For many there’s a lack of capital in the capital
By alison.blackwood, Senior Policy & Campaigns Advocate
We all know that London is a city of both the haves and have-nots, but what do we know about London debt?
This morning we released our latest analysis of problem debt in London. The headline figures show that, again, our clients living in London are faring slightly worse than those living in other regions of the UK.
The main take-home message is that Londoners in problem debt, despite having high incomes on average, are spending a greater proportion of that income on essentials. And this is pushing them further into debt.
Unsurprisingly, most of this extra cost is the result of higher costs in the capital. However, we’re also seeing higher levels of arrears on credit cards, overdrafts and payday loan debts.
Council tax and bailiff use are also an issue
Perhaps a slightly more surprising finding is that, although across London average council tax bills tend to be lower, clients living in the capital have higher average council tax arrears when compared with the UK average. And when looking at figures obtained by Money Advice Trust through Freedom of Information (PDF), we see that bailiff use to collect debts for local authorities is increasing almost as rapidly as across the rest of the country.
We really want London local authorities to wake up to this issues, and commit to follow the example set by authorities such as Hammersmith & Fulham who are leading the way in seeking better alternatives to bailiffs.
Comparing our data with others
Our findings chime with research from others. The recent Financial Conduct Authority’s Financial Lives survey showed that Londoners were less likely to be satisfied with their financial circumstances than those living in other regions and less likely to have savings, including pensions. Both this report and the recent Resolution Foundation research on London, London Stalling (PDF) found a typical London family (a household with two children on a median income) was much less likely to own their own home.
Taken together these findings suggest that the high costs of living in London are reducing people’s chances of saving or achieving the chance of owning their own home. They also suggest that high costs are pushing more Londoners into problem debt. This is something the Mayor’s office should rightly be concerned about, and we are keen to work with policymakers on strategies for addressing Londoners’ financial resilience.
Taking this work further
We’ve produced London in the Red reports in both 2016 and now 2018. London’s characteristics tend to be different to the rest of the UK, with younger households, fewer homeowners, and a more fluid population. We now want to expand our analysis to look at what is influencing the number of people in problem debt in other areas of the country.
We’re keen to hear about more research and experiences from both London and across the regions, so please get in touch if you have more to tell us.
