Staff at Eastwood’s Citizen’s Advice Bureau were given a chance to field questions to Ashfield and Eastwood MP Gloria De Piero and the Labour Party’s consumer champion Stella Creasy yesterday.
At the event held at Eastwood’s Library & Information Centre in Wellington Place, the CAB staff on the frontline of debt advice discussed a range of issues around payday lenders and personal debt faced by people in the community.
Service Manager David Cook revealed the scale of the problem.
He said: “In the last 11 months we’ve dealt with 800 debt cases. To put that into some sort of context, roughly 50 per cent of everything we see is now debt related and in that time there’s been a massive increase in debt related mental health issues.”
Last year Gloria spoke out after research revealed the true scale of the debt crisis gripping the region after 39 per cent of people in the East Midlands said they were in personal financial difficulty according to one report.
The Shadow Minister for women and equalities said: “I couldn’t believe it when I was told how much the client base of the CAB has changed in the last five years.
The average amount of debt per CAB client is now £9,000, she added.
Ms Creasy said Labour is battling against the impact of “rip-off” lenders charging high levels of interest, often over 5,000 per cent APR.
She added: “It was worrying to hear about the increasing number of people who have debt related mental health issues. What concerns me as well is the fact that companies are already getting round the new Government rules on credit so that needs tightening up.”
She added that one in four clients had never used the internet, “so when people are told to switch your energy supplier it means absolutely nothing to them. It just shows how expensive it is to be poor”, said Ms Creasy.
Although the cap on the cost of credit came into force in Britain and limiting the rates payday loan companies can charge earlier this year - there’s still a long way to go.
Each day people in Britain pay £163 million in interest alone, and Labour calls payday loans just one component of a credit industry that “benefits from encouraging unsustainable levels of debt”.
An increasing problem, added Ms Creasy, is the “legal loan sharks” who skirt interest caps with products designed to evade them, which ii why there are calls to review the cap on credit costs.