WALES IN THE RED A research report prepared for StepChange Debt Charity Contents 1 Scale of debt problems 4 1.1 Demand for debt advice 4 1.2 Debt levels 6 1.3 Financial position of clients 7 1.4 Burden of debt repayments 9 2 Making ends meet 10 2.1 Rent arrears 10 2.2 Mortgage arrears 12 2.3 Council Tax debt 13 2.4 Electricity arrears 15 2.5 Gas arrears 16 2.6 Water arrears 18 3 Payday loans 20 4 Unitary authority profi les 22 2 Stepchange Debt Charity Research Introduction StepChange Debt Charity is Key fi ndings the UK’s leading specialist debt • Last year saw a 23% increase in the number of people contacting the charity’s helpline from Wales. Over the advice charity, offering free past four years, the number of Welsh clients has risen by 84%, from 5,029 in 2011 to 9,270 in 2014. There and impartial advice to those are noticeable differences in demand for the charity’s struggling with problem debt via services in the 22 unitary authority areas, with those in the far North and South of the country more likely to its telephone helpline and online contact the charity for debt advice (based on demand Debt Remedy tool. The charity per 10,000 people). • The average debt level amongst clients in the country helps over half a million people is £12,759, yet the average client has just £10 left at the end of each month after covering their essential each year to tackle their debt household costs to be able to put towards their debts. problems. • Council Tax debt and arrears on water bills are among the most rapidly growing debts for Welsh clients. The In 2013, the charity published its fi rst annual Wales in the proportion of clients with Council Tax debt rose from Red report, using its extensive client database to analyse 21.4% in 2011 to 30.4% in 2014, and the proportion of the scale and make-up of debt problems in Wales as a clients with water arrears has almost doubled in that whole, and in each of the 22 unitary authority areas within time. Last year, the average amount owed by clients with Wales. This report brings that analysis up-to-date for 2014, these types of debts reached a high of £762 on Council and is based on the 27,115 people who contacted the Tax debt and £714 in water arrears. charity’s telephone helpline from Wales between 2011 and 2014. • There has been a signifi cant increase in the number of people in rented accommodation coming to the charity. The evidence looks at a wide range of issues, from In 2014, 53% of clients in Wales were renters, up from the position of household budgets and burden of debt 29.8% in 2011. repayments on income, to the proportion of Welsh clients falling behind on essential bills such as rent, mortgage repayments and Council Tax. It also looks at the payday loan phenomenon of recent years, and analyses whether its rapid growth is continuing under new regulation. Wales in the Red Report 3 1. Scale of Debt Problems To assess the scale of problem debt within Wales, 2013 we have analysed the following factors: Clients advised Demand per • Demand for debt advice 10,000 • Unsecured debt levels Bridgend 475 43 Blaenau Gwent 219 39 • Monthly budget defi cit/surplus Rhondda Cynon 639 34 • Contractual debt repayments relative to income Taf Torfaen 247 34 1.1 Demand for Debt Advice Wrexham 364 34 National 7,559 31 The demand for debt advice in Wales has grown steadily over the past four years. Calls to the StepChange Debt Charity helpline have almost doubled, rising from 5,029 2012 in 2011 to 9,270 in 2014 – an increase of 84%. In the last Clients advised Demand per year, we saw a 23% increase in calls, rising from 7,559 in 10,000 2013. Bridgend 285 26 When looking at the demand per 10,000 people, we Torfaen 183 25 can see that the proportion of people advised varies Caerphilly 116 25 signifi cantly across the country. Regions in the far South Merthyr Tydfi l 352 25 (with the exception of the capital, Cardiff) and North of the country have the highest demand for the charity’s Newport 282 25 services, with central areas of Wales consistently National 5,257 21 recording lower than average advice levels over the past four years. In 2014, the biggest demand came from 2011 Blaenau Gwent, with 50 clients advised per 10,000 people, closely followed by Neath Port Talbot and Bridgend, with Clients advised Demand per 47 clients advised per 10,000 people. As Chart 1 shows, 10,000 the biggest percentage increase in calls between 2011 Neath Port Talbot 283 25 and 2014 has been in Gwynedd (147%), Powys (132%) Bridgend 280 25 and Blaenau Gwent (132%). Flintshire 302 25 Areas with the highest demand for debt Wrexham 257 24 advice 2011-2014 (based on demand Merthyr Tydfi l 108 23 per 10,000 people)1 National 5,029 21 2014 Clients advised Demand per 10,000 Blaenau Gwent 281 50 Neath Port Talbot 531 47 Bridgend 522 47 Caerphilly 602 43 Newport 484 43 National 9,270 38 1 In StepChange Debt Charity’s Wales in the Red 2013 report, this fi gure was calculated using the ONS Mid-Year Population Estimates for people of all ages in Welsh unitary authorities. This year, in order to give a more accurate picture, this has been calculated using the ONS Mid-Year Population estimates for adults aged 18 and over in Welsh unitary authorities, and past data amended accordingly. 