North East families facing debt crisis as recovery lags

Some families in the North East have just £5 a month left to repay debts after covering the cost of living, new research from a major charity shows

Some families in the North East are facing a debt crisis
Some families in the North East are facing a debt crisis

Some families in the North East have just £5 a month left to repay debts after covering the cost of living, new research from a major charity shows.

The figures from the StepChange debt organisation, which come after statistics showing more people in the region than ever before are worried about debt, are adding to fears that the economic recovery being seen in other parts of the country is not reaching the North East.

StepChange helped 1,717 new people over the phone with debt problems from the Newcastle and Durham areas between January and June.

On average people contacting the charity from Newcastle owed £13,525 and in Durham the figure is £14,608.

The amount owed has decreased since the charity’s records began in 2005 due to the recession limiting access to credit.

A spokesperson said: “In the North East we’ve actually seen an increase in the people coming to us.

“The green shoots of economic recovery are pretty recent so it’s difficult to see if that’s going to feed through to household budgets. The growth in wages is also slower than the rate of inflation.

“The North East in terms of budget surplus stands up favourably against other regions with £5 left over a month, but a lot of people still do not have enough to live on and service the debts they have.”

The charity found that in Newcastle families have £10 left a month to service debt. However, in Berwick-upon-Tweed, Northumberland, families would need an extra £26 to help make realistic repayments.

Meanwhile, it has emerged that more than 2,000 people have used advice helplines in the last 12 months because of worries over their financial affairs. Concerns over credit card repayments now top the mounting list of anxieties affecting squeezed households in the region.

Steve Ross, chairman of insolvency trade body R3 in the North East, said: “Although the economy is starting to pick up, many families are finding themselves left behind, weighed down by the cost of the day-to-day. Many people are struggling to afford the absolute essentials.

“The credit market is becoming increasingly fragmented as traditional sources of credit become harder to access, and other types of debt, such as payday loans, have become established as a concern.”

R3 found that 44% of those surveyed in its latest poll had a significant degree of concern about how much they owed – a rise from the 37% figure in February.

Almost a quarter of survey respondents said they were now either extremely or very worried about their debts and more than half (56%) were worried about their credit card payments. This was up from 44% six months ago.

David Pern, of Sanderson Young estates agents based in Gosforth, Newcastle, said the latest figures go hand in hand with region’s continued stagnation in the housing market.

He said: “Housing does tell a story of the economy more generally. If people have job security and are spending more they are also thinking about moving.

“People might have more confidence in the economy and maybe more buyers are out there than six months ago, but there’s no way we’re seeing a recovery in housing prices of 11% quoted for elsewhere in the country. This region is usually the last to catch up.”

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer