‘Interest rate hike could be devastating for many’ - Labour deputy leadership campaigner warns of debt crisis on the cards
- Credit: Archant
A senior Labour politician on the campaign trail had a stark warning about the scale of personal debt in Stevenage and North Herts when she spoke to supporters.
The average UK resident is around £10,000 in debt and households in Eastern England could soon need a further £1,000 a year to meet debt repayments, according to shadow consumer affairs minister Stella Creasy.
She was on a tour of the region which took in sessions with Labour supporters in Stevenage, Harlow, Southend, Colchester and Ipswich as part of her campaign for the deputy leadership of the party.
She stressed that after years of rock bottom interest rates a hike of two per cent combined with recent budget cuts could leave large numbers of households in financial meltdown because of their outstanding debts.
With new evidence showing that many families underestimate the size and scale of their financial obligations, Ms Creasy – who has hit the headlines in the past by calling for better regulation of payday loan companies – is calling for the government to make tackling this issue a national priority.
She said: “The recent Conservative budget will leave working people £1,300 a year worse off, and a two per cent interest rate rise could burden families in the East with yet more unmanageable debt.
“With many here not realising the true cost of raising kids, studying or saving for a pension these problems could get even worse without help.
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“That’s why this government needs to take responsibility and properly fund debt advice services by doubling the levy on legal loan sharks and other high cost lenders, who feed off the misfortune of those suffering financial hardship.”
The new evidence comes from a recent survey which suggests that many adults drastically underestimate the cost of raising a child, university fees and the amount needed to save for a pension.
The survey found that most people thought the average cost of raising a child in the UK was under £100,000 – it’s actually £229,000.
Most also underestimated the level of student debt, with the average now standing at nearly £45,000, and the amount you need to save to ensure a decent retirement income.
It’s also estimated that the country’s unsecured personal debt has increased to £48 billion in the last six months.