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Thursday, 21 November 2013


Centre for Social Justice has just discovered that  "Problem debt can have a corrosive impact on people and families" in a report called "Maxed Out".  
The Centre for Social Justice (CSJ) was set up by Iain Duncan Smith while he was in opposition and recommended the welfare reforms we now experience and that are in the pipe line with the Universal Credit. 
Like all government reports the CSJ refuses to acknowledge in "Maxed Out"  incomes must be raised to meet the a minimum cost of living in order to prevent poverty related debts and their consequent "corrosive impact". An otherwise very useful report is spoilt by "This vision rested on recognising that using money alone to combat disadvantage, as important as income is, is too narrow an approach". 
There is a point at which money alone must combat disadvantage and prevent debt. That point has been passed when an unemployment benefit of £71.70 is not only 42% of the Joseph Rowntree minimum income standard but is also being hit by the council tax, the bedroom tax, the £500 overall benefit cap and the 1% freeze in annual increases. . 
The coalition was warned by others time and again in 2012 that caps, cuts and council tax would create debt.
During the passage of the Welfare Reform Act 2012 and the Local Government Finance Act 2012, which started the taxation of benefits with the council tax by local authorities, the attention of Lord Freud was drawn to the Government Office for Science in 2008 report  "Mental Capital and Well being". I quote
"Debt. There is a strong case for Government to work with financial organisations and utility companies to break the cycle between debt and mental illness. Recent research has indicated that debt is a much stronger risk factor for mental disorder than low income. A range of possible interventions are suggested: a greater awareness of the link between mental health and debt by banks and financial institutions; and measures by utility companies to handle arrears better."
I was present on behalf of Zacchaeus 2000 Trust when the Royal College of Psychiatrists warned Lord Freud about the relationship between debt and mental illness. 
The coalition would not change their policies in 2012 to prevent the misery now reported by the CSJ. 
Caps, cuts and council tax are now wreaking havoc in the lives of the poorest citizens. 
"BBC home affairs editor Mark Easton said the poorest people could often access banking and credit only at a premium, with onerous terms making it more likely they would go overdrawn and suffer penalty charges.
Mr Christian Guy (Director of CSJ) said the poorest people in the UK were "cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders".
The report says payday lenders have increased business from £900m in 2008/2009 to more than £2bn in 2011/2012.
It says more than 26,000 UK households have been accepted by councils as homeless in the past five years because of mortgage and rent arrears.
Mr Chris Pond (a former Labour Work an Pensions Minister) said that "with falling real incomes and increasing costs of basic essentials, many, especially the most vulnerable, are sliding further into problem debt.
"The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense.
But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services."

Rev Paul Nicolson
Taxpayers Against Poverty
93 Campbell Road,
London N17 0BF
0208 3765455
07961 177889
also at www.z2k.org 

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