This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.
You can find the current article at its original source at https://www.theguardian.com/business/2017/sep/18/britain-debt-hotspot-newham-borrowing
The article has changed 6 times. There is an RSS feed of changes available.
| Version 1 | Version 2 |
|---|---|
| Britain's debt hotspot: how Newham is making ends meet | Britain's debt hotspot: how Newham is making ends meet |
| (35 minutes later) | |
| It’s only just gone 9am at the Stratford Centre in east London, but the debt advice centre in the shopping mall is already full. | It’s only just gone 9am at the Stratford Centre in east London, but the debt advice centre in the shopping mall is already full. |
| Three miles from the gleaming towers of Canary Wharf in a former clothes shop, the borough of Newham’s Moneyworks service helps residents struggling to make ends meet. Problems with high cost credit, payday lending and loan sharks are commonplace in this part of the capital. | Three miles from the gleaming towers of Canary Wharf in a former clothes shop, the borough of Newham’s Moneyworks service helps residents struggling to make ends meet. Problems with high cost credit, payday lending and loan sharks are commonplace in this part of the capital. |
| According to research from the Money Advice Service, residents of Newham – which stretches from the Olympic Park in the west to London City airport and the river in the south and almost to Barking in the east – are the most likely in the country to be overburdened with debt. It calculates that almost one in four people in the area – approximately 60,000 people in this borough alone – have problem debts. | According to research from the Money Advice Service, residents of Newham – which stretches from the Olympic Park in the west to London City airport and the river in the south and almost to Barking in the east – are the most likely in the country to be overburdened with debt. It calculates that almost one in four people in the area – approximately 60,000 people in this borough alone – have problem debts. |
| The issues are symptomatic of a growing problem with debt in Britain, as borrowing accelerates almost five times as fast as the growth in earnings. Personal debt levels, excluding student loans, now total more than £200bn, according to the Bank of England. Those levels have not been seen since before the financial crisis. | The issues are symptomatic of a growing problem with debt in Britain, as borrowing accelerates almost five times as fast as the growth in earnings. Personal debt levels, excluding student loans, now total more than £200bn, according to the Bank of England. Those levels have not been seen since before the financial crisis. |
| Michael Bruce, a 68-year-old former demolition worker who used to blast concrete from the metal frames of condemned buildings along the banks of the Thames, got a cheap loan from the credit union linked to Moneyworks to fix flood damage at his home. Living on disability benefits, he couldn’t get credit elsewhere and was facing exorbitant charges on products he bought from hire purchase firm Brighthouse. | Michael Bruce, a 68-year-old former demolition worker who used to blast concrete from the metal frames of condemned buildings along the banks of the Thames, got a cheap loan from the credit union linked to Moneyworks to fix flood damage at his home. Living on disability benefits, he couldn’t get credit elsewhere and was facing exorbitant charges on products he bought from hire purchase firm Brighthouse. |
| A £600 washing machine cost him £1,500 after charges for interest from the shop, which has drawn the ire of politicians for the cost of its products. “They charge ridiculous amounts,” he said. Living with his wife, two children and granddaughter, a change in the benefits system left him £400 a month worse off. “I was gutted as you’ve still got to live,” he added. | A £600 washing machine cost him £1,500 after charges for interest from the shop, which has drawn the ire of politicians for the cost of its products. “They charge ridiculous amounts,” he said. Living with his wife, two children and granddaughter, a change in the benefits system left him £400 a month worse off. “I was gutted as you’ve still got to live,” he added. |
| Since the steady decline of London’s docklands since the 1960s, the borough which hugs the wider, muddier parts of the Thames, has had high levels of unemployment and a changing population. It was a predominantly white, working class area until as recently as the 1990s, although it now has the highest concentration of black and minority ethnic groups in the country, making up more than 70% of the population. The borough voted narrowly for remain in the Brexit referendum, with 53% voting to stay – a much narrower result than the 60% average across London. | Since the steady decline of London’s docklands since the 1960s, the borough which hugs the wider, muddier parts of the Thames, has had high levels of unemployment and a changing population. It was a predominantly white, working class area until as recently as the 1990s, although it now has the highest concentration of black and minority ethnic groups in the country, making up more than 70% of the population. The borough voted narrowly for remain in the Brexit referendum, with 53% voting to stay – a much narrower result than the 60% average across London. |
