The Recession Coping with the Human Cost

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Presentation at the unionlearn Training and Development day for Union Reps in Cornwall by John Ede, Citizens Advice Bureau.

Text of The Recession Coping with the Human Cost

  • 1. The Recession Coping with the Human CostThe difference good advice can makethe charity for your community

2. The Financial Storm Record Levels of Debt (Personal Debt 1.4 trillion) An end to special mortgage rates (3m) First Time Buyers (1m out of 11.8 m mortgages) Falling House Prices (20% and counting) The Credit Crunch (Restricted Credit, increasing interest rates) Rising Prices (Essential Bills, food, utilities, fuel) Limited Savings (1/2 of UK households have little or no savings) Changing Incomes (Reduced hrs and/or job loss) the charity for your community 3. Meeting the NEW needs Personal life events trigger unmet need Cataclysmic shock events:- redundancy or severe change in economic circumstances, sudden illness Transitions between life stages:- especially those involving a change in role, status, expectations and responsibility Capacity eroding changes:- spiralling and unsustainable indebtedness, becoming a primary carer, onset of mental health issues Job Centre Plus/Inclusion Cornwall:- Cornwall Works LAA, ESF, CW 50 +, Welfare Benefits Group, Debt and Financial Inclusion Group, Real Choices Tackling Child Poverty, Cornwall Migrant Workers Group, Mental Health mini Summit, Debt Advice in JCP Offices, Drs Surgeries, One Stop Shops the charity for your community 4. Churning SOCIAL EXCLUSION Unemployment 3 21Labour LIFE EVENT Market SocialExclusionCITIZENS ADVICE BUREAUXWork ExperienceSkillsConfidenceEngagement the charity for your community 5. SavingsHousehold Savings Levels by weekly income.Weekly incomeHouseholds with With savings lessNo Savingsthan 1,500300-400 34%22%400-500 29%24%500-600 25%24%600-700 18%24% So 56% of households with income 300-400 have less than 1,500 Savings i.e. 1 months income- just enough till next pay day. the charity for your community 6. Debt Average household debt in UK excluding mortgages is 9,200. However the figure is 21,300 if the average is based on the number of households who actually have some debt. Plus Average Mortgage 103,000 UK Penzance County Court 180,000. the charity for your community 7. the charity for your community 8. Cornwalls Economy ? Estimates HouseholdsAnnual Interest HouseholdsMortgage with Debts(20%) with MortgagesInterest (6%) Caradon 15,00065m12,80080m Kerrier 17,00073m13,70085.5m N Cornwall14,75063.5m10,30064m Penwith 12,00051.75m8,30051.75m Restormel 17,25074.5m14,00087.5m Carrick 16,50071m12,50078m Cornwall92,500398.75 71,600446.75m Debt interest 357/ monthMortgage interest 520/ month the charity for your community 9. Total Q1Q2Q3Q4Total Cornwall %07/08 08/09 08/09 08/09 08/09 08/09 (National %)Mortgage & Secured 582 211 231 280 368 1090+87% (+49%) Loan Arrears Fuel Debts 514 105 109 144 226 584 +14% (+19%) Credit, Store & Charge 539413951168117014445177-4% (+9%) Card debts Unsecured Personal 3039854 745 757 10083364+11% (+10%) Loan debts Bankruptcy 1075227 334 405 444 1410+31% (+24%) Council Tax Arrears1061220 282 340 484 1326+25% (+15%)Dismissal820 195 282 248 334 1059+29% (+17%) Redundancy 379 113 174 359 326 972 +156% (114%)Jobseekers Allowance 474 138 157 281 352 928 +96% (61%) the charity for your community 10. TotalTotalCornwall CAB April-Sept 08April-Sept 09Increase Mortgage & Secured44258332% Loan ArrearsFuel Debts214516141%Credit, Store &25632847 11% Charge Card debtsUnsecured Personal 15991956 +22% Loan debtsBankruptcy56194769%Council Tax Arrears 50278857% the charity for your community 11. TotalTotalCornwall CABApril-Sept 08April-Sept 09Increase Terms & Conditions 30240534% of EmploymentRedundancy 28737029%Threatened 