Problem Debt leaves Households without Basic Goods
18th December 2017
A new report, by the charity Turn2Us, has revealed that UK households experiencing problems with debt are often unable to afford the most basic goods and services.
Turn2Us surveyed 2,285 people who had come to them for help, and found that significant proportions did not have access to essential white goods:
- 16% did not have a fridge
- 15% did not have a cooker
- 25% did not have a freezer
- 21% did not have a washing machine
The charity’s Chief Executive, Simon Hopkins, has characterised the hardships faced by households like these as an “intolerable struggle”.
Turn2Us noted that lacking essentials such as these could make life more expensive for the poorest families, as well as more difficult. For instance, households who cannot afford to repair or replace a washing machine are faced with the choice between using costly launderettes, and experiencing the stigma associated with dirty clothes. Not having access to a working fridge and freezer has a similar impact. Buying food in bulk from larger, out-of-town supermarkets is the cheapest way to eat, but this is impossible without the ability to keep food fresh at home.
Earlier this year another charity, Christians Against Poverty (CAP), discovered that one in ten of their clients did not have a bed to sleep in. Sleep proved to be an overarching issue for those approaching the charity for support with financial difficulties – eight out of ten admitted that their financial situation led to sleepless nights, and three quarters were afraid to open their post. The same survey revealed the sacrifices which many struggling households have been making to keep up with essential bills. One third of respondents in the survey by CAP reported going without at least one essential item, in order to stretch their income as far as possible. In many cases, these sacrifices included going without internet access, which is fast becoming a necessity as more and more business is conducted online. This trend was recently exemplified by Royal Bank of Scotland’s decision to close 259 of its branches, expecting customers to use their online banking services more often. Doing without the internet also blocks these households’ access to many of the best deals, such as being able to easily compare the prices of energy providers and insurance policies.
Hire Purchase Problems
Another fact revealed by the survey was the prevalence of goods bought on hire purchase by struggling households. This can exacerbate their financial problems for a couple of reasons. Firstly, because of the high interest rates these kind of arrangements involve, the overall cost is far more expensive than buying appliances outright would be, despite the deceptively low weekly payments. Another problem is the fact that hire purchase companies have faced criticism, this year, for poor conduct towards customers. The UK wide rent-to-own company, BrightHouse, denied refunds to 250,000 customers who had cancelled their agreements between April 2010 and September 2016. This practice led the Financial Conduct Authority (FCA) to brand the company as an irresponsible lender. Since around one in five people seeking help from CAP had rented or bought an item through a hire-purchase provider, their financial position is rendered yet more vulnerable. The debt associated with such hire purchases could quickly spiral out of control; 91% of respondents reported to borrowing money just to pay essential bills and existing debts. This cycle of borrowing will eventually collapse, causing a further decline in living standards and mental health for the households affected.
Debt pressure at Christmas
These statistics have come to light in the run up to the most expensive event of the year for the majority of UK households: Christmas. According to the Money Advice Trust, over a third of people pay for the holiday using a credit card, leading to the phenomenon of the “spending hangover”, which often lasts well into the New Year.
Research by the investment service, Scottish Friendly, found that six in ten UK households felt under pressure to provide their families with the “perfect Christmas”. This sentiment was, unsurprisingly, especially prominent among families with younger children. It is possible that this pressure is behind the fact that so many households risk slipping into unaffordable debt to finance the Christmas festivities.
Where to turn for Help
If you or someone you know is struggling to access basic goods, Turn2Us can provide advice about what charitable grants are available to alleviate the issue. Their site also includes a tool for checking whether you are entitled to any benefits, which can be hugely useful. For tips on enjoying an affordable Christmas, check out our earlier blog post.
The FCA have recently warned of an emerging consumer debt bubble, which has been growing as wages have failed to keep up with the costs of living in recent years.
If debt is beginning to cause problems, it could be time to seek professional help. Creditfix can offer friendly advice about which debt solution might be right for you.