The Recession Coping with the Human Cost

the charity for your community

The Recession

Coping with the Human Cost

The difference good advice can make

… the charity for your community

The Financial Storm

• Record Levels of Debt (Personal Debt £1.4 trillion)

• An end to special mortgage rates (3m)

• First Time Buyers (1m out of 11.8 m mortgages)

• Falling House Prices (20% and counting)

• The Credit Crunch (Restricted Credit, increasing interest rates)

• Rising Prices (Essential Bills, food, utilities, fuel)

• Limited Savings (1/2 of UK households have little or no savings)

• Changing Incomes (Reduced hrs and/or job loss)


Meeting the NEW needs• Personal life events trigger unmet need

• Cataclysmic shock events:- redundancy or severe change in economic circumstances, sudden illness

• Transitions between life stages:- especially those involving a change in role, status, expectations and responsibility

• Capacity eroding changes:- spiralling and unsustainable indebtedness, becoming a primary carer, onset of mental health issues

• Job Centre Plus/Inclusion Cornwall:- Cornwall WorksLAA, ESF, CW 50 +, Welfare Benefits Group, Debt and Financial Inclusion Group, Real Choices Tackling Child Poverty, Cornwall Migrant Workers Group, Mental Health mini Summit,

Debt Advice in JCP Offices, Drs Surgeries, One Stop Shops


Churning

Unemployment

3

2

1£

££

££££

SOCIAL EXCLUSION

Labour

Market

Social

Exclusion

CITIZENS ADVICE BUREAUX

Work Experience Skills Confidence Engagement

LIFE EVENT


Savings

Weekly income Households with

No Savings

With savings less

than £1,500

£300-400 34% 22%

£400-500 29% 24%

£500-600 25% 24%

£600-700 18% 24%

Household Savings Levels by weekly income.

So 56% of households with income £300-400 have less than £1,500 Savings

i.e. 1 months income- just enough till next pay day.


Debt

• Average household debt in UK excluding

mortgages is £9,200.

• However the figure is £21,300 if the

average is based on the number of

households who actually have some debt.

• Plus Average Mortgage £103,000 UK

• Penzance County Court £180,000.


Cornwall’s Economy ?

Estimates Households

with Debts

Annual Interest

(20%)

Households

with Mortgages

Mortgage

Interest (6%)

Caradon 15,000 £65m 12,800 £80m

Kerrier 17,000 £73m 13,700 £85.5m

N Cornwall 14,750 £63.5m 10,300 £64m

Penwith 12,000 £51.75m 8,300 £51.75m

Restormel 17,250 £74.5m 14,000 £87.5m

Carrick 16,500 £71m 12,500 £78m

Cornwall 92,500 £398.75 71,600 £446.75m

Debt interest £357/ month Mortgage interest £520/ month


Total

07/08

Q1

08/09

Q2

08/09

Q3

08/09

Q4

08/09

Total

08/09

Cornwall %

(National %)

Mortgage & Secured

Loan Arrears

582 211 231 280 368 1090 +87% (+49%)

Fuel Debts 514 105 109 144 226 584 +14% (+19%)

Credit, Store & Charge

Card debts

5394 1395 1168 1170 1444 5177 -4% (+9%)

Unsecured Personal

Loan debts

3039 854 745 757 1008 3364 +11% (+10%)

Bankruptcy 1075 227 334 405 444 1410 +31% (+24%)

Council Tax Arrears 1061 220 282 340 484 1326 +25% (+15%)

Dismissal 820 195 282 248 334 1059 +29% (+17%)

Redundancy 379 113 174 359 326 972 +156% (114%)

Jobseekers Allowance 474 138 157 281 352 928 +96% (61%)


Total

April-Sept 08

Total

April-Sept 09

Cornwall CAB

Increase

Mortgage & Secured

Loan Arrears442 583 32%

Fuel Debts 214 516 141%

Credit, Store &

Charge Card debts

2563 2847 11%

Unsecured Personal

Loan debts1599 1956 +22%

Bankruptcy 561 947 69%

Council Tax Arrears 502 788 57%


Total

April-Sept 08

Total

April-Sept 09

Cornwall CAB

Increase

Terms & Conditions

of Employment302 405 34%

Redundancy 287 370 29%

Threatened

Homelessness

257 269 5%

Domestic Violence 41 82 +100%

Relationship

Breakdown652 765 17%

Rent Arrears 346 493 42%


Repossessions

• Council of Mortgage Lenders figures are estimates and relate only to first charge lenders who are members of the CML.