4 Stepchange Debt Charity Research The following map highlights demand for the charity’s services, by area, in relation to the national average (based on demand per 10,000 people). Key Areas where Isle of demand for debt Anglesey advice is higher than national Flintshire average Conwy Areas where demand for debt Denbighshire advice is on par Wrexham with national average Areas where Gwynedd demand for debt advice is lower than national average Ceredigion Powys Merthyr Tydfi l Blaenau Gwent Carmarthenshire Pembrokeshire Monmouthshire Torfaen Swansea Newport Neath Port Talbot Caerphilly Bridgend Cardiff Vale of Glamorgan Rhondda Cynon Taf Wales in the Red Report 5 6 of astheeconomy even mightmeanthat debt problem andtightenedlendingcriteria.Lowerlevels cautiously actedmore nancial institutionshave the recessionasfi be aconsequenceof morelimitedaccesstocreditduring of thisis, Whilst course, to awelcomepattern, itislikely from£14,027in2013to£12,7592014. fall lastyear, of to continued level debt inWales clients thecharity’s theaverage recentyears, As hasbeenthetrendover 1.2 DebtLevels £10,000 £15,000 £20,000 120% 150% £5,000 CHART 1 SHOWS THE PERCENTAGE INCREASE IN THE NUMBER OF CALLS TO THESTEPCHANGE INCREASEINTHENUMBEROFCALLSTO THEPERCENTAGE 1SHOWS CHART 30% 60% 90% CHART 2 SHOWS THE AVERAGE DEBT LEVELS OF CLIENTS IN EACH UNITARY AUTHORITY AREAFOR AUTHORITY UNITARY DEBTLEVELSOFCLIENTSINEACH THEAVERAGE 2SHOWS CHART 0% 0 DEBT CHARITY HELPLINE IN EACH UNITARY AUTHORITY AREABETWEEN2011AND2014 AUTHORITY UNITARY DEBT CHARITYHELPLINEINEACH Blaenau Gwent Blaenau Gwent Bridgend Bridgend Caerphilly Caerphilly Cardiff Cardiff FORWALES AVERAGE THENATIONAL TO 2014 INRELATION Carmarthenshire Carmarthenshire Ceredigion Ceredigion Conwy Conwy Denbighshire Denbighshire Flintshire Flintshire Gwynedd Gwynedd Isle of Anglesey Isle of Anglesey country. isamongstthelowestin where advice thedemandfor –areas CeredigionandPembrokeshire Monmouthshire, werehighestin levels debt In 2014,average hasreturnedthough theeconomy to growth. isnotbecominglesswidespreadeven debt problem that helpsuggest Charityfor coming toStepChangeDebt risingnumbers of The to individualsandfamilies. people problematic areproving lowdebts historically recovers, Merthyr Tydfil Merthyr Tydfil Monmouthshire Monmouthshire Neath Port Talbot Neath Port Talbot Newport Newport Pembrokeshire Pembrokeshire Stepchange Debt Charity Research Debt Stepchange Powys Powys Rhondda Cynon Taf Rhondda Cynon Taf Swansea Swansea Torfaen Torfaen Vale of Glamorgan Vale of Glamorgan Wrexham Wrexham Areas with highest average debt levels 1.3 Financial Position of Clients 2011-2014 The ability of those in fi nancial diffi culty to repay what 2014 they owe offers an insight into the fi nancial positions of Average debt indebted households across Wales. In 2014, household budgets showed signs of improvement, with clients in just Monmouthshire £15,916 four areas (Pembrokeshire, Merthyr Tydfi l, Powys and the Ceredigion £15,113 Vale of Glamorgan) unable to meet their essential living Pembrokeshire £14,381 costs2 each month. This is a big improvement from 2013, Bridgend £13,732 when clients in 11 of the 22 unitary authorities had a monthly budget defi cit. Last year, the average Welsh client Newport £13,697 had £10.40 left to put towards their debts each month after National £12,759 covering their essential outgoings, increasing from £4.05 in 2013. 2013 Areas with worst budget defi cits Average debt 2011-2014 Powys £16,704 2014 Pembrokeshire £16,246 Budget defi cit/surplus Monmouthshire £15,593 Pembrokeshire -£31 Newport £15,456 Merthyr Tydfi l -£26 Carmarthenshire £15,274 Powys -£8 National £14,027 Vale of Glamorgan -£4 Denbighshire £0 2012 National £10 Average debt Pembrokeshire £23,580 2013 Powys £21,737 Budget defi cit/surplus Vale of Glamorgan £18,591 Ceredigion -£118 Isle of Anglesey £18,092 Carmarthenshire -£44 Conwy £17,535 Conwy -£29 National £16,163 Monmouthshire -£25 Gwynedd -£25 2011 National £4 Average debt Powys £22,443 Pembrokeshire £22,283 Monmouthshire £20,615 Newport £19,171 Denbighshire £18,545 National £17,500 2 Benchmarked against the StepChange Debt Charity income and expenditure budgeting tool Wales in the Red Report 7 2012 2011 Budget defi cit/surplus Budget defi cit/surplus Ceredigion -£24 Ceredigion -£73 Gwynedd -£16 Pembrokeshire -£9