High unemployment is not alone in increasing financial hardship, with many in work but under-employed.

This issue has been highlighted by the Trades Union Congress (TUC) which has unveiled figures showing that the number of men who are only working part time because they cannot get a full time job has risen from 293,000 in December 2007 to almost 600,000 in the same month in 2011.

Such a situation will mean many people have lower incomes and for those in debt, this could make it far harder to manage payments while dealing with other bills and the rising cost of living.

Women are also suffering, with a 74 per cent rise in underemployment during the four-year period to 780,000, which means the tally of people who are only working part time stood at a record 1.38 million at the end of last year.

Andrew Smith of Cleardebt noted that male under-employment is a particular problem for hard-pressed families, explaining: "This is exacerbated by fact women are still generally paid less and that families with children often rely on male partner for the main income."

TUC general secretary Brendan Barber also expressed concern about the financial impact on families of lower incomes caused by less work.

He said: "Virtually all employment growth is coming from part-time and temporary jobs but most of the people taking them want and need permanent, full-time work.

"Any job may be better than no job at all but people are having to make huge salary sacrifices to stay working. This is bad news for family finances and it is holding back our economy."

One solution for those struggling to pay debt in such circumstances could be a debt management plan, as this can spread out repayments more.

Those hoping for improved job prospects in the near future may have some time to wait, as the Confederation of British Industry recently predicted the jobless total will peak at 2.86 million early next year, before renewed economic growth starts to improve the situation.

By James Francis

Under-employment ‘a key cause of financial worry’ is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.

Much of the current discussion about the problems of personal debt concerns those being built up by consumers now as they struggle to make ends meet in a time of austerity and falling real incomes.

But the root of the problem for many might date back several years, to before the financial crisis.

A study by the National Institute for Economic and Social Research has indicated that those on middle or lower incomes were the most prone to going into debt during the decade between 1997 and 2007.

It found that while spending grew faster than income for all groups, the increase was higher for those on the lowest incomes, the gap being 40 per cent for the bottom ten per cent by 2007.

Therefore, those least able to sustain and maintain their payments were the ones taking on the most new debt, with mortgage payments less likely to account for their liabilities.

Commenting on the situation, chief executive of the Resolution Foundation Gavin Kelly said: "We all know by now that the debt position of households grew starkly worse in the run up to the financial crisis. But what this report exposes is the dramatic difference for lower income households who were way outspending their incomes by 2007."

While many people might have taken actions that have greatly increased their debt in recent times – such as taking out payday loans – the greater availability of credit before the middle of 2007 may mean credit card debt is the big problem for some.

Those still trying to pay this off and struggling to do so might benefit from a debt management plan, while and individual voluntary arrangement could be considered by those owing £15,000 or more.

Director of CashQuestions.com Annie Shaw recently gave strong advice to consumers against using cards or payday loans to fund everyday living.

She remarked: "I would send a warning to anybody who is thinking of doing it and beg them not to do it."

By Joe White

Debt problem ‘predates financial crisis’ is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.

People facing major financial problems such as serious debt should take practical steps to address their situation, rather than stressing about it.

This is the advice of director of Stress Management Society Neil Shah, who said "media hype" about how worried people should be about the economy is a large cause of the problem.

He noted there are many people "genuinely facing the threat of redundancy" who really do have cause for concern.

But, Mr Shah added, it is "far better to focus on what you can do to overcome the challenges you're facing" than lose sleep over the matter.

People wanting to take practical steps to deal with debt may benefit from seeking advice as soon as their situation starts to deteriorate due to redundancy or other negative developments.

A recent MoneySupermarket survey revealed 37 per cent of consumers are more worried about their finances because the UK has gone back into recession.

Posted by Paul Thacker

Financial problems ‘need practical response’ is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.

Poorer people have been hit disproportionately hard by rising prices, according to a Trades Union Congress (TUC) study.

This found that while the headline rate for the Consumer Price Index measure of inflation is 3.4 per cent, for the ten per cent of people on the lowest incomes it works out at 4.1 per cent.

Compared to this, those on middle incomes are seeing 3.6 per cent inflation and the richest only have to ensure a 3.3 per cent increase.

Such a disparity is the result of costs rising faster for bills that require a higher proportion of personal income to pay for people on lower incomes – such as domestic fuel and food.

For example, the lowest ten per cent for income spend 17 per cent of income on food, compared with ten per cent for the richest.

This also means people on low incomes who have debts are likely to find it harder to pay back what they owe.

