Debt can have a devastating impact on Londoners and the Mayor is keen to see what can be done in London to help those affected.
Since the economic and financial crisis began in 2008, many vulnerable Londoners have struggled to meet daily costs of living as well as managing their debts. In addition, many people’s financial circumstances have changed as a result of the economic recession, making it more difficult for them to make ends meet. As a result there was, and continues to be, an unprecedented increase in demand for London’s free debt advice services.
London Debt Strategy Group (LDSG)
In response to this situation the Greater London Authority and the Capitalise Partnership (external website) held London’s first ever Debt Summit in 2009, at which we launched the report 'Up to our Neck in it' (see below) which set out these changes and their impact on London and Londoners.
We also established the London Debt Strategy Group in 2009 in partnership with Toynbee Hall and a range of other stakeholders and policy makers including advice agencies, statutory and voluntary bodies and representatives from the financial services industry. Our aim was to consider and find solutions to the issues confronting London’s free debt advice services and their clients in the wake of the economic crisis.
Over the past three years the group has provided a vision for debt advice in uncertain times, raising awareness of the negative impact of debt on people’s lives, including health and wellbeing, ability to work, housing situation and the wellbeing of children.
We are delighted that the Government has decided to continue to fund the Capitalise Debt Advice Service until 31 March 2013. From April 2012 onwards Capitalise is funded by the Money Advice Service, a new agency set up by Government, which is responsible for funding of debt advice and financial capability services through the banking levy.
Because the group has been so successful it will continue to meet twice a year. We will continue to ensure that there is stable provision of information and advice on debt and money in London.
In May 2011 the LDSG launched 'Treading Water' - a report on the work of the group and the changing nature of debt advice in London, which included the following key statistics:
- In London there has been a 75 per cent increase in average debt levels amongst 17-24 year olds since 2008 (Capitalise, 2010) from £3,500 to over £5,500.
- Data from the Legal Services Commission (LSC) shows a 140 per cent rise in the numbers of young people accessing debt advice through the LSC between November 2007 and December 2009, although this remains low at five per cent of total client numbers.
- There are more people in arrears with their debts in London than in any other region even though London does not have the highest level of JobSeekers’ Allowance claimants amongst its workforce.
- People with a long-term illness or disability have three times the level of debt problems, compared to the population as a whole. Evidence from research suggests that, in addition to those with long-term illness, the key groups likely to benefit from debt advice services are people with mental health problems, carers, working households on low incomes, people living in social housing, lone parents, black and minority ethnic communities, and self-employed people in urgent need of debt advice.
- Thirteen per cent of Londoners were in arrears with their debts as compared to the national average of 10 per cent. This suggests that both demand and need for debt advice in London are likely to be at a higher level than nationally.