Councils must cure personal debt problems, says think tank
Published by Max Salsbury for 24dash.com in Local Government and also in Finance
A think tank has called on councils to tackle the root causes of their residents' personal debt problems.
A survey by the Local Government Information Unit (LGiU) found that 77% of local authorities believe that personal debt is increasing or significantly increasing in their regions, while 59% reported a rise in council tax arrears.
Many of those surveyed highlighted the key drivers of personal debt as changes to the welfare system, high fuel costs, as well as the rising cost of living more broadly, easy access to credit, low wage growth and unemployment.
LGiU has now asked what councils can do to get to the bottom of the problem and has offered country-wide examples of ways in which local authorities can tackle personal debt problems:
• Early identification of potential debtors - through swift intervention with rent and council tax arrears, as well as effective partnering with housing associations and voluntary sector
• Engaging with high street banks and demanding an improved provision of those financial products in demand.
• Working with credit unions to increase capacity to meet a growing client base.
• Improving access to financial advice and information through council funded awareness schemes as well as partnerships with local CABs and the voluntary sector.
• Limiting the spread of payday loans companies through a ban on advertising in council properties, including online advertising, as well as banning payday loan companies within council owned properties.
• Combating illegal loan sharking through use of licensing powers, awareness campaigns and partnerships with the voluntary sector and projects such as the Illegal Money Lending Team.
Jonathan Carr-West, LGiU chief executive, said: "Personal debt is an issue which has been growing and councils are often the first public bodies to see the effects. But they are also the arm of government which can do the most. From using licensing powers to halt the spread of illegal loans, to an understanding approach to debt repayment, councils can help people to grapple with debt before it gets too bad.
"With budgets shrinking - especially in 2015/16, councils need to up the ante by maintaining debt advice provision and working with residents to take an understanding and progressive approach to repayment of council tax and rent.
“Across the country, we are already seeing forward thinking councils using their role as place shapers to work with local high street banks and loan providers to highlight the lack of capacity for basic bank accounts, as well as partnering with housing associations and the voluntary sector to provide early support to the financially vulnerable. The LGiU is calling on all councils to use their role as community leaders to take the lead in tackling the personal debt crisis.”