Official figures released by the Insolvency Service show that 25- to 34-year-olds are the single biggest group using debt relief orders (DROs).
Since DROs were introduced in April 2009, 44,000 have been granted in England and Wales, with 1 in 4 of those resorting to a DRO aged between 25 and 34.
If you have debts of up to £15,000 and are struggling to make the payments, have no more than £50 disposable monthly income, have savings and assets of less than £300, and don’t own your own home, a DRO enables you to write off your debts.
The figures show the extent to which young people are suffering in the current economic climate, and it has been suggested that increasing student debt could make the situation worse. Student loans aren’t covered by DROs, but they are often a contributing factor when a young person becomes insolvent.
According to Joanna Elson, chief executive of the Money Advice Trust, financial realities don’t match up with the expectations many 25- to 34-year-olds grew up with – “at the same age their parents would most likely have bought their first home, have a comfortable pension lined up, and be saving for the future. For today’s 25-34 year-olds the picture is much bleaker,” she said.
The Insolvency Service’s figures indicate that, over the last 2 years, 1 in 3 people under 25 who were granted a DRO owed less than £5,000, whilst other age groups tended to owe more. 40% of those aged over 25 owed between £10,000 and £15,000.
According to a new report published by the Chartered Institute of Personnel and Development (CIPD), the answer is yes – unemployment will rise to 2.85 million next year, with the number of people in work falling by 120,000.
The CIPD predicts the number of people out of work will hit its highest level since 1994, and the figure will continue rising until it peaks at 2.9 million in the first half of 2013.
If the forecasts for next year are accurate, this will be the first time unemployment has reached 2.85 million and still been increasing since 1991.
It is expected that unemployment will remain above 2.5 million until 2015 as a result of feeble economic growth.
The report doesn’t forecast any change to the figures for long-term and youth unemployment, and cited Government efforts to get these 2 groups into work.
The report also predicted that productivity would continue to stutter and that caps on pay would remain ‘severe’.
Dr John Philpott, chief economic adviser at the CIPD, said
“The combination of worsening job shortages for people without work, mounting job insecurity and a further fall in real earnings for those in work may test the resilience and resolve of the UK workforce far more than it did in the recession of 2008-9.”
He even speculated that this could “foster a tetchy passive-aggressive mood in many workplaces that could prove very hard to manage.”
Shadow work and pensions minister Ian Austin said “it is crystal clear that this government is failing to get people off benefits and into work.”
However, a spokeswoman for the DWP said “the increase in those claiming Jobseeker’s Allowance has slowed and our welfare reforms are having a positive impact with overall benefit claimant numbers falling by around 40,000 in the last 18 months.”
If unemployment is having an impact on your ability to repay your debts, speak to one of our debt management experts today.
The Government has outlined plans to ban “excessive” credit and debit card fees for things like flights and cinema tickets by the end of 2012.
Complaints have been levelled at airlines and booking agencies, but also organisations like local councils, for imposing excessive card charges. Whilst the Government will be limiting what card charges can be imposed, companies will still be allowed to add a “small charge” to cover the cost of processing payments.
Buying flights online is notoriously confusing, with additional charges seemingly being added at every stage. When customers tick a box to confirm they will pay using a card (how else would you pay?!), extra charges are often added. Sometimes these charges aren’t made visible until as many as 8 pages have been clicked through.
Other organisations guilty of excessive card charges include local authorities and the DVLA, whilst buying train, ferry, theatre and cinema tickets online can also be something of a headache.
Consumer magazine Which? urged the Office of Fair Trading (OFT) to investigate the problem, and, in June, the regulator published a report on the travel industry’s use of surcharges.
The OFT said the industry needs to make the charges clearer, and stop levying surcharges for debit cards. The Government is planning to go beyond the OFT’s recommendations, banning all surcharges it deems to be “excessive”.
A consultation will be launched at the start of 2012.
Susan Evans, a 57-year-old mother from Talke Pits, Staffordshire, has been jailed for 28 months after stealing £115,000 from her employer.
After joining PSB Group Ltd – a manufacturing firm based in Tunstall – as a receptionist in 1998, she was promoted to the position of administration manager in 2002. She then began paying company cheques to herself and her son for nearly 4 years.
