Tuesday, February 8, 2011
Huge debts loom over British poor
Tue Feb 8, 2011 10:24AM
The most vulnerable British households are facing the risk of falling into debt due to the government's crackdown on schemes designed to help families with loans.
The coalition is ending the Financial Inclusion Fund, which finances debt services advice, and the Growth Fund that offers low-interest loans as well as the Saving Gateway Fund, is meant to help people on lower incomes develop a saving habit.
The government's decision has raised concerns about the impact of the measures on the poorer members of the public as recent figures showed 135,000 people have been announced bankrupt in England and Wales in 2010, which is a 50-year record.
The cuts to the Growth Fund have been especially alarming for debt experts among them David Orr , the chief executive of the National Housing Federation, which provides affordable loans from the fund to those really in need.
"If these services disappear, there's a very real danger that loan sharks and doorstep lenders will fill the void and suck people into chronic levels of debt and hardship," Orr said.
The Growth Fund has given out loans to more than 370,000 people out of a total of 430,000 applicants in the period between July 2006 and December 2010 while if the same people turned to loan sharks they were in for reported interest rates of 825 percent.
Orr also described the two other schemes, the Saving Gateway and the Financial Inclusion Fund, as a “financial lifeline” for the neediest families “by offering affordable loans, debt advice and banks accounts”.
Orr's comments become more alarming when considering the 1.3 million people across Britain who have no bank accounts.
Posted by MSMZ at 3:52 AM