1.4m families hit by 'problem' debt
More than a million families are struggling with "problem" debt with nearly three million extra households containing dependent children on the brink of sliding into financial difficulties, according to a report.
Many families are in an "extremely precarious" financial position, leading them to take out loans to pay for necessities, the Children's Society and StepChange debt charity said.
The stress of keeping up with repayments leads to rows, emotional distress to children and cut backs on essentials, the charities said.
A survey for the report found "p roblem" debt - defined as being in arrears on at least one household bill or credit commitment - currently affects close to one in five, or 18% of households with children in the UK.
On average these households owe £3,437, or an estimated £4.8 billion to creditors and government, the research found.
The findings amount to 1.4 million families across the UK, containing 2.4 million dependent children in "problem" debt, the charities said.
A further 2.9 million households with dependent children are on the brink of sliding into financial difficulties and are struggling to keep up with payments on household bills or credit over the past year, they found.
Nearly one in five children aged 10 to 17 years old in families with debt problems told the survey they had been bullied at school as a result of their family's financial difficulties while more than half said they felt embarrassed by their lack of money.
The charities said low wage growth since 2008 has ensured many families who suffered in the financial crisis have failed to recover financially while many more have fallen into financial difficulties.
The Government should work with creditors and other groups to develop a "breathing space" scheme to give struggling families an extended period of protection from default charges and enforcement action, the report said.
There should also be a review of the protection given to families with children against debt enforcement including the potential harm caused by evictions, bailiffs and court action, it said.
The Government should review the case for tighter restrictions on loan advertising seen by children, the report recommended. Children are being exposed to a "barrage" of advertising for credit products that underplays the risks of falling into debt, it said.
Matthew Reed, Children's Society chief executive, 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."
Mike O'Connor, chief executive of StepChange, said: " This report is a stark warning to policymakers, creditors and the wider society of the devastating effects of debt on children."
The Archbishop of York, Dr John Sentamu, gave his backing to the report:
"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," he said.
"We need to make sure families living in poverty have somewhere to turn other than to usury-lenders."