• They do not include other secured lending or “Sub Prime” lenders

• 2007 CML 27,100 repossessions.

• Estimate 2007 including Sub Prime 53,000

• Plus the Sale and Rent back schemes 27,000

• Estimate for CML 2009 Repossessions was 74,000 revised December 2009 to 48,000


County Court RepresentationMonth Adjourned

on Terms

Suspended Additional

Time

Outright

OrdersArrears Mortgage

Outstanding

Oct 7 7 1 6 £110,547 £2,040,962

Nov 4 9 4 2 £40,929 £1,271,362

Dec 0 4 1 1 £24,699 £822,011

Jan 1 8 5 1 £70,015 £996,229

Feb 4 4 0 0 £22,788 £445,174

March 5 2 4 2 £48,939 £1.092,795

Total 21 34 15 12 £317,917 £6,668,533

46 cases in Penzance out of a total of 82 £190,529 average mortgage outstanding(49 mortgage, 33 landlord)


The Combined Result

• Clients using the Welfare Benefits Advice service were, on average £72 per week better off

• Clients using the Debt Advice service were, on average £160 per week better off

• Where clients took advantage of using both Welfare Benefits and Debt advice they were, on average £232 per week better off


What about the Future?District Employees

Cornwall 2008

Self employed

Cornwall 2008

Recession to Recovery LGA

Reduction in No. of Jobs

Caradon 29,900 10,000 25% 2,900

Carrick 30,700 11,500 27% 4,300

Kerrier 35,700 7,500 17% 3,200

N Cornwall 36,700 6,700 15% 2,700

Restormel 36,400 9,200 20% 3,800

Penwith 20,900 9,000 30% 2,400

Cornwall 190,300 53,900 22% 19,300

May 2008, Working Age Benefits 42,300 19,300 Plus Short Time Working


PBR - Treasury Forecasts• Number claiming JSA would peak at

1.75 million in the middle of 2010, implying

an overall unemployment total of 2.7m.

• predicted JSA claimant count would

remain at 1.5m at the end of 2012

= 2.3m overall unemployment

• Employers were retaining staff by agreeing

shorter working hours and freezing pay


Cornwall• Economy Monitoring Monthly Update

• Rock Pool Cornwall 12 month lag?

• Holistic - Quality & Effective Partnerships

• Stronger Communities- Take Responsibility

• Reduced Income:-Cornwall Predicted Job Losses, Short time working, Self Employed, Pensioners Savings and Interest (£80 to £1.94pm)

• Debt, Health, Mental Health

• Training Front Line Staff.

• Increasing Interest Rates


Support for Jobseekers ~ Cornwall

Day One 6 Months 12 months+

Next Step IAG

ESF

Employability/basic skills

Programme Centre

Current New Deals

Employer Incentive

Additional Training

Voluntary Work Experience

Self employment support

Job Boost

NJR/Flexible New Deal and support

contract

** available now … replaced by FND ** from April 2009 ** from October 2009


A Helping HandA Helping Hand

http://www.visualparadox.com/images/no-linking-allowed-/dominos640.jpg


VolunteersAdvisors and Contacts per day

0

5

10

15

20

25

30

35

40

45

50

2nd

Feb

3rd

Feb

4th

Feb

5th

Feb

6th

Feb

7th

Feb

8th

Feb

9th

Feb

10th

Feb

11th

Feb

12th

Feb

13th

Feb

14th

Feb

15th

Feb

16th

Feb

17th

Feb

18th

Feb

19th

Feb

20th

Feb

21st

Feb

22nd

Feb

23rd

Feb

24th

Feb

25th

Feb

26th

Feb

27th

Feb

No of Client ContactsNo of Volunteer Advisors


Thank you

• Thank you to the Volunteers and Staff of

the CAB in Cornwall.


Households & Property

• Repossessions are more likely to be

located in lower value properties

• Unemployment and reduction in income

were the main causes of arrears

• Unemployment was found to often be

followed by relationship breakdown


Leaking Bucket Syndrome

The Recession Coping with the Human Cost

Business

Transcript of The Recession Coping with the Human Cost