People in her constituency – who may “feel a huge compulsion” to keep up appearances – often have nowhere to turn when they get into debt, MP Sarah Russell has told Parliament.
Speaking in a debate about debt, the MP said there was a lot of debt in her constituency, despite it appearing relatively affluent.
She told MPs: “One of the problems is that people feel a huge compulsion to maintain that appearance.
“I have spoken to a lot of people on the doorstep, and people are really struggling and finding it incredibly difficult.”
And she said: “In areas such as mine, where there is not a perception of poverty, there are simply no services to assist people who need help.
“My constituency has no Citizens Advice Bureau anywhere, no law centre — nothing.
“When people have difficulties, they do not know where to turn.”
She said Citizens Advice Bureaux were partly funded by local government, which was cut, and partly through the legal advice work they did, charged at legal aid rates, now very difficult to work under.
“All those advice services have been decimated,” she said.
Mrs Russell continued: “I spoke to my local citizens advice bureau — I say local, it is not in the constituency although it can occasionally do some in-person transitory work — about how important it is to see people face to face.
“It said vulnerable people, older people and others might in theory have online access but actually cannot go through a complex system to resolve their debt without that consistent face-to-face assistance.
“We need to aspire not just to improve telephone and online services, but to ensure that in-person advice is provided.”
She said that part of the problem was that although the Financial Conduct Authority regulated the products that people were sold around debt reduction, there was “a real problem” of mis-selling them, despite the theoretical regulation.
“Unfortunately, regulation is only as good as the enforcement. It is important that we keep discussing the matter and that we bring real change to the advice landscape because our residents need us to,” she said.
Opening the debate on debt advice services, Stella Creasy MP had said that often the British public would rather talk about sex than debt.
“Both can equally cause a lot of trouble (but) a 2019 study showed that the majority of people in this country believed it was easier to talk about miscarriages than about money,” she said.
“The truth is that debt is suffocating millions of people in this country,” she said.
“The Joseph Rowntree Foundation recognised in October that there were seven million low-income families in this country going without the essentials in the previous six months, including 5.4 million who had experienced food insecurity in the previous month. That is a fancy term for starving themselves because they could not afford to put food on the table.
“Furthermore, 4.3 million low-income households are in arrears on at least one household bill or credit commitment, and 14 million people in this country have less than 100 quid in their savings.”
She added: “One piece of Lego stuck in the washing machine, and they are done.”
She said that while some might say that taking on debt in response to problems such as new washing machine was manageable — and it was for some – that did not apply to the one person every four minutes who was declared bankrupt or insolvent.
She said that the Registry Trust estimated that 4.6 million people had one or more county court judgment.
“At the end of last year, lenders wrote off £576 million of debt, of which £291 million was credit card debt. That is £3 million a day being written off because people will just never pay it back,” she said.
She paid tribute to groups such as Fair4All Finance, which provided funding for credit unions but said that no credit union could compete with the online lenders, who she said were “pummelling our constituents on their phones and on their websites, offering them unprotected credit to get through to the end of the month so that they can buy a pizza”.
She went on: “Then they stick them with late repayment fees and charges before lending to them again, even though they cannot repay it, because they are stuck in a spiral of unaffordable debt.
“In all of this debt, the most important thing that a person can do is talk about it. That means that they need somebody to talk to, because it could be the critical difference between getting out of the hole that they are in and burying themselves even further.”
