The Personal Credit Crunch

I attended the quarterly management committee of the Citizen Advice Bureau.

It is becoming abundantly clear that the pressure on household budgets is affecting low and middle income families.

The Mendip CAB has seen an increase of 21% in people seeking help and advice since January.

The issues being dealt with are welfare payments up by 31%, Housing problems increasing by 16% and Employment issues rising by 10%.

It is particularly worrying the amount of rent arrears to social landlords increased by 74%, with the average client having £14,000 mortgage arrears, although there is no evidence that financial institutions are foreclosing on mortgages.

The Housing benefit cap seems not to have led to a reduction in rents.

The CAB GP surgery outwork project has gained £400,000 for it's clients by the third quarter of the year.

The current economic situation is seeing more short term less secure employment, that is low paid, there is a lack of affordable housing.

There are more changes to the benefit system coming through in the coming year, changes to working tax credits, the government want affordable rents to be 80% of the private rented sector and if changes are approved in the welfare bill.

The Independent newspapers are reporting that 6 million households are in fuel poverty.

The Press like to characterise the lower to middle income families as benefit cheats yet, 0.8 per cent of benefit spending is overpaid due to fraud, amounting to £1.2 billion, and this proportion is the same as in 2009/10, every penny lost through fraud is too much, yet look at the billions not paid in tax through evasion as a comparison, yet the Press make little of this!

The governments austerity plan has choked off growth, they have reduced income with cuts in benefits and they have failed to control utility bills and their VAT increase to 20%, a tax they denied they'd increase, has further squeezed incomes, this has transferred debt from the government to individuals, banks and financial institutions has hoarded the money given in quantitative easing, but the only people prepared to lend is the payday lenders at interest rates of 2,000%APR. This is a time bomb that will explode in the future.

The growing crisis of housing, employment and income will cause the economy to underperform, it's a self serving prophecy.