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Unmanageable debt is rising in all parts of society

Fall in real incomes, rise in cost of living are making UK householders work harder

Households in the UK are working hard to reduce their debts and cut spending with decline in real incomes and the rising cost of living, according to debt charity Consumer Credit Counselling Service's (CCCS) statistical yearbook, published today.

Through analysis of the 370,000 clients counselled during 2011, the CCCS found that clients owed an average of £20,023 in unsecured debt, compared to £22,476 last year, while monthly living costs were £1,369, compared to £1,410 in 2010.

The CCCS yearbook found that average client in 2011 had just £44 left over after meeting their basic living costs each month despite cutting down on spending (hardly unchanged from £43 in 2010). It also found that 42 percent of clients under the age of 25 out of work, compared with 27 percent of all clients.

The UK’s leading debt advisor has counselled 17,138 young debtors under 25 in 2011, an increase of 12 percent over 2010.

As per the yearbook, 48 per cent of clients across all age groups counselled by the CCCS said that unemployment or reduced income from employment as main cause of their financial difficulty in 2011.

The economic downturn has affected renters most severely. During 2011, a total of 10,246 renters contacting CCCS for help were in arrears, an increase of 30 percent in three years. Renters in arrears to private landlords were in the worst position, owing £924 in unpaid rent and having a monthly budget deficit of £145.

Demand for debt advice from the over 60s has increased by 15 percent in three years, according to CCCS. This looks like the beginning of a long-term trend, and the service forecasts that in two years almost half of its clients will be over 45.

Lord Stevenson, chairman of CCCS, said:

It is good news that our clients are reporting reduced unsecured debts, but stagnating incomes mean that debtors had no more money available to repay what they owe.

We need to do more to help those in our society who need debt advice and solutions.  We call on the money advice service to do more to ensure that people struggling with their household finances are made aware of the free advice and support available from charities like ours.

Norman Lamb, minister for consumer affairs, commented:

The yearbook shows that unmanageable debt is rising in all parts of society.  It reminds us how vitally important it is to understand the needs of those who seek help, so that we can give them the right kind of help.

We want people to be better informed and able to make good financial choices, taking back control of their money.  I am pleased that there is help available through the fantastic work of the consumer credit counselling service.

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Labour tensions boil over at fractious MPs' meeting

Corbyn supporters and critics clash over fiscal charter U-turn and new group Momentum. 

"A total fucking shambles". That was the verdict of the usually emollient Ben Bradshaw as he left tonight's Parliamentary Labour Party meeting. His words were echoed by MPs from all wings of the party. "I've never seen anything like it," one shadow minister told me. In commitee room 14 of the House of Commons, tensions within the party - over the U-turn on George Osborne's fiscal charter and new Corbynite group Momentum - erupted. 

After a short speech by Jeremy Corbyn, shadow chancellor John McDonnell sought to explain his decision to oppose Osborne's fiscal charter (having supported it just two weeks ago). He cited the change in global economic conditions and the refusal to allow Labour to table an amendment. McDonnell also vowed to assist colleagues in Scotland in challenging the SNP anti-austerity claims. But MPs were left unimpressed. "I don't think I've ever heard a weaker round of applause at the PLP than the one John McDonnell just got," one told me. MPs believe that McDonnell's U-turn was due to his failure to realise that the fiscal charter mandated an absolute budget surplus (leaving no room to borrow to invest), rather than merely a current budget surplus. "A huge joke" was how a furious John Mann described it. He and others were outraged by the lack of consultation over the move. "At 1:45pm he [McDonnell] said he was considering our position and would consult with the PLP and the shadow cabinet," one MP told me. "Then he announces it before 6pm PLP and tomorow's shadow cabinet." 

When former shadow cabinet minister Mary Creagh asked Corbyn about the new group Momentum, which some fear could be used as a vehicle to deselect critical MPs (receiving what was described as a weak response), Richard Burgon, one of the body's directors, offered a lengthy defence and was, one MP said, "just humiliated". He added: "It looked at one point like they weren't even going to let him finish. As the fractious exchanges were overheard by journalists outside, Emily Thornberry appealed to colleagues to stop texting hacks and keep their voices down (within earshot of all). 

After a calmer conference than most expected, tonight's meeting was evidence of how great the tensions within Labour remain. Veteran MPs described it as the worst PLP gathering for 30 years. The fear for all MPs is that they have the potential to get even worse. 

George Eaton is political editor of the New Statesman.