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
Ben Little, right, is a Labour supporter while Jonathan Rogers supports the Green Party
general election 2015
The 91st Hakone Ekiden Qualifier at Showa Kinen Park, Tokyo, 2014
Life and Style
Former helicopter pilot Major Tim Peake will become the first UK astronaut in space for over 20 years
food + drinkNothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
Kim Wilde began gardening in the 1990s when she moved to the countryside
peopleThe singer is leading an appeal for the charity Thrive, which uses the therapy of horticulture
Have you tried new the Independent Digital Edition apps?
ebooksA special investigation by Andy McSmith
Alexis Sanchez celebrates scoring a second for Arsenal against Reading
Life and Style
An easy-peel potato; Dave Hax has come up with an ingenious method in food preparation
voicesDave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Japan's population is projected to fall dramatically in the next 50 years (Wikimedia)
Life and Style
Buyers of secondhand cars are searching out shades last seen in cop show ‘The Sweeney’
motoringFlares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
  • Get to the point
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs General

Recruitment Genius: Project Implementation Executive

£18000 - £23000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Chiropractic Assistant

£16500 per annum: Recruitment Genius: A Chiropractic Assistant is needed in a ...

Recruitment Genius: Digital Account Executive - Midlands

£18000 - £26000 per annum: Recruitment Genius: They work with major vehicle ma...

Recruitment Genius: Web Developer

£28000 - £30000 per annum: Recruitment Genius: This company provides coaching ...

Day In a Page

NHS struggling to monitor the safety and efficacy of its services outsourced to private providers

Who's monitoring the outsourced NHS services?

A report finds that private firms are not being properly assessed for their quality of care
Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

Zac Goldsmith: 'I'll trigger a by-election over Heathrow'

The Tory MP said he did not want to stand again unless his party's manifesto ruled out a third runway. But he's doing so. Watch this space
How do Greek voters feel about Syriza's backtracking on its anti-austerity pledge?

How do Greeks feel about Syriza?

Five voters from different backgrounds tell us what they expect from Syriza's charismatic leader Alexis Tsipras
From Iraq to Libya and Syria: The wars that come back to haunt us

The wars that come back to haunt us

David Cameron should not escape blame for his role in conflicts that are still raging, argues Patrick Cockburn
Sam Baker and Lauren Laverne: Too busy to surf? Head to The Pool

Too busy to surf? Head to The Pool

A new website is trying to declutter the internet to help busy women. Holly Williams meets the founders
Heston Blumenthal to cook up a spice odyssey for British astronaut manning the International Space Station

UK's Major Tum to blast off on a spice odyssey

Nothing but the best for British astronaut as chef Heston Blumenthal cooks up his rations
John Harrison's 'longitude' clock sets new record - 300 years on

‘Longitude’ clock sets new record - 300 years on

Greenwich horologists celebrate as it keeps to within a second of real time over a 100-day test
Fears in the US of being outgunned in the vital propaganda wars by Russia, China - and even Isis - have prompted a rethink on overseas broadcasters

Let the propaganda wars begin - again

'Accurate, objective, comprehensive': that was Voice of America's creed, but now its masters want it to promote US policy, reports Rupert Cornwell
Why Japan's incredible long-distance runners will never win the London Marathon

Japan's incredible long-distance runners

Every year, Japanese long-distance runners post some of the world's fastest times – yet, come next weekend, not a single elite competitor from the country will be at the London Marathon
Why does Tom Drury remain the greatest writer you've never heard of?

Tom Drury: The quiet American

His debut was considered one of the finest novels of the past 50 years, and he is every bit the equal of his contemporaries, Jonathan Franzen, Dave Eggers and David Foster Wallace
You should judge a person by how they peel a potato

You should judge a person by how they peel a potato

Dave Hax's domestic tips are reminiscent of George Orwell's tea routine. The world might need revolution, but we like to sweat the small stuff, says DJ Taylor
Beige is back: The drab car colours of the 1970s are proving popular again

Beige to the future

Flares and flounce are back on catwalks but a revival in ’70s car paintjobs was a stack-heeled step too far – until now
Bill Granger recipes: Our chef's dishes highlight the delicate essence of fresh cheeses

Bill Granger cooks with fresh cheeses

More delicate on the palate, milder, fresh cheeses can also be kinder to the waistline
Aston Villa vs Liverpool: 'This FA Cup run has been wonderful,' says veteran Shay Given

Shay Given: 'This FA Cup run has been wonderful'

The Villa keeper has been overlooked for a long time and has unhappy memories of the national stadium – but he is savouring his chance to play at Wembley
Timeless drama of Championship race in league of its own - Michael Calvin

Michael Calvin's Last Word

Timeless drama of Championship race in league of its own