Indeed, with the TUC analysis showing pay rates rising by 1.1 per cent, the strain on incomes and people's ability to pay is set to become even greater.

TUC general secretary Brendan Barber said: "People have been getting poorer every month for the last two years as high inflation, tax rises and the dire state of the economy take their toll on family budgets.

"Over the last year the poorest households have suffered more than anyone else from rising food prices and soaring gas and electricity bills."

He went on to attack government policies such as raising VAT, lowering tax credits and cutting public spending.

The difficulty many have in avoiding energy-related debt was emphasised by the latest Legal and General Moneymood Survey, published last week.

It revealed that over the last eight months an extra million households have found it hard to pay their bills.

By James Francis

Poorer people ‘suffering most from rising prices’ is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.

The Bank of England may face an increasing monetary policy dilemma at a time of economic stagflation that hits indebted consumers hard.

Yesterday (May 10th) saw the Bank of England announce its monthly Monetary Policy Committee decision. As usual, it held the base rate at 0.5 per cent, while keeping the asset purchases at £325 million, a figure it has not increased since February.

The decision may have been predictable enough, but it could also reveal a growing dilemma faced by the MPC, with significant consequences for consumers struggling to pay off their debts at a time when the first quarter gross domestic product (Q1 GDP) figures indicated Britain is back in recession.

Consumer economist at the Royal Bank of Scotland Fionnuala Earley outlined the problem, commenting: "Even though inflation is higher than the Monetary Policy Committee would like, it has to take very seriously the risk that weak Q1 GDP numbers and yet more turbulence in the Eurozone could be catalysts for below target inflation, and growth, in future."

This means that on the one hand, the bank cannot risk raising interest rates to try to curb inflation that has remained persistently above target – and rose in March after five successive monthly falls – without further depressing an economy that is contracting again, at least according to the Office for National Statistics' initial estimate.

And on the other, the Bank may find further quantitative easing a problem as increasing the flow of money into the economy could further fuel inflation, while at the same time not doing so could remove a much-needed source of stimulus.

A situation where inflation is rising while an economy declines is termed stagflation and if this persists over the coming months, it may hit consumers hard.

Any failure of inflation to fall back to its target level over the coming months as predicted in the Bank's most recent Quarterly Inflation Report could mean it is harder than ever to find the cash to pay off debt while also meeting other living costs.

And at the same time, recession could mean job losses and people with debt might find the income they rely on to pay what they owe suddenly vanishes.

The next Quarterly Inflation Report is due out next week and commentators may be keen to know if the MPC believes inflation will manage to drop in the months ahead without a continuing shrinkage of GDP.

By Joe White
 

Bank of England still on horns of inflation dilemma is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.

Hard-pressed consumers may be set to see their utility bills kept under more control by new legislation.

One of the major causes of rising consumer debt and financial strain in the past couple of years has been the surge in utility prices. Water bills are up while gas and electricity costs have rocketed.

This has all added to inflation at a time of economic strife and hit hardest at the poor, who spend a higher proportion of their money on fuel. It has increased the number in fuel poverty – defined as having to spend over ten per cent of income on fuel – and even left some leaving heaters off on cold winter days as they grapple with the choice of heating or eating.

With this being an area of widespread concern, pressure has been placed on the government and utility companies alike. Ministers have been seeking a solution and have now revealed plans are in the pipeline to improve the lot of householders.

Announcing new legislation, the Queen's Speech said: "My government will propose reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair."

In addition to this, the Queen also announced: "A draft bill will be published to reform the water industry in England and Wales."

Those words do not confirm that there is a specific aim in the latter case to reduce water bills, but such an outcome would be eminently desirable for the government and the consumers who can reward or punish it at the ballot box. But the electricity proposals are clearly aimed at ensuring the cost of energy is kept down.

Commenting on the electricity plans, executive director of consumer body Which? Richard Lloyd said: "We recognise that mechanisms to encourage investment in low carbon electricity generation are necessary, but the cost to the consumer should be the government's overriding concern when they are negotiating contracts.

"People tell us rising energy costs are their biggest financial worry so the government should also take the opportunity to reform energy tariffs and make them simple and fair."

Of course, with pressure to ensure Britain's energy generating future is as green as possible, that circle may not be easy to square. However, a better idea of whether this can be achieved may be gauged when details of the bill are published.

Posted by Paul Thacker
 

Debt to be eased by utility reforms? is a post from: ClearDebt Newsdesk a leading UK IVA licensed insolvency services company. ©2011, All Rights Reserved.