Debt trap: The millions of children living in families using credit to make ends meet

Around 2.4m children are living in families with problem debt totalling almost 5bn according to a major new study that highlights the suffering the recent recession has caused to relationships at home.

A further five million children are in families that are struggling to keep up with repayments and risk falling behind. The shocking statistics that reveal how many families are trapped in a downward spiral of borrowing are found in The Debt Trap, a report from The Children’s Society and StepChange Debt Charity.

The findings show the psychological damage debt inflicts in children who are enduring anxiety and bullying from school friends as they go without daily essentials due to their parents struggling to cope.

Almost half of children in families with problem debt say it causes arguments in the family while 58 per cent say their worry about their family’s financial situation. Nine in ten families in problem debt say they have had to cut back on essentials like food, clothing or heating for their children in order to keep up repayments.

Highlighting how well known payday lenders such as Wonga and QuickQuid have become even to under-18s, more than half of children aged 10 to 17 said they saw advertising for loans ‘often’ or ‘all of the time’. In contrast only one in five children said that their school taught them about money management and debt. The report, which coincides with The Children’s Society’s launch of ‘The Debt Trap’ - a campaign lifting the lid on the massive impact of debt on children’s lives, calls for tighter restrictions on advertising to children, as well as piloting savings accounts for children through credit unions. It also says schools and families should do more to teach children about borrowing.

Many families struggling to cope with their bills believe taking on credit is the only way to make ends meet but the report says this is the moment when they are caught in the debt trap that is almost impossible to get out of.

Families caught in the trap feel local authorities are failing them with a third of parents (32 per cent) in problem debt said that councils were not helpful at all when they sought help and 42 per cent of parents in problem debt said payday lenders treated them ‘badly’ or ‘very badly’. The report calls on every council to create a debt collection strategy which takes into account the impact on families with children.

The Archbishop of York, John Sentamu, who is supporting the report and campaign, said: “Parents living in poverty face incredibly difficult choices. What is to come first? Heating your home or putting food on the table? Many choose to go without themselves so they can provide the basics for their children. Parents want to make the best choices for their family, but low wages, expensive childcare and inflexible jobs make this very difficult.

“When the monthly struggle to pay the bills becomes too much, often families think they have no option but to borrow money to provide the basics for their children. We need to make sure families living in poverty have somewhere to turn other than to usury-lenders.”

Matthew Reed, Chief Executive of The Children’s Society, said: “Families are increasingly relying on debt as a way to make ends meet – but we’re in danger of ignoring the impact this is having on children now and in the future. We cannot allow children to pay the price of debt. With little savings to fall back on, it can take just one unexpected setback - like illness or being made redundant – to tip a family over the edge and into a debt trap that can feel impossible to escape from.”

Mike O’Connor, Chief Executive of StepChange Debt Charity, said the report is a “stark warning to policymakers, creditors and the wider society of the devastating effects of debt on children”.

He said: “Repay the payday loan or put food on the table? Pay the council tax bill or buy clothes for the kids? These stark choices are facing families up and down the country. Debt can have a devastating impact on people's lives; especially the 2.4 million UK children living in families with problem debt.

“All too often, credit is seen as the only way to plug the gap. Payday loans may look like a lifeline but in reality they can be a financial death sentence.

“StepChange Debt Charity and the Children's Society see the lengths parents go to protect their children: 10 per cent of families tell us they borrow to buy food for children; frequently they have to cut back on what most of us would regard as essentials. We need to protect children through encouraging creditors to offer breathing space to allow families to recover their financial footing.”

Case Study

Gary, 55, from north London, is divorced with two children - a son aged 18 and a daughter aged 11. He separated from his wife in October 2011, and went to stay with his sister before moving to a new flat. Despite no longer living in the family home, he continued to pay the mortgage, bills and childcare costs, as well as paying for a deposit, rent and furniture on his new home.

“I felt obliged to do it, to juggle my responsibilities but after a few months I just wasn’t ready for what was coming,” he told the Independent. “I knew things were getting bad when I had to start using my credit card to pay for food. I began spending what I didn’t have.”

