Debt crisis looms as council tax arrears mount

Money troubles are looming for more and more people in the Lothians.
Money troubles are looming for more and more people in the Lothians.
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EDINBURGH and the Lothians are at the centre of a massive explosion in personal debt, according to a new report.

Debt charity StepChange said the Lothians had seen the biggest increase in average council tax arrears in Scotland – from £1443 in 2013 to £2255 by the end of June 2014.

And at almost 47 per cent, the region also had the highest percentage of clients in arrears.

Among the major cities, Edinburgh had the highest arrears at £2736.

But in Edinburgh Northern and Leith constituency, average arrears were more than £6000.

The StepChange report, Scotland in the Red, surveyed all forms of personal debt and claimed Scots had the highest level of council tax arrears and payday loan debts in the UK.

The charity’s Scottish clients also had the largest average electricity arrears in the UK.

The report comes at the same time as a separate report by Accountant in Bankruptcy showed nearly 380,000 people in Scotland were taken to court last year over personal debts.

Lothian and Borders saw the biggest rise with 49 per cent more cases, taking the total to 66,886.

And Citizens Advice Scotland (CAS) said its experience confirmed the rising debt problem.

Spokesman Fraser Sutherland said: “This situation has arisen because incomes have failed to keep up with the cost of living. With low wages, zero hours contracts and benefit cuts, thousands of Scottish families are having to get into debt just to pay for essentials like rent, energy and tax. That’s before they even think about putting food on the table or buying for leisure.

“And of course when people turn to high-interest lenders like payday loans it makes their situation even worse, as they get into mounting debts that they simply can’t repay.”

The StepChange report found people in Edinburgh Central had the second lowest average income in Scotland at £990 per month.

It said rent arrears in Edinburgh Central averaged more than £1000 and in Edinburgh Northern and Leith more than £2000.

And it found two city constituencies were in the top five for the number of people with payday loans. Edinburgh Western topped the table, with 27.8 per cent of clients having at least one payday loan. In Edinburgh Central, the figure was 26.3 per cent.

Lothian Labour MSP Kezia Dugdale said: “December is a tough month financially for many families up and down the country. Paying the bills, feeding the family and finding enough extra cash to ensure Santa delivers is a real challenge. But we all know January is even harder.

“It’s really worrying to hear the average payday loan debt of Scottish clients was £1438, which is £129 more than the UK figure. We need to continue to fight to ensure there are more sustainable credit options available to people, and warn against the dangers of payday loans.”