德莫斯研究所-双重打击：绘制英国个人债务地图（英）-2022.2-24页_353kb

Summary of "THE DOUBLE WHAMMY: MAPPING THE UK'S PERSONAL DEBT"

Core Content

This report, titled The Double Whammy: Mapping the UK's Personal Debt, analyzes the intersection of financial vulnerability and access to affordable credit across the UK. It uses two key indices:

• Demos' Good Credit Index (GCI): Measures the availability and accessibility of affordable credit in different areas.
• Lowell's Financial Vulnerability Index (FVI): Assesses the level of financial vulnerability in various regions.

By overlaying these two indices, the report identifies areas where individuals face both high financial vulnerability and limited access to affordable credit, termed "credit deserts." It highlights the need for a more integrated approach to address these issues, particularly in the context of the Levelling Up agenda.

Main Findings

1. Key Correlation Between Indices

• There is a strong correlation (0.77) between the GCI and FVI, indicating that financial vulnerability is closely linked to poor access to affordable credit.
• The most financially vulnerable areas are also the least able to access affordable credit, reinforcing the idea that these issues are intertwined and self-perpetuating.

2. Worst Affected Areas

• Middlesbrough is identified as the worst-affected area in the country, with the highest financial vulnerability (FVI rank 1) and the third-highest lack of credit availability (GCI rank 3).
• Other areas of significant concern include Blackpool, Kingston upon Hull, Knowsley, Wolverhampton, and Sunderland, which are all among the top 10 in the combined GCI-FVI ranking.

3. Regional Overview

• The North East of England is the worst region by both FVI and GCI.
• Ex-industrial towns in the North East are disproportionately affected, with Hartlepool and Middlesbrough standing out.
• Cities outside of London (including parts of London) are also heavily impacted, often being more financially vulnerable and less credit accessible than towns.

4. Conurbation Type Analysis

• Core cities and other cities are the most financially vulnerable and have the least access to affordable credit.
• Large towns and hub-and-spoke towns also show high vulnerability and low credit availability.
• Rural towns and affluent towns have lower vulnerability and better access to credit.

Key Recommendations

1. Address Underlying Deprivation

• Increase benefit generosity and build public support for a more robust benefits system.
• Reduce the Universal Credit (UC) taper rate.
• Promote the Help To Save scheme among UC claimants.
• Introduce one-off financial products such as bonds or grants for UC recipients.
• Conduct an audit of UC claimants to identify those at risk of problem debt and provide tailored support.

2. Improve the County Court Judgement (CCJ) Process

• Unpause Ministry of Justice (MoJ) reforms to provide live data to county court bailiffs.
• Promote interdepartmental data sharing (e.g., between DWP and MoJ) to better identify vulnerable individuals.
• Accelerate the implementation of the Online Court to increase transparency and access.

3. Tackle Problem Debt

• Raise the financial threshold for Debt Relief Orders to make them more accessible.
• Maintain or increase funding for debt advice, especially in high-priority areas.

4. Expand Access to Affordable Credit

• Expand the No Interest Loan Scheme (NILS) to areas of high deprivation.
• Promote sustainable alternatives to high-cost credit, such as community finance providers, possibly with subsidies or investment incentives.
• Encourage the Financial Conduct Authority (FCA) to work with mainstream lenders to improve access to credit for vulnerable individuals.

5. Support Credit Rehabilitation

• Develop a system to automatically match individuals with satisfied CCJs to credit unions.

6. Prioritize Affected Areas in Levelling Up

• Ensure that cities and areas outside of London are not overlooked in the Levelling Up agenda, as they face significant financial hardship.

Key Insights

• Ex-industrial towns and core cities are particularly vulnerable to the personal debt crisis.
• The crisis is not limited to towns but is also severe in cities, especially those not in London.
• Data sharing and credit rehabilitation mechanisms are essential for improving financial outcomes for vulnerable individuals.
• The Levelling Up agenda must be reoriented to address the root causes of financial vulnerability and credit access, especially in areas with high deprivation.

Conclusion

The report underscores the urgent need for policy action to address the growing personal debt crisis in the UK, emphasizing that it is a geographic and systemic issue. It calls for a combination of short-term reforms, long-term investment, and data-driven solutions to support those most affected, particularly in the North East and core cities, which are key targets for the Levelling Up agenda.