The biggest difficulty was telling his children he just could not afford to treat them in the way they were used to. “They wanted the same stuff I was providing before, after school activities and holidays, and didn’t see my situation as a problem. They just saw me as their dad and couldn’t understand what had changed.”

Gary believes the lack of financial education in schools plays a big role in hurting relationships in families that have to go through situations such as his. He wants a change in how children taught so they are better prepared for financial realities.

“It wouldn’t be a big change,” says Gary, who after contacting StepChange and finding the help he needed was able to restore order in his everyday life.

“I’m sure something could be introduced in either maths or economics in the curriculum My kids, like so many, just had little idea of how much everything costs. We live in a different world now and it’s crucial for them to know how much it costs to live.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executive or Senior Sales Executive - B2B Exhibitions

£18000 - £30000 per annum: Recruitment Genius: A Sales Executive or Senior Sal...

Recruitment Genius: Head of Support Services

£40000 - £55000 per annum: Recruitment Genius: This is an exciting opportunity...

Recruitment Genius: Warehouse Team Leader

£22000 per annum: Recruitment Genius: This industry leading company produces h...

Recruitment Genius: Business Development Manager / Sales - OTE £40,000

£20000 - £40000 per annum: Recruitment Genius: This IT provider for the educat...

Day In a Page

A nap a day could save your life - and here's why

A nap a day could save your life

A midday nap is 'associated with reduced blood pressure'
If men are so obsessed by sex, why do they clam up when confronted with the grisly realities?

If men are so obsessed by sex...

...why do they clam up when confronted with the grisly realities?
The comedy titans of Avalon on their attempt to save BBC3

Jon Thoday and Richard Allen-Turner

The comedy titans of Avalon on their attempt to save BBC3
The bathing machine is back... but with a difference

Rolling in the deep

The bathing machine is back but with a difference
Part-privatised tests, new age limits, driverless cars: Tories plot motoring revolution

Conservatives plot a motoring revolution

Draft report reveals biggest reform to regulations since driving test introduced in 1935
The Silk Roads that trace civilisation: Long before the West rose to power, Asian pathways were connecting peoples and places

The Silk Roads that trace civilisation

Long before the West rose to power, Asian pathways were connecting peoples and places
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled

The honours that shame Britain

Outcry as donors, fixers and MPs caught up in expenses scandal are ennobled
When it comes to street harassment, we need to talk about race

'When it comes to street harassment, we need to talk about race'

Why are black men living the stereotypes and why are we letting them get away with it?
International Tap Festival: Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic

International Tap Festival comes to the UK

Forget Fred Astaire and Ginger Rogers - this dancing is improvised, spontaneous and rhythmic
War with Isis: Is Turkey's buffer zone in Syria a matter of self-defence – or just anti-Kurd?

Turkey's buffer zone in Syria: self-defence – or just anti-Kurd?

Ankara accused of exacerbating racial division by allowing Turkmen minority to cross the border
Doris Lessing: Acclaimed novelist was kept under MI5 observation for 18 years, newly released papers show

'A subversive brothel keeper and Communist'

Acclaimed novelist Doris Lessing was kept under MI5 observation for 18 years, newly released papers show
Big Blue Live: BBC's Springwatch offshoot swaps back gardens for California's Monterey Bay

BBC heads to the Californian coast

The Big Blue Live crew is preparing for the first of three episodes on Sunday night, filming from boats, planes and an aquarium studio
Austin Bidwell: The Victorian fraudster who shook the Bank of England with the most daring forgery the world had known

Victorian fraudster who shook the Bank of England

Conman Austin Bidwell. was a heartless cad who carried out the most daring forgery the world had known
Car hacking scandal: Security designed to stop thieves hot-wiring almost every modern motor has been cracked

Car hacking scandal

Security designed to stop thieves hot-wiring almost every modern motor has been cracked
10 best placemats

Take your seat: 10 best placemats

Protect your table and dine in style with a bold new accessory