The Debt Trap exposes the impact that living with debt has on children
The publication of The Debt Trap: Exposing the impact of problem debt on children adds an important voice to the debate on the growing problem of personal debt – that of children. As an MP, I regularly see the problems of those struggling on low incomes. People whose wages can’t meet their outgoings each month, who have been pushed over the edge with welfare changes like the bedroom tax, or those who are just getting by until their boiler breaks down. Too many are parents who just want their children to be warm and fed, to be clothed and maybe have the occasional treat.
When the money runs out, parents are faced with tough choices, and many turn to payday lenders. Constituents like Monika (I’ve changed her name to protect her anonymity) who is a single mum with three kids. To help pay the bills she took out loans from multiple payday lenders, but quickly got into serious financial difficulty. When she couldn’t pay back on time, lenders encouraged her to roll over the loans, charging her extra every time. Then without telling her they repeatedly raided her bank account, so she couldn’t pay the bills or her rent, and the debts piled up.
It’s because of people like Monika that I’ve campaigned with colleagues for the regulation of high cost credit, and we are seeing changes which will limit some of the worst practices of payday lenders. But the problem of families whose incomes are simply not enough to meet the commitments of daily life will continue until we deal with the low wages, zero hours contracts and welfare policies that make family budgets so tight.
The Debt Trap
In their timely report, The Debt Trap, The Children’s Society and StepChange Debt Charity highlight the scale of the problem – almost 1.4 million families with dependent children facing problem debt, and a further 2.9 million who have struggled to pay their bills over the last 12 months.
But these are just numbers. The Debt Trap also exposes the impact that living with debt has on children. Family stress and arguments cause distress, being different through missing out on things leads to bullying, and progress at school is affected. Children from families in debt are twice as likely to be bullied and three-quarters could not afford to engage in the social activities that are the norm for their peers.
And children are being exposed to the debt culture that creates the problems – during our inquiry on payday lenders, Martin Lewis of Money Saving Expert, told the House of Commons Business Select Committee that 14% of under-10s had pressed their parents to take our payday loans for things they couldn’t afford.
There’s a responsibility for us to tackle these problems on many fronts and The Debt Trap offers some practical proposals. The report calls for government action, working with creditors and debt advisers, to create a breathing space to avoid spiralling debt, and to deal with over-zealous debt enforcement would make a difference. So would the proposals for creditors to put in place 'early warning signs', the development of more affordable credit options, and tougher rules on payday loan advertising.
This is a timely report that deserves serious attention.
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