2018-03-21 Debt

Last Friday, I learnt that the Student Loans Company had over-lent to many students, in some cases by very considerable amounts, and was now considering stopping further payments.  It turns out that several students had contacted the company, telling them that they thought their payments were too high, but the company had replied that there was no mistake.  After the students had (for the most part) spent the money, the company suddenly realised that there was indeed a mistake, and then seemed to expect that the students could live on fresh air for the next few weeks or months to make up for it.

This isn’t about bad budgeting by the students – they have to live on these loans, they have no other source of income unless they have wealthy parents who can subsidise them.  Because they are studying or training they aren’t allowed any benefits and have to rely on loans. Most of the Members of Parliament who created this loans system received free tuition and maintenance grants to live on.  I think the fact that MPs benefited from supported university education themselves and then denied it to the next generation is unreasonable.  I said so at the time, and I still say so, and I’m very glad that now Labour is promising to scrap tuition fees and re-introduce maintenance grants when we form the next government – not just for University students, but for all young people in further education and training.

Of course, loans are supposed to be repaid, and very many younger people have a burden of debt that they will carry for much of their lives, making it almost impossible for them to take on the additional burden of a mortgage on their own home unless they are lucky enough to have wealthy parents who can help them out.  And of course, if they wanted to borrow money to start their own small business that would also be very difficult unless they have wealthy parents to help them out.

The Conservatives often talk about “equality of opportunity”, claiming that Labour wants to make everyone the same while THEY want to give everyone the opportunity to flourish.  In fact what they have created is a society where those whose families are already wealthy can flourish, while those who make the effort to improve their life chances or establish their own families often land in unmanageable debt.

On Wednesday, I attended a presentation by the Archbishop of Canterbury of a new report from Christians Against Poverty, which worked with 16,641 people last year whose lives were being destroyed by debt, many of them on the verge of suicide.  We heard moving stories from some of the people who have been helped.  In many – if not most – cases, these debts arise through no fault of the victim.  People may suddenly lose their job, or suffer from an accident which leaves them unable to work, or become seriously ill, or go through a difficult and depressing divorce. Thousands of Christians across the country are donating to help free these unfortunate people from debt, and they are to be applauded for that – there will always be a place of honour for charity. 

But surely society should not be deliberately loading debt onto people.  When people lose their jobs, why on earth do they have to wait for weeks before they get any support from the state?  When Universal Credit is introduced, why is it going to be paid in arrears, forcing the most vulnerable people to take out loans to tide themselves over?  Why do we allow private landlords to charge enormous deposits (most of which never get repaid) plus weeks and weeks of rent in advance, so that many young families starting to rent have to enter into huge debts just to get a roof over their heads?  Why won’t the government slash the stakes on “fixed odds betting terminals”, as Labour has demanded, to cut the scourge of gambling addiction and the debt that that causes?  And why are the Conservatives cutting ALL of the County Council’s support for the Citizens Advice Bureau that can help people deal with debt?

I don’t often quote Conservative MPs, but last year Heidi Allen from Cambridgeshire said something which I think is very true: “To pull our country out of debt, we should not be forcing working families into it”.  Austerity continues to bite – some of it is hidden, but it is destroying lives, and it needs to end.