The real cost of hardship

Ed Stubbs

At the end of last winter, seven million people were behind on at least one bill. Think about what that tells us about the precarious nature of many people’s finances.

Seven million were not keeping their heads above water, and many more are just one broken TV, washing machine, vet bill or small price rise away from being in the same position.

As I said in my last column, for so many, the cost of living is never far from their minds.

This is doubly true at this time of year, as they worry about whether to turn the heating on and how to afford Christmas.

Every Monday at Splott Community Volunteers, we run a “Worry Club,” a chance for our service users to share their concerns and for us to help them better understand their options and signpost them to support.

The club is assisted by volunteer and trustee Simon Cowper, who has years of experience helping people who are struggling, particularly young people navigating the world on their own for the first time.

Despite this, when I sat down with Simon to talk about this piece, he highlighted an increasingly concerning trend in these conversations: debt. Whether that’s buy-now-pay-later schemes, doorstep loans, payday loans or credit cards, increasing numbers of our service users are struggling with debt, and even more are being targeted with debt options they simply cannot afford.

Vulnerable residents are being targeted, many of whom have no idea what basic questions to ask.

Simon tells me he has lost count of the number of times he has had to explain what Annual Percentage Rate means and the difference between a credit and a debit card.

He has many examples of people trapped in debt spirals, with no way out, falling prey to riskier forms of borrowing as a result.

As a charity, we must be very conscious that illegal money lending exists in the communities we support, and it brings with it violence and coercion.

Unaffordable debt, legal and illegal, results in a serious deterioration in people’s physical and mental health. Poor people die earlier and have shorter healthy lifespans, and debt plays a part in that. It’s not just catastrophic for individuals either; it’s cripplingly expensive for the state, as residents need more serious health interventions or can’t afford rent and end up in temporary accommodation, which is incredibly costly for councils and leaves them with far less to spend on other services.

If you want to read more about the real cost of hardship, earlier this year Trussell produced an excellent report, just Google “Trussell – Cost of Hunger and Hardship”.

Credit

Most of us have some understanding of how this works. One of my abiding teenage memories is the TV breaking and my mum taking me with her for moral support to buy a new one on credit. The television happened to break just as the only FA Cup Final I’ve ever missed was starting (I even missed Chelsea’s early goal against Middlesbrough!).

We were on benefits at the time, and looking back, I’m sure mum wasn’t convinced credit would be extended. My story ended okay, we moved on and things got better, but for many in today’s world, a situation like this would be the start of a debt that would never be realistically repaid.

Simon’s clear message about today is that most people enter into debt just to get through the week and now feel completely trapped.

For everyone, it’s a different journey. One of our service users is struggling because of the cost of vet bills for a beloved cat. For people living alone and isolated, pets are family and vital for their mental health.  We all have people and pets that we love and we would do anything for them.

Another person came to us because the washing machine broke and the cost of repair meant that they had to use credit for their weekly shop. People try their best to manage their money but sometimes, life throws a curveball that we can’t anticipate or budget for, especially if every penny is already accounted for just to survive.

Shoes

Another example that stuck with me came from Trussell. They quoted a Welsh mum about her situation:

“I would love to be just comfortable so if my kids had a hole in their shoes, like happens, I could buy them a pair of shoes and I haven’t got to wait for a few weeks and try and eke it out and hope it doesn’t rain so their feet don’t get wet.”

What would you do if it started raining in that situation, would you go into debt even if you couldn’t afford it? After reading that quote, I couldn’t stop thinking about it for days. Trussell do some really powerful work.

It’s easy to say “don’t borrow”, but far harder to do, especially now as you can opt to ‘pay back in three instalments’ on so many sites, including second-hand online stores, using third party services. The business models of many debt providers are placing horrendous strains on both the finances of individuals and the finances of our public services, particularly health, and increasingly education. Ask yourself: how many schools are running food banks? How many teachers are giving out food ad hoc?

We are doing more as a charity. On top of our warm hubs, food provision and support with heating costs, we have more targeted interventions like the Worry Club and Council-run cooking and budgeting courses which have seen participants benefit from air friers or supermarket vouchers . We also provide financial literacy classes and in-house advice from experts ranging from Welsh Water to National Energy Action specialists and Riverside Advice.

Christmas

For people on the poverty line, and maybe already struggling with a debt, the most stressful time of the year is upon them: Christmas.  Who doesn’t want to make others, especially their children, happy at Christmas? And there are easy debt options like instalments and buy-now-pay-later that are increasingly popular.  It’s forecast that millions in the UK will rely on credit to fund festive spending

Splott Community Volunteers and so many other fantastic organisations will continue to support everyone we can, but we need a national conversation about debt, indebtedness and the strain it’s putting on individuals and services. That conversation has to start by listening to people like Simon, who are on the front line of the cost-of-living crisis.

Ed Stubbs is Chair of Splott Community Volunteers a charity that seeks to tackle poverty and support its local community, as well as being a Welsh Labour Councillor in Cardiff.