257269 5% HomelessnessDomestic Violence 41 82 +100%Relationship 65276517% Breakdown Rent Arrears 34649342% the charity for your community 12. Repossessions Council of Mortgage Lenders figures are estimates and relate only to first charge lenders who are members of the CML. They do not include other secured lending or Sub Prime lenders 2007 CML 27,100 repossessions. Estimate 2007 including Sub Prime 53,000 Plus the Sale and Rent back schemes 27,000 Estimate for CML 2009 Repossessions was 74,000 revised December 2009 to 48,000 the charity for your community 13. County Court Representation Month AdjournedSuspended AdditionalOutright ArrearsMortgage on Terms TimeOrdersOutstandingOct 77 1 6110,547 2,040,962Nov 49 4 240,9291,271,362Dec 04 1 124,699822,011Jan 18 5 170,015996,229Feb 44 0 022,788445,174March 52 4 248,9391.092,795Total 21 341512 317,917 6,668,53346 cases in Penzance out of a total of 82 190,529 average mortgage outstanding (49 mortgage, 33 landlord) the charity for your community 14. The Combined Result Clients using the Welfare Benefits Advice service were, on average 72 per week better off Clients using the Debt Advice service were, on average 160 per week better off Where clients took advantage of using both Welfare Benefits and Debt advice they were, on average 232 per week better off the charity for your community 15. What about the Future? District Employees Self employed Recession to Recovery LGACornwall 2008 Cornwall 2008 Reduction in No. of JobsCaradon29,90010,00025% 2,900 Carrick30,70011,50027% 4,300 Kerrier35,700 7,50017% 3,200 N Cornwall 36,700 6,70015% 2,700 Restormel36,400 9,20020% 3,800 Penwith20,900 9,00030% 2,400 Cornwall 190,300 53,90022%19,300 May 2008, Working Age Benefits 42,30019,300 Plus Short Time Working the charity for your community 16. PBR - Treasury Forecasts Number claiming JSA would peak at 1.75 million in the middle of 2010, implying an overall unemployment total of 2.7m. predicted JSA claimant count would remain at 1.5m at the end of 2012 = 2.3m overall unemployment Employers were retaining staff by agreeing shorter working hours and freezing pay the charity for your community 17. Cornwall Economy Monitoring Monthly Update Rock Pool Cornwall 12 month lag? Holistic - Quality & Effective Partnerships Stronger Communities- Take Responsibility Reduced Income:-Cornwall Predicted Job Losses, Short time working, Self Employed, Pensioners Savings and Interest (80 to 1.94pm) Debt, Health, Mental Health Training Front Line Staff. Increasing Interest Rates the charity for your community 18. Support for Jobseekers ~ Cornwall Day One6 Months12 months+ Next Step IAGESFEmployability/basic skillsProgramme Centre Current New DealsEmployer IncentiveAdditional TrainingVoluntary Work ExperienceSelf employment support Job BoostNJR/Flexible New Deal and support contract** available now replaced by FND ** from April 2009 ** from October 2009 the charity for your community 19. A Helping Hand A Helping Hand the charity for your community 20. 2n d 0 5 1015 2025 3035 404550Fe 3r bdFe4t bhFe5t bhFe6t bhFe7t bhFe8t bhFe9t bhF 10 eb thF 11 eb thF 12 eb thF 13 eb thF 14 eb thF 15 eb thF 16 eb thF 17 eb thF 18 eb No of Client Contacts thF No of Volunteer Advisors 19 eb th Advisors and Contacts per dayF 20 eb thF 21 eb st Volunteers22 FebndF23 eb rdF 24 eb thF 25 eb thF 26 eb thF 27 eb thFe b the charity for your community 21. Thank you Thank you to the Volunteers and Staff of the CAB in Cornwall. the charity for your community 22. Households & Property Repossessions are more likely to be located in lower value properties Unemployment and reduction in income were the main causes of arrears Unemployment was found to often be followed by relationship breakdown the charity for your community 23. Leaking Bucket Syndrome the charity for your community