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Slippery slope a piece of plastic away

PUBLISHED: 00:06 09 December 2001 | UPDATED: 10:59 03 March 2010

THE Great British consumer is a mighty resilient soul.

Despite the threat of recession, the fear of job cuts, and the prospect of financial suffering – these hardy individuals still won't side-step their ultimate passion.

THE Great British consumer is a mighty resilient soul.

Despite the threat of recession, the fear of job cuts, and the prospect of financial suffering – these hardy individuals still won't side-step their ultimate passion.

Yes, even in the wake of international tragedy, and with military action ringing in their ears, shopping is still the number one obsession that drives so many.

It's the love affair that comforts us; the pastime that consoles us…and the costly habit that breaks us.

It's long been said that Britain is a nation of spendaholics, and given our seemingly dogged resilience in the face of such global strife, that label might not be such a harsh one after all.

Experts suggest that we've hardly tightened our purse strings in the aftermath of September 11, and the presumption is that Christmas will still be as buoyant on Suffolk's high streets as ever.

Presumably, with interest rates now so low, and with so many credit facilities now available to Mr and Mrs Average Consumer, that should hardly come as any great surprise.

But will it end up costing us dearly?

Will today's spend-addiction merely plague us tomorrow? Will it come back to haunt us on an astonishing scale…is it doing that already?

In fact, research suggests that this spend-happy behaviour has indeed caught up with us already.

Literally billions of pounds are being accumulated against the names of shop-obsessed Britons in the form of debt.

Be they individuals, families or firms, a huge proportion of today's spenders seem simply to have lost sight of their own financial limitations.

The latest studies by Citizens Advice Bureaux (CAB) reveal that some £1.2billion worth of new debt is being collectively dealt with by the UK's various CAB outlets, statistically pushing up the level of the problem by some 39 per cent in the last four years.

"We are very aware of the rising number of people with debt problems," said Ipswich's CAB manager, Ian Burnett.

"It's something that has really become an issue in modern society, and the worrying thing is that people are still not seeking help early enough."

Ian accepts that the country's lowered interest rates may well have helped to woo people into the shops, and into signing for loans, but he says this is only a small part of the nation's trend for spending.

"Some loans and credit cards have still got very high interest rates, but even that is not putting people off the idea of seeking credit," he said.

"They sign up for things, convinced that they're getting a good deal and yet they're just not looking into the future. Before long things escalate, and then they start to panic."

And typically, it's when this 'panic' finally sets in that the Ipswich CAB begin hearing the financial traumas of Suffolk's spenders.

Debt plays a huge part in the reasons for which consumers seek CAB advice, and in Ipswich, the public struggle with personal finance is evidently reaching mammoth heights.

"In our branch, we see a collective debt problem worth £2.5 million coming through our doors according to the last assessment a few months ago," added Mr Burnett.

"It shows how big the problem is, and how a considerable number of people are just not prepared to budget."

He said: "I think people over 50 tend to have been used to having to save for things, but those under that age group are a little less equipped when it comes to budgeting.

"They have been raised in a consumer- driven society, and that may explain why high-spending, and then debt, seems to be more of a problem among the young."

Recent surveys would tend to support this theory.

The young – and particularly women – are thought to be very much prone to debt.

Research carried out this summer suggested that 75pc of females between 18 and 28-years-old were officially in debt, while 63pc of 18-21 year olds were 'in the red'.

The belief among experts is that young people may rapidly find themselves on a despairing financial spiral just as soon as they have left university.

More and more teenagers are now taking up higher education, and, while living away from home with the temptations of a hectic social world, their outgoings are likely to soar.

Even those who have learnt the art of budgeting for rent, food and other essential needs, may still find that they need to acquire loans, and that they struggle to pay these back on their departure from campus life.

Samantha Payne is all too aware of this problem. A 21-year-old student at Suffolk College, she says debt is a constant source of worry.

"I try really hard to budget, but there is only so much you can do with such a small amount of money – and I'm very aware that I'll end up taking debt with me when I eventually get a job.

"It's hard on those of us who have entered under the new system because there are no grants and you have to use your loan to pay for tuition fees as well as everything else."

She admits that it would be tempting to take out lots of store cards, but so far she has managed to resist.

"Everyone I know has got store cards, but eventually they have to be paid off, and I'd rather not put temptation like that in my way."

She said: "I want to be a teacher when I leave here, and the trouble is, unless you're on a great deal of money when you leave, you can't help but take the debt with you for a long time."

Fellow student Chris Davies, had already saved a lot of money by working for several years before his course. But still he is struggling.

"I've eaten into all my savings and I know that I'll be paying student loans back for a long while.

"What gets me is that we're told to help ourselves by getting jobs at the same time as our course, but it's just not possible for people like me. We have to really struggle – and yes, a lot of people turn to the cards to make ends meet."

Lucy Baguley, who holds the paid position of Students Union President, said: "I think store cards are really dangerous territory for anyone who is in the position of struggling to make ends meet.

"Here, we do see a lot of people having trouble with their finances and it is a fact that those cards will seem tempting."

She said: "We can offer a hardship fund to those people in very serious trouble, but it's a shame that it has to come to that.

"All anyone wants is a good education and I know from my own experience that even though I was a student under the old grant system, I'm still left with four loans and a huge overdraft."

As college students indeed recognise, the attraction to effectively 'borrow' money has been enhanced on Suffolk's high streets, thanks to the growing number of store credit cards.

No longer do consumers rely on the main bank cards today. Instead, a confirmed shopaholic could theoretically sign up for a host of credit-offering packages, and could notch up literally thousands of pounds in accumulated 'borrowings'.

Even without a job, their own house, or any great financial stability, a young retail-addict could still join in the consumer passion for delaying payment.

Take a store like TopShop for example – this has long been a form of high street heaven for a young shopper, and now it's even more cash-friendly thanks to its own in-store credit card.

Are facilities like this an advantage, or are they simply dragging youngsters unwittingly into a trap of debt?

GE Capital – which co-ordinates TopShop's credit system – is adamant that their scheme maintains a responsible function for younger and more vulnerable consumers.

"We believe it is important to ensure customers manage their finances and stay in control of their spending - it is not in our interests for customers to get into financial difficulty," said spokeswoman Julie Varanfrain.

"Overall, the majority of our account holders either choose to pay their balances in full within the interest free period and so pay no interest charges, or their accounts carry such modest balances they only pay a nominal amount of interest."

She added: "As a responsible credit provider, we apply a thorough credit scoring process to ensure account holders are given a credit facility that is set at a level they can manage to repay.

"We have dedicated teams available to assist individuals who may experience difficulties meeting their monthly store card payment, and customers are advised to contact us as early as possible to ensure alternative arrangements can be made to repay their outstanding balance."

Unfortunately, the trouble, however vigilant companies like GE Capital might be, is that so few debt-nearing consumers are prepared to seek that crucial guidance and advice as early as they should.

Instead, they wait until the problem becomes so bad that they are struggling to keep their head above water – that is exactly the plight which Britain will be fighting to prevent in the coming weeks.

Weblinks

www.nacab.org.uk

www.debthelpuk.co.uk


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