Only a few miles from London cities richest lies a debt hotspot in the borough of Newham. How did this come about? Why are so many people in debt? Find out with Quick Loans Express the reasons for Newhams debt hotspot.
Research from The Money Advice Service has put the London Borough of Newham at the top of the list of the boroughs with the highest number of people who have problem debts. What are the reasons that this borough, just 3 miles from the riches of the City’s Canary Wharf, are so debt-ridden?
In this article about why the borough of Newham is a debt hotspot we shall examine:
How a London borough be a debt hotspot
The London Borough of Newham
The London borough of Newham is home to 308,000 residents. Its boundaries stretch from the Olympic Park in the west, over to Barking in the east and down as far as the City Airport and the River Thames in the South. According to the most recent Money Advice Service figures; it is the poorest area of the country, with 1 in 4 of its residents in bad debt.
It is not just boroughs such as Newham that have a high proportion of its citizens in debt. The overall amount of consumer debt in the UK is at its highest level since before the 2008 financial crisis. The levels of personal debt, according to the Bank of England, excluding student loans, are more than £200 billion. The Bank has recently voiced concerns about the increasing amount of consumer debt and how people are taking the wrong way out of payday debt leaving them alot worse off. Borrowing and going for quick same day loans is growing five times faster than the increase in wages.
Why are Newham residents so susceptible to debt?
Newham appears to be a nice area in East London that had money poured into it in the form of a new shopping centre and other redevelopment projects from the Olympic fund. The reality is that Newham has always had high levels of unemployment since the decline in London’s Docklands during the 1960’s. Up until the 1990’s, it was a white, working-class area of London. However, over the last few years, the borough has been flooded with immigrants. These imigrants now make up over 70% of the population.
The borough of Newham has many serious social problems
Newham has the most significant percentage of immigrants in the country. It also has a gang culture with shootings on the rise as well as frequent acid attacks. Most of the jobs in the area are unskilled and low paid. Unemployment is still high and below the national average, after decades of unemployment in the area. For those who do have a job their median wage before living expenses have been accounted for is £15,704 compared to the national average of £22,204.
- Newham borough has the highest number of people with problem debts in the country
- It is a large borough with 308,000 residents
- The problems associated with high consumer debt are not only visible in Newham
- The Bank of England has raised concerns over £200 million worth of consumer debt in the country
- Newham has high levels of unemployment since the docks relocated during the 1960’s
- It has the largest percentage of immigrants in the country
- Most of the jobs in Newham are for the unskilled and pay little
The cost of living in Newham
The cost of housing in Newham, as in all areas of London, is very high. Housing is a dominant problem in Newham where the few that have a job find that it is not a very well paid one. Around half of Newham’s residents rent private accommodation. The cost of renting a one bedroomed flat in the area is on average £1,200 a month, up from £801 in 2011.
There are 30% of the population living in sociable or affordable housing and the rest are homeowners. As many as 13,000 landlords in the borough of Newham do not declare their rental earnings to the tax office. This contributes to the estimated £200 million that is lost in tax revenue each year across London by landlord’s undeclared earnings.
Newham council is trying to help
A debt advice centre called Moneyworks has helped many Newham residents with their debt problems. The staff at the centre in the nearby town of Stratford offer free advice. They try to help people get low-cost loans from credit unions to sort out their financial worries and help them avoid taking out short term loan for bad credit. The borough’s elected mayor, Sir Robin Wales, has been at the forefront of a campaign to try and help the citizens of Newham. In 2007 a job exchange, called Workplace, was opened in the borough. It has filled 35,000 job vacancies over the years that it has been in operation.
Moneyworks helps people get lower cost credit than payday loans
The Moneyworks scheme underwrites many of the loans that default and cost the council a lot of their budget each year. Many of the residents that they help have bad credit. They could only be able to take online fast cash loans UK or much worse, unregulated forms of high-interest credit. A spokesman for a local debt charity blamed the resident’s financial problems on government cuts in benefits and services. The high streets, in the London borough of Newham, are packed with payday lenders shops, bookies and pawnbrokers. They cater to these unfortunate people’s borrowing needs. They also make the debt hotspot even worse.
So what can we conclude about the reasons that Newham is a debt hotspot?
It seems that the unemployment problems in Newham have been around since the decline in work from the docklands that once thrived in the area. As Newham has changed over the years, by having the highest immigrant population in the country, the unemployment problem has got worse. This is because many immigrants are unskilled workers who cannot do well paid, skilled jobs. The cost of living in the Capital is very high which often pushes the residents into taking instant payday loans from direct lenders when they are in debt. The recent increases in the value of housing across London have taken effect in the form of very high rents in the Newham area that have pushed many ordinary people into an abyss of debt.
The mayor of Newham is very concerned about local residents and has set up schemes to help people manage their debts and find work. This has proved a lifesaver for many debt-ridden people in Newham who voice their gratitude to Sir Robin Wales for his attempts to help them.