In 2008, she was dismissed for an unrelated matter, and the owner’s daughter took over the financial management of the business. It was then that Ms Evans’ crime was discovered – it became apparent that a number of invoices had been copied and changed, and the company’s bank was able to confirm who the cheques had been paid to.
From March 2004 to January 2008, Evans paid 26 cheques worth nearly £60k into her account, as well as making another 33 cheques out to her son, taking the total amount stolen to £115,411.99.
At the Stoke-on-Trent Crown Court hearing, Evans pleaded guilty to 2 charges of theft.
Her husband died in 1996, saddling her with debts of £12,000, and she never managed to get her finances back on track.
She admitted spending the stolen money on clothes, holidays, friends and family. Whilst she used some of it to pay off loans, she still has substantial debts.
She will serve no more than 14 months in prison, after which she will be released on licence.
If you are having financial difficulties, don’t let the situation get any worse. Speak to one of our experts for free debt management advice today.
New data shows that, in the run-up to Christmas, household debt has increased at the fastest rate since the beginning of the recession.
At a time when people are trying to find money for a variety of festive expenses, the jobs market has become less secure and incomes have dropped at the fastest rate for 2 years.
That more people are getting into debt, and the average amount owed is rising, is hardly surprising in this context.
Tim Moore, senior economist at financial services information firm Markit, said: “December’s survey rounds off a year in which the aftershocks of the recession have hit UK household finances with unprecedented force. Weak labour market conditions, ongoing austerity measures and heightened inflationary pressures all contributed to a near-record deterioration of household finances in December.”
He added that it was likely things would deteriorate further before they improve.
The Bank of England has also published a report which indicates the majority of British households have experienced a squeeze on their finances over the last 12 months. This was presented as both a consequence of and a response to Government cuts.
Although the Centre for Economics and Business Research is forecasting a 1.7% drop in retail sales from November to December, the likes of John Lewis and Selfridges are reporting healthy year-on-year improvements.
If you wake up with a financial hangover in the New Year, our debt management experts might be able to help you find a cure. Get in touch to discuss your situation.
More grim economic news today – unemployment in the UK has hit a 17-year high according to the latest figures from the Office of National Statistics.
At the end of October, there were 2.64 million people eligible to work but without a job, an increase of 128,000 on the previous quarter and a level not reached since 1994. The rate of unemployment is 8.3% – the highest since 1996.
Women and young people have been hit hardest. There are now 1.03 million people aged 16-24 who are unemployed – an increase of 54,000 and the highest level since youth employment statistics were first recorded in 1992. The number of women out of work rose by 45,000 to 1.1 million – the highest level for 23 years.
Public sector cuts seem to be the overriding factor in the recent increase in unemployment, and fierce criticism has been levelled at the Government. Labour leader Ed Miliband has warned that current Government policy could result in a ‘lost generation’ for whom finding work becomes impossible, whilst union leaders argue that the latest unemployment figures expose the failure of the Government’s cost-cutting strategy.
So how much worse is the situation going to get?
Whilst unemployment is still increasing, the rate at which it is doing so is slowing down, according to some economists. Based on the data from November, there is a sense that things might not be as bad as initially feared, although we are probably still heading for another recession.
Shoppers are out in force on the nation’s high streets, sparkly celebrity-filled adverts are taking over our TV screens, and the first flakes of snow are falling.
Incredible as it seems, another year is drawing to a close and Christmas is just 17 days away!
Consumers are embracing the opportunity for some festive cheer, with Christmas providing a much-needed distraction from the onslaught of economic doom and gloom that’s dominated the news for what seems like an age. When times are hard, people are even more desperate for the escapism of gifts, good food and gallons of booze.
But there is a risk that seasonal celebrations could leave you with more than just a slightly bigger belly, some especially garish socks, and a very sore head. If you get carried away, Christmas could be followed by a financial hangover for which there is no easy cure.
Of course, the next few weeks should be a time for indulgence and enjoyment, but that doesn’t mean financial common sense should go out of the window.
