John McDonnell & an Alternative Strategy

THE Shadow Chancellor, John McDonnell, is attending the Closing the Gap Financial Exclusion Conference as part of convening a series of public events to broaden the debate around economics in Britain.

�We have established a series of meetings with trade unions, the TUC, and a range of third sector organisations, think tanks and educational establishments�.We need to listen to new ideas, because the economy needs them�. Shadow Chancellor, John McDonnell

CLOSING THE GAP CONFERENCE
DISCUSS AND CREATE AN ALTERNATIVE ECONOMIC STRATEGY
Friday 29th APRIL 10.0AM - 4.00 PM
AJ Bell Stadium Irlam Salford M30 7WH

Speakers include: John McDonnell MP Shadow Chancellor

Closing the Gap Financial Exclusion Conference

By: Alec McFadden

SINCE the onset of the financial crisis,  recession and the governments/ austerity policy, the nature of debt and personal finance problems facing households across Britain and Salford has been changing.

A major factor in that change has been that for a long time many price rises have outstripped average income growth. The gap between income relevant inflation and earnings growth for low income households has been significant for a number of years. As a result many households have been driven into arrears on basic household bills, and the traditional model for debt problems in Salford  has moved from being �change of circumstance� focussed, to �deficit budget� focussed model.

Although household incomes for all groups have fallen in real terms since the recession, low to middle income households feel the squeeze particularly acutely because they spend a greater proportion of their income on essentials than higher income households.

 A new model of debt problems has emerged in Salford; a deficit budget model that leaves households even more vulnerable to income shocks.  In the �deficit budget� focussed model of a debt problem a person/household finds that the increased cost of essential-living items outstrips their income and they begin to fall into arrears on some household bills such as rent, energy, water or telephone bills. Whilst different households respond differently to this situation, it has been well documented that many households cut expenditure significantly in an attempt to maintain a functioning budget. Cutting back on essentials included cutting back on food.

Problem debt need no longer have a specific �cause� such as unemployment, illness, or relationship breakdown.  Instead problem debt can be the result of nothing more that the slow erosion of a household budget in the face of ever-increasing bills. This model of problem debt means that relatively small levels of total debt can trigger severe financial difficulties due to a lack of budget flexibility.  For those households at the front line of these economic struggles, it can be difficult to see a way out.

Salford Unemployed & Community Resource Centre (SUCRC)  has witnessed this shift in personal debt problems first hand. Our advisers have reported increasingly over recent years that more callers have deficit budgets � where their income doesn�t match their regular expenditure.  Our advisors have also had to help people with a growing number of different debt types � from the emergence of payday loans, to an increase in telephone arrears. In fact nearly all debt types we record at SUCRC have seen record numbers in the last few years. This is reflective of an increasingly insecure labour market e.g zero hour contracts , a changing benefits system that uses sanctions to stop benefits and a changing society, one which has a very different attitude to and access to traditional credit products.  With a possible  rise in interest rates , we are also concerned that many more may fall into debt as their day-to-day essential living costs reach a tipping point.

Peoples attitude to debt is also changing. For many people falling behind on household bills doesn�t constitute a �debt� problem and as such they may be less likely to get help from advice services like SUCRC.  This is a serious concern; despite the changing nature of debt problems in Salford, advice still works and the earlier people seek advice, the better outcomes they will have.

The role of Salford Credit Union is vital for the whole community to help tackle the problem of debt and poverty in our society.  All the money our Credit Unions have is member�s money and the people that need it most can�t always repay their loans. 

Therefore, the Credit Unions (peoples banks) need support and investment to underwrite loans to members at a low interest rate.  That investment could come from: 

�      Churches

�      Trade Unions

�      Council/government

The higher the level of underwriting, the lower the risk of bad debts and the lower the interest rate.  We would like to see a future strategy by the government to support Credit Unions by appointing a Secretary of State for Credit Unions and councils to appoint a cabinet member for Credit Unions.

These are just some of the areas which this conference will address.

Keynote speakers will include:

Eccles MP Rebecca Long Bailey & Salford Councillor Paul Dennett.

In addition, John McDonnell MP, Shadow Chancellor of the Exchequer, Paula Barker, Unison North West Regional Convenor and Steve Higginson secretary of Liverpool CASA Unite Community Branch  have also confirmed they will  speak.  

We are also delighted that Dr Richard Head and his team will speak at the event.

Mark Serwotka, General Secretary of the Public and Commercial Services Union and Steve Turner, Assistant General Secretary of Unite have also been invited to speak. 

This free event is organised by SUCRC and is supported by Salford Credit Union and Salford City Council. Refreshments and food will be provided.