how we roll! In the majority of cases we see, debt is rarely just debt alone. It’s debt and mental ill-health, physical illness, bereavement, domestic abuse, fuel poverty, skipping meals… the list goes on. That’s why the holistic element of the CAP service is so important – these clients need more than just practical help with their money, they need a hand to hold and someone to reassure them that there’s a way out.

Alison*, a single mum from Wakefield, got into debt when she had to leave her job due to problems with her mental health. She suffered with depression and, at the worst point, considered ending her life. Thankfully, she contacted CAP and got the support she needed, practically and emotionally.

She says, ‘Sarah [Wakefield CAP Debt Coach] was so lovely and supportive and really wanted to help me. It was just knowing that someone was there who could help me, who was reaching out to me. I was just overwhelmed by the love and support to be honest. When Sarah said, “I’ll take all your papers”, I said, “What?! You can’t take all my mess!” I felt guilty almost that someone was taking on that burden. But it was a huge pressure taken off me. It was incredible. It really lifted me, someone saying, “Right, let’s get this sorted”.’

As well as our debt centres, there are six CAP Job Clubs in the Bradford area alone – 18 in Yorkshire in total.

These are designed to give people seeking employment a place to open up about their experiences with others who are in the same boat, get one-to-one coaching and practical guidance with CVs and application forms, share ideas, practise interviews, and gain useful networking contacts. It’s always satisfying when we get a call from a member to say, ‘I can’t make it to job club tonight – I’ve started a new job!’ That’s what it’s all about!

Greg* had been unemployed for four years when he started coming to a job club in Bradford.

He says, ‘I was applying for 20 jobs a week or more. I became depressed and found it very isolating. After joining the CAP Job Club I got a job more or less straight away! I’m now working as a bin man and love being outdoors and talking to people – it’s pulling me out of lots of dark places.’

Having officially launched earlier this year, there are already eight CAP Life Skills groups open across Yorkshire.

Over an eight-week period, CAP Life Skills members learn new ways to live for a brighter future, whether it’s through practical money management skills, ways to shop and cook for less, help to maintain healthy relationships or advice on good decision-making. It’s the stuff everyone wished they’d been taught at school! As with all of CAP’s group services, the coaching and community elements are key, giving members one-to-one time with an expert coach and the chance to meet new friends.

One in eight of the UK’s CAP Release Groups are based in churches in Yorkshire too.

CAP Release Groups is all about helping people who are struggling with life controlling habits, such as smoking, drinking and gambling. The groups are a safe and confidential place to tackle the issue right at the core to break free and stay free.

Alan* from Barnsley joined his local CAP Release Group in a bid to quit smoking, a habit that had gripped him for 24 years!

He says, ‘The CAP Release Group taught me lots, including about changing my habits. In the morning I would have a coffee which I associated with cigarettes, now instead I have tea which I associate with biscuits! Since I quit smoking, my health is better, my budgeting is better, and the money I’m saving is going towards getting my own place.’

To read more about how Christians Against Poverty became what it is today, order your free copy of John Kirkby’s Nevertheless here

*Names have been changed to protect identities

Seven budget activities for a rainy day with the kids

calendar26 July 2017

Gemma Pask's avatar Gemma Pask

Seven budget activities for a rainy day with the kids

It’s now officially summer… apparently. Tell that to the dark clouds and puddled streets. With any luck, Britain will afford us one or two glorious days of sunshine over the next few months, but if not it’s a good idea to be prepared, especially if you have kids. Plan in advance lots of activities and things to do in the event that a downpour keeps you indoors over the school holidays.

  • Baking buns and biscuits is always a great rainy day activity, but why not help the kids make their own ice cream instead? Double cream, natural yoghurt, lemon curd and some lemon zest are all you’ll need to make a batch of tasty lemon ice cream. And you don’t need a fancy ice cream maker either – just a little arm strength to whip the cream! Mix in the other ingredients and freeze the whole lot overnight. Perfect if the sun comes out the next day!
  • Fancy a quiet afternoon? Help the kids to build a den out of duvets, blankets and chairs. Set the laptop up inside and pop on a film. Hey presto - the world’s most inexpensive home cinema!
  • Time consuming and cheap, paper mâché is always a favourite. It’s fun, it’s creative and it’s messy! Blow up a balloon and let the kids cover it in a few layers of ripped up newspaper dipped in PVA glue. Make sure the final layer is plain white paper. Once it has dried, use a pin to pop the inner balloon and leave the little ones to paint and decorate it as they please!
  • Messy bedrooms? Perfect! Challenge the kids to a tidy up race – fastest gets a prize!
  • Grab a shoe box and start filling it with bits and bobs today. Whether it’s old kitchen roll tubes, magazines, plastic bottles or loose bits of string, keep it all. That way, when a rainy day comes and extinguishes all your plans, you’ll have a go-to craft box to keep the kids entertained. It really is amazing the things you can make with some leftover items and a bit of imagination!
  • If you’ve got kids whose likes, dislikes and skills differ from one another’s, why not challenge them to put on a variety show together? There could be a solo dance section, a dramatic performance for two or a team magic show. It’ll get them working together, and you could even invite the family round to watch them perform and make a real show of it. That’s surely a whole afternoon sorted!
  • So it’s been a week, the rain is still coming down and both you and the kids are going a little stir crazy. Perhaps it’s time to make a dash for the car or bus and head to the nearest cinema. All through the summer holidays, various Vue cinemas are offering a morning movie from £2.49 a ticket. Click here to find out more.