| There are some serious social problems. A rise in gang violence has led to more shootings, while the borough has also become a hotspot for acid attacks. | There are some serious social problems. A rise in gang violence has led to more shootings, while the borough has also become a hotspot for acid attacks. |
| Stephen Timms, the Labour MP for East Ham, sits drinking tea in an empty cafe in a park in his constituency, which falls within the borough. “It’s rather disappointing to learn we’re right at the top of the list for indebtedness. It’s a legacy, I think, of very high levels of unemployment over time, which has led to the problems which the data highlights,” he said. | Stephen Timms, the Labour MP for East Ham, sits drinking tea in an empty cafe in a park in his constituency, which falls within the borough. “It’s rather disappointing to learn we’re right at the top of the list for indebtedness. It’s a legacy, I think, of very high levels of unemployment over time, which has led to the problems which the data highlights,” he said. |
| Things have improved in recent years, although living costs have shot up in an area where many jobs are low skilled and low paid. The employment rate in Newham – which encompasses areas such as West Ham, Stratford, Canning Town, Royal Docks and Beckton – has gone from about 52% a decade ago to 68.7% – below the London average of 73.8%. The national average at that time was more than 74%, the highest since comparable records began in 1971. | Things have improved in recent years, although living costs have shot up in an area where many jobs are low skilled and low paid. The employment rate in Newham – which encompasses areas such as West Ham, Stratford, Canning Town, Royal Docks and Beckton – has gone from about 52% a decade ago to 68.7% – below the London average of 73.8%. The national average at that time was more than 74%, the highest since comparable records began in 1971. |
| Sir Robin Wales, the borough’s elected Labour mayor, points to Moneyworks and a job exchange called Workplace his council has introduced to help ease local problems. He says Workplace has filled more than 35,000 vacancies since launching in 2007, and that Moneyworks is a drain on his budget, as it underwrites loans – many of which default – in partnership with the London Community Credit Union. | Sir Robin Wales, the borough’s elected Labour mayor, points to Moneyworks and a job exchange called Workplace his council has introduced to help ease local problems. He says Workplace has filled more than 35,000 vacancies since launching in 2007, and that Moneyworks is a drain on his budget, as it underwrites loans – many of which default – in partnership with the London Community Credit Union. |
| Sat in the back room at Moneyworks (occupying a unit once used by a fashion chain that collapsed under its own huge debts), he said: “We’re lending to people who can’t get credit. To people that would ultimately end up being the customers for these people [payday lenders and loan sharks]. If we can siphon enough of them off, we’ll break their business model.” | |
| East Ham high street in the north-east of the borough has a string of shops closely linked with high levels of debt. Payday lenders, pawnbrokers and bookmakers are dotted at regular intervals. Fixed odds betting terminals are seen as a menace by the political leaders, who want to cap wagers. Whether it’s a case of correlation or causation is up for debate, but there’s no denying rising costs and government austerity have had a big impact. | East Ham high street in the north-east of the borough has a string of shops closely linked with high levels of debt. Payday lenders, pawnbrokers and bookmakers are dotted at regular intervals. Fixed odds betting terminals are seen as a menace by the political leaders, who want to cap wagers. Whether it’s a case of correlation or causation is up for debate, but there’s no denying rising costs and government austerity have had a big impact. |
| Carl Packman, a researcher at the debt charity Toynbee Hall, which has helped the East End’s poor since 1884, said: “Previous research has been quite clear on what’s causing a spike in indebtedness in the area: cuts to benefits and public services directly leading to lower income households in areas of deprivation taking on more debt just to get by.” | Carl Packman, a researcher at the debt charity Toynbee Hall, which has helped the East End’s poor since 1884, said: “Previous research has been quite clear on what’s causing a spike in indebtedness in the area: cuts to benefits and public services directly leading to lower income households in areas of deprivation taking on more debt just to get by.” |
| Newham has 4,690 benefit claimants, or 2% of the local population, just above the UK average. Southwark has the most in London, with 7,390, or 2.9% of the local population, according to the Office for National Statistics. There’s been a massive growth in the use of food banks, according to Timms, as benefit cuts hit residents. | Newham has 4,690 benefit claimants, or 2% of the local population, just above the UK average. Southwark has the most in London, with 7,390, or 2.9% of the local population, according to the Office for National Statistics. There’s been a massive growth in the use of food banks, according to Timms, as benefit cuts hit residents. |
| “Quite a significant number of people who come to see me are struggling with housing and rapidly increasing rents, and of course the effects of the benefits cap. The vice there is getting tighter and tighter,” he said. | “Quite a significant number of people who come to see me are struggling with housing and rapidly increasing rents, and of course the effects of the benefits cap. The vice there is getting tighter and tighter,” he said. |
