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Matter of life and debt

Help for the eight million people at risk from the credit crunch

Produced by John Preston, National Stewardship and Resources Officer, in association with the Communications Office and Mission and Public Affairs

Coins

The credit crunch is the biggest news story of 2008 - often the main item in television and newspapers reports.

Defined by the Concise Oxford English Dictionary (OED) as "a severe shortage of money or credit", the credit crunch has had a huge impact on households.

WHAT NEWSPAPERS SAY ABOUT THE CREDIT CRUNCH
'The number of mortgages approved for people buying a house dived by nearly 70 per cent during the past year to hit a new record low, figures showed today.'
(Independent, 29 Jul 2008)

'Grocery bills have risen by an average of 23 per cent over the past year – but individual items have risen much more.'
(Telegraph, 26 Jun 2008)

'Food prices in UK supermarkets and shops have risen by 8.3% since January, an index compiled for the BBC shows.'
(bbc.co.uk, 5 Sep 2008)

'A £100-a-month fuel bill is to become a reality for millions more families after record energy price rises were announced yesterday.'
(Times, 31 Jul 2008)

'Average petrol prices burst through the £1 barrier today and more increases could be on the way.'
(Telegraph, 8 Nov 2007)

'The current record price of £1.19 a litre of unleaded, and £1.32 for diesel, does not yet reflect the high cost of crude oil, motoring groups warned.'
(Daily Mail, 5th Jul 2008)

Not as easy to borrow money

The number of opportunities to borrow money has decreased (the Bank of England says that mortgage lending is down 70 per cent in a year) leading to various negative knock-on effects on the economy.

Some people who are used to rolling debts (re-mortgaging on to a new fixed rate, or getting a new zero per cent credit card) are no longer able to do so, and are more than likely paying more than they planned for their credit.

This reinforces the message that borrowing to pay bills - or using a credit card to obtain a higher level of consumer spending - is not a long-term solution, as it leads to long-term debt with no plan in place, or guaranteed higher future income, to pay it off.


Energy prices rising

Finding credit is not the only problem facing the country as many households face debt problems due to the rising cost of living.

This year alone, the price of petrol has increased nearly 20 per cent; and British Gas plc says gas prices are to rise 35 per cent and electricity nine per cent, as wholesale energy prices have increased by more than 60 per cent.

The term ‘fuel poverty’ has been used much in the media, defined, by the Government, as when a household spends 10 per cent or more of its income on heating bills, and has less to spend on other essentials.

Some newspapers are publishing a ‘real inflation index’ showing that food inflation is currently at around 23 per cent.

Help from Church for eight million on edge of debt

It is estimated that as many as eight million people in the UK are at risk of getting into problem debt because of the state of the economy - and many of them won’t realise how serious, and stressful, the situation can become if it isn’t kept under control.

To help households spot the warning signs of long-term debt sooner rather than later, the Church of England has made a useful 10-point guide available as a free download.


Common sense advice

For those feeling anxious about the amount of debt they are in, common sense advice and helpful Bible quotations are included in the section Are you struggling with debt? along with useful resources - such as an easy-to-use interactive spreadsheet for planning a household budget.

Realising that money problems are a source of stress, specially written prayers are available online, composed by our National Worship Development Office.


Debt ministry

Churches interested in developing debt ministry at their church should visit How your church can help people in debt, containing instruction on how to teach on debt issues as well as a Powerpoint presentation of our common sense advice, and links to organisations that help to set up local debt advice centres.


Speaking into the credit crunch

To look at how the Church of England is speaking into issues surrounding the credit crunch and increasing household debt - in the House of Lords and other public arenas - go to the section The Church of England on debt containing contributions from, amongst others, the Archbishop of Canterbury, Dr Rowan Williams.

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