Got your own ideas for keeping the kids entertained this summer? We'd love to hear them - leave us a comment below.

Claire’s cheap chicken enchiladas

calendar18 July 2017

Claire Wong's avatar Claire Wong

Claire’s cheap chicken enchiladas

Claire says, ‘The great thing about this recipe is that it’s much simpler than it looks! A tin of soup works as a great cheap substitute for enchilada sauce and no one will guess your secret ingredient!’

Preparation time: 10 mins
Cooking time: 50 mins
Serves: 6
Total cost: £5.66 (94p per serving)

Ingredients
500g chicken pieces (£3 – you can also save money by buying chicken thighs and chopping up the meat yourself)
1 tomato, chopped (12p / 69p for pack of six)
1 onion, chopped (16p)
6 tortilla wraps (68p / 90p for pack of eight)
1 tin of condensed cream of chicken soup (£1)
100g cheese (any kind that’s easy to grate) (70p / £1.40 for 200g mature white cheddar)
2 tsp chili powder (few pence / 85p for 50g)

Method

  1. Heat the oven to 200 degrees (or 180 if you have a fan oven).
  2. Fry the chicken in a pan. When it starts to turn golden brown, add in the onion and cook for five mins. Remove the pan from the heat and leave to cool down.
  3. Pour the whole tin of soup over the chicken and onion. Mix in the chopped tomato and chili powder.
  4. Divide the mixture between the tortilla wraps. Roll up each one and place them side by side in a rectangular baking dish.
  5. Grate the cheese and sprinkle over the wraps.
  6. Bake in the oven for 30 mins or until the cheese is melted and the sauce is starting to bubble.

*Prices from Tesco, correct at time of publishing

‘Breathing space’ to tackle problem debt

calendar11 July 2017

Kiri Saunders's avatar Kiri Saunders

‘Breathing space’ to tackle problem debt

The stress of being in debt, combined with the threat of enforcement action and the spiralling of interest and charges often leads to ill health, relationship problems and even thoughts of suicide.

‘Breathing space’ is an initiative to give those in financial crisis time and space to begin to work towards a debt solution, without their situation worsening. This is done by providing guaranteed protection from collections and enforcement activity, as well as stopping all interest and charges.

Here at CAP we always work with creditors to try getting interest and charges stopped and we contact enforcement agents to prevent collections activity. Unfortunately, not every company responds positively but a formal ‘breathing space’ would guarantee protection to all those in financial crisis.

Background

‘Breathing space’ builds on the idea in the Financial Conduct Authority (FCA) guidelines stating that as soon as someone seeks debt advice, creditors should provide a 60-day hold period on collections activity.

The idea of an extended ‘breathing space’ was first mentioned by our friends at debt charity StepChange two years ago, inspired by a scheme in Scotland that gives legal protections to those repaying debts.

In 2016 ‘breathing space’ started to build momentum and The Children’s Society, StepChange and Kelly Tolhurst MP brought it to be discussed in Parliament via a Private Member’s Bill. ‘Breathing space’ gained much political support and Parliament discussed the idea twice, but the election in June put a halt to progress. That being said, we were all encouraged when both Labour and Conservative manifestos included a commitment to implement ‘breathing space’.

The new Conservative government hasn’t yet formally put ‘breathing space’ plans into motion, but we understand that this is still something they are looking to do.

CAP supports the principle of ‘breathing space’, but we still need to work out the technical details to make sure it is flexible for those in the most vulnerable situations. In June it was promising to hear Stephen Barclay, Economic Secretary to the Treasury, say:

‘The Government fully supports the principles of better debt management and lower levels of problem debt. The Conservative manifesto committed to introduce ‘breathing space’ and we will outline further information on how this policy could be implemented in due course.’

Email your MP

With the formation of the new government, this is a key time to ask your MP to keep it on the agenda. Why not write to them and explain what is important to you, asking that they keep supporting ‘breathing space’ in this new parliament?

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