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Call for better data to help tackle household debt

October 2016

A new report from the Community Investment Coalition (CIC), funded by Local Trust, is calling for radical action to tackle local debt ‘hot spots’ across the UK. 

Debt has a local dimension

The report, ‘The Distribution of Consumer Credit Debt in Leicester’ specifically looks at local debt hot spots in Leicester, particularly highlighting findings for the St Matthew’s Big Local area in Leicester. The St Matthew’s Big Local partnership have made it a priority to help residents avoid over-indebtedness and to support the development of credit union provision in the area.

The report finds that Britain’s household debt problem has a local dimension with communities with high concentrations of lower income, younger and households living in rented housing more likely to experience problem debt.

Over-indebtedness is associated with poor health and negatively impacts on children living in debtor households. Concentration of household debt also reduces household consumption and so constrains local economic growth.  

The report author Damon Gibbons from the Centre for Responsible Credit said:

‘The impact of household debt is well evidenced resulting in poorer health and financial exclusion. It is essential that we have the data to better understand both the nature and location of the debt hot spots to support effective solutions to tackle them.’

 

Local data for local action

Ben Hughes, Local Trust interim chief executive, says:

‘Knowing who is affected by debt, in which areas and how, enables a more coordinated response and allows for better targeting of resources at areas and communities facing greatest need.

‘As this report shows, debt levels vary, even between neighbouring areas. Where there are particularly high levels of household debt, it’s going to be harder for people to get on a more secure financial footing.

‘This report shows the need for robust and comprehensive data on debt ‘hot spots’, so that more communities, local authorities and lenders can work together to find solutions.

‘St Matthews in Leicester, a Big Local area, have made it a priority to help residents avoid over-indebtedness and to support the development of credit union provision. 

‘We know that it’s possible for communities to take positive steps like this to tackle financial exclusion, with the support of lenders, community finance organisations and local authorities.’

What’s next?

The report calls for a range of radical changes, including:

  • the need for the main retail banks to release better lending data to create a comprehensive picture of household indebtedness at a local level;
  • the FCA to conduct an analysis into how well competition is working within the financial services sector to meet the needs of lower income households;
  • and for local authorities to engage with the main retail banks to discuss how best to address local debt ‘hot spots’.

Find out more

View the report

Jennifer Tankard, Director of the Community Investment Coalition (CIC) has written a blog discussing the research findings and their implications. Visit the blog.

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