A new report on the levels of over-indebtedness in Wales reveals that 16 per cent, or 400,000 people, in Wales are in too much debt, the Minister for Communities and Tackling Poverty Jeff Cuthbert said yesterday (12 June).
The Minister outlined the latest report showing the impact and causes of indebtedness on deprived communities and households, at a meeting of the Welsh Government’s Ministerial Stakeholder Event for Welfare Reform. The report by the Public Policy Institute for Wales (PPIW) was commissioned by the Welsh Government.
The report, published tomorrow (13 June), looks at the impact of indebtedness on deprived communities and households. Over-indebtedness is measured in three mains ways: arrears with payments, feeling debt is a heavy burden and making heavy use of credit.
Low income is strongly associated with indebtedness and financial exclusion. The report looks at some of the triggers which tip people into debt. They include redundancy or unemployment, delays in receiving benefits and, more recently, cuts to benefits. Financial exclusion, where people cannot access lower cost borrowing and resort to payday lenders or loan sharks, is also strongly associated with indebtedness.
Minister Jeff Cuthbert said:
“I welcome this report from the PPIW which is part of the evidence that we are considering to show the level and impact of poverty in Wales.
“We know that one in six people are being over burdened by debt, which is too many. While there are many factors which cause people to go into poverty we believe that the impact of the UK Government’s welfare reform is too deep, too fast and changes to the benefits system, including the bedroom tax, is contributing to the poverty problems faced by individuals, families and communities in Wales.
“While not all the factors that cause poverty are within our control we are determined to continue playing our part in helping to tackle poverty.
“We are determined to continue our support to advice bodies like Citizens Advice Bureau Cymru so people facing problems get free advice and to credit unions to provide low cost borrowing to help people in poverty or who are financially excluded. Credit unions offer a real, community based alternative to traditional banks and payday lenders.
“Our assessment, which has focused on working-age people, estimates that the UK Government’s Welfare Reforms will reduce annual benefit and tax credit entitlements in Wales by around £900 million in 2015-16 alone. While losses depend on individual circumstances the average annual loss per working age adult in Wales is estimated to be around £500.”
Organisations at the meeting represented a wide range of public and third sector organisation, such as Age Cymru, Citizens Advice Cymru, Community Housing Cymru, Save the Children and trade unions.
There were presentations on the impact of reforms in Wales by CAB Cymru, Flintshire County Council and Community Housing Cymru.
The Communities and Tackling Poverty Minister, Chair of the Welsh Government Task and Finish Group for Welfare reform, was joined by colleagues from the Group, the Minister for Housing and Regeneration Carl Sargeant, Local Government and Government Business Minister Lesley Griffiths, the Deputy Minister for Tackling Poverty Vaughan Gething and the Deputy Minister for Social Services Gwenda Thomas.