So grab a Glühwein, stick on some Slade, and check out our top tips for saving money and avoiding debt problems this Christmas…
1. Be realistic about what you can afford to spend. Create a budget and STICK TO IT.
2. Do you knit? Are you a great cook? Love taking photos? Then think about making your own gifts using the skills you have. People will appreciate the personal touch.
3. If you’re buying presents online, be aware of delivery charges. Buying lots of presents from different sites might not be the best idea.
4. Check voucher code sites to see if you can save money on internet purchases.
5. Christmas TV is usually an anti-climax so make sure you’ve got plenty of entertainment and activities you can enjoy at home. Staying in is the new going out.
6. If you’re expecting lots of visitors, head to a cash and carry to stock up on cheap drinks and snacks.
7. Ensure you’re on the cheapest electricity and gas tariffs and only use the heating when necessary. Invest in draught excluders and warm jumpers!
8. Make sure you’re taking advantage of any state benefits or tax credits you’re entitled to.
9. Don’t waste anything. We all love turkey sandwiches but there’s plenty more you can do with your leftovers. Be imaginative.
10. Don’t rely on credit. If you can’t afford it now, can you really afford it later?
Do you have any great money-saving tips of your own? Head over to our Facebook page to share your ideas.
A new study carried out by the National Centre of Social Research (NatCen) shows that as the bleak economic situation continues to force shops and leisure facilities to close, slot machines and gaming arcades are becoming increasingly common.
The NatCen study is the first major analysis of the geographical distribution of fruit machines. It found that they tend to be most prevalent in areas of high unemployment such as the Welsh valleys, areas around Airdrie, Stirling and Glasgow, and Yorkshire towns like Halifax and Barnsley. Areas where the majority of the population is aged between 16-34 or over 75, such as Brighton and Bournemouth, also had more slot machines than other parts of the country.
More unexpectedly, the study also indicates that reasonably wealthy towns, such as Altrincham in Greater Manchester, as well as places like Milton Keynes and Peterborough, are also what researchers refer to as “high-density machine zones,” with one or more gaming machines per hectare.
Researchers point to a correlation between the closure of shops and leisure outlets and the growth of the gambling industry. Heather Wardle, director of research at NatCen, says: “These high-density areas are not only in poor neighbourhoods. There are relatively affluent areas with a high density of machines. Altrincham is a relatively wealthy area but has a high density of machines, and you think, why is that? And it could be because of a lack of other leisure and recreation types on offer in that area. We know Altrincham town centre had one of the highest rates of retail vacancies in 2010.”
Shadow Culture Secretary Harriet Harman recently suggested that betting companies are deliberately targeting the poor by opening branches in areas with high levels of poverty. She argued that this was making the situation worse, and that gambling is increasingly a factor in benefit dependence for many people.
Harman described high-stakes games machines as “evil” and said they had created “a casino on every high street,” but the Association of British Bookmakers said there was no evidence that betting was exacerbating poverty.
If you think you have a gambling problem, GamCare can provide you with support, information and advice. If you are struggling with debt as a result of gambling, we can advise you on debt management solutions.
New research indicates that, in the UK, women are better at saving money than men. The Halifax Savings Report found that even though women tend to earn less, they generally manage to save more.
On average, women have £7,981 in savings (40% of the typical gross salary for women) and men have £7,657 (23% of their average income).
Bucking this trend, however, were men in Scotland and the North of England, who were found to be saving more than women in the same regions.
One explanation for women having higher levels of savings is that they have wealthier partners who have transferred money to them for tax purposes. Older women may also often inherit money if they outlive their husbands.
Martin Ellis, an economist at Halifax, said “the difference as a proportion of earnings is quite substantial. Female savers seem to be managing to devote more of their earnings to savings.”
Overall, savings were highest in the South of England, even though people in the rest of the UK are saving a higher proportion of their income. Savers in Hambleton, North Yorkshire, were something of an anomaly, with average savings of £11,316 (46% more than the typical figure in the South). By contrast, the figure in Islington was slightly below the national average, with savers putting away just 12% of their earnings.
Wondering how to keep costs down this Christmas? Keep an eye out for our top winter money-saving tips later this week.
