Midlands: Debt soars

The amount of debt being chased by Britain's bailiffs has soared by 70% over the past two years to a record £5bn.

A report published this week by Leeds University Business School blames most of the increase on an alarming rise in the number of people falling behind on credit card and personal loan payments.

It found that the typical household falling into difficulty owes £25,000, compared with £10,000 three years ago.

The report, compiled for the Credit Services Association which represents the UK's debt collection industry, also found that households were building up debts with an average of 15 different lenders and pointed to a surge in the number of people declaring themselves bankrupt.

The Leeds University report confirmed that lenders are moving far more swiftly to punish delinquent borrowers, with cases passed to bailiffs when an individual is only two months behind on payments.

The emphasis in recent years has switched to being more aggressive in dealing with early delinquency.

Customers are contacted earlier and more frequently in very early stage delinquency and late payment charges are threatened and imposed

Targeting the Poorest Households

The poorest households are increasingly turning to doorstep lenders charging high levels of interest as a means of fending off spiralling debts elsewhere.

Provident Financial is the country's biggest doorstep-lender. It alone has 1.5m customers.

Its new company, Vanquis Bank, is targeting a new credit card at people with a poor credit history.

But it comes at a price with interest rates as high as 58% including an annual fee of £1.

'Laura' from Nottingham said;

I had a load of different credit card organisations come to the door.

Its like someone will say you can have £200 by tomorrow afternoon and then pay back £5 a week and you're like great if you're skint.

So I just said yes happily I'd love them to give me £200. Its only when you fill the paperwork in that you notice you've got to pay back £325

The campaign group Debt on our Doorstep said that rates charged by doorstep lenders can be as high as 177%, with almost anyone able to set up as a lender provided they have an easily-obtainable consumer credit licence.

Complaint to OFT

The National Consumer Council said it is considering an urgent complaint to the Office of Fair Trading over the interest rates charged and the methods used by doorstep sales teams.

Families who are struggling to put food in their mouths

"I'm seeing families who are struggling to get by struggling to put food in their mouths ... simply because they've taken a loan off the doorstep", said Mark Greveson from the Walsall Money Advice Project

The OFT recently acted to toughen up the policing of debt management companies which promise to sort out debt problems by amalgamating an individual's loans, credit cards and other debts into one monthly payment.

But they usually do this by merely spreading the debt repayment over many more years.

MPs alerted

Three Midlands MP's, Ros Cranston (Lab - Dudley North), Andy King (Lab - Rugby & Kenilworth) and Tom Watson (Lab - West Bromwich East) became founder members of the All Party Parliamentary Group on Debt and Personal Finance.

The group will be watching next months White Paper from the Department of Trade and Industry's white paper on consumer credit with interest.

It is expected to call for a root-and-branch overhaul of the 1974 Consumer Credit Act, which governs any loan below £25,000.

University top up fees

Nigel Imbush's daughter could face 'top up' fees

At the Labour Party Conference Tony Blair went out of his way to defend the government's plans to fund a massive increase in the number of students going to university by introducing £3,000 a year top up fees.

But now three Midlands University's, Birmingham, Nottingham and Warwick, all members of the elite Russell Group, want him to go even further and allow them to charge up to £5,000 a year.

On the other hand, the Tories have upped the political stakes with a promise to scrap the charges altogether.

The Conservative plan would mean fewer students going to university, but those who did would have to pay for the privilege.

The plan puts 'clear blue water' between the parties. But will it swing "Middle England" voters behind the Tories?

Target middle England

Nigel Imbush from Warwick has one daughter, Holly, in her first year at University. Her younger sister, Cherry, could face top up fees when she starts university in three years' time.

These top-up fees are just going to create even more pressure on people ...

They think they're a soft target because 'middle England', people want their children to have a good education and the best opportunities.

If there was one party that was pushing top up fees and another party that was not pushing top up fees it would be a compelling argument in the way I vote.

Government targets

The government wants 50% of all students to go on to University.

How they pay for that expansion in higher education is currently causing huge problems within the Labour Party.

Come the election it could cause them even more problems in the country.

Philip Cowley, Politics Department, University of Nottingham said;

It offends MPs from the left who fear it for ideological reasons ... who think this is about stopping equality of opportunity.

It also offends and causes problems for those MPs who have won marginal seats in 1997 and 2001 (which are often middle class traditional Conservative seats)

... and those MPs are worried not necessarily because they're objecting on grounds of equality but because this is a very visible tax on their middle class constituents.

Will 'top up fees' affect how you vote? E-mail us now.

Politics Show

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