| Household incomes are significantly below the national average. Before housing costs, the median income was £15,704, compared with the national £22,204, according to a 2014 study by the London School of Economics – the most recent data available. “Housing is a dominant problem in Newham, and across London, but the level of poverty and low income in Newham make pressures on the poorest particularly acute,” it found. | Household incomes are significantly below the national average. Before housing costs, the median income was £15,704, compared with the national £22,204, according to a 2014 study by the London School of Economics – the most recent data available. “Housing is a dominant problem in Newham, and across London, but the level of poverty and low income in Newham make pressures on the poorest particularly acute,” it found. |
| About half of the 260,000 residents in Newham rent privately, with about 30% in social or affordable housing. The remaining minority are homeowners. The median monthly cost of a one bedroom flat in the area was £1,200 in March, up from £801 in June 2011. Half of landlords in the borough fail to declare their income. | About half of the 260,000 residents in Newham rent privately, with about 30% in social or affordable housing. The remaining minority are homeowners. The median monthly cost of a one bedroom flat in the area was £1,200 in March, up from £801 in June 2011. Half of landlords in the borough fail to declare their income. |
| Examples of deprivation abound. Wales said his officers found three people working in a chicken shop paid £1 an hour, all sleeping in a single bedroom. Rent control might work, according to the mayor, but the “best control in the private sector is you build so many homes that landlords can’t charge the ridiculous amounts they can, because there’s so many homes”. | Examples of deprivation abound. Wales said his officers found three people working in a chicken shop paid £1 an hour, all sleeping in a single bedroom. Rent control might work, according to the mayor, but the “best control in the private sector is you build so many homes that landlords can’t charge the ridiculous amounts they can, because there’s so many homes”. |
| Newham got a shot in the arm from the Olympics in 2012, bringing redevelopment projects and the construction of the Westfield shopping centre with the creation of about 8,000 jobs – of which 2,000 were taken by local residents. Brexit threatens to unpick some of this success, although it might also bring some short-term relief to the area if migrant workers leave or don’t come in the near future. Fewer workers might mean the potential for higher wages, as the labour market tightens, but many economists dispute the link between immigration and low wages. | Newham got a shot in the arm from the Olympics in 2012, bringing redevelopment projects and the construction of the Westfield shopping centre with the creation of about 8,000 jobs – of which 2,000 were taken by local residents. Brexit threatens to unpick some of this success, although it might also bring some short-term relief to the area if migrant workers leave or don’t come in the near future. Fewer workers might mean the potential for higher wages, as the labour market tightens, but many economists dispute the link between immigration and low wages. |
| Wales said: “You have fewer people here, that could ease the pressure on rents. Fewer people here, could help us get more local people into work. But not being part of Europe, it could mean less jobs, and less good jobs, and as we’re less welcoming [of business], which in turn means less jobs.” | Wales said: “You have fewer people here, that could ease the pressure on rents. Fewer people here, could help us get more local people into work. But not being part of Europe, it could mean less jobs, and less good jobs, and as we’re less welcoming [of business], which in turn means less jobs.” |
| Back at the Stratford Centre, the tattier cousin on the other side of the tracks from Westfield, Edward, an unemployed cleaner, says the area has changed for the worse in the 50 years since he was born there. “There’s too many people coming in. They belong to gangs,” he said. | Back at the Stratford Centre, the tattier cousin on the other side of the tracks from Westfield, Edward, an unemployed cleaner, says the area has changed for the worse in the 50 years since he was born there. “There’s too many people coming in. They belong to gangs,” he said. |
| Seeking help with rent arrears and other debts, he’s typical of the Moneyworks’ clientele, and shows why starting the centre comes with great political benefits for Wales and the council. | Seeking help with rent arrears and other debts, he’s typical of the Moneyworks’ clientele, and shows why starting the centre comes with great political benefits for Wales and the council. |
| “I used to think he was a money-grabbing whatsit, on the other side of the fence,” he says, fighting back a tear. “Since I’ve been coming in here – you see the people here – he’s helped me so much I cannot thank him enough.” | “I used to think he was a money-grabbing whatsit, on the other side of the fence,” he says, fighting back a tear. “Since I’ve been coming in here – you see the people here – he’s helped me so much I cannot thank him enough.” |