Welsh families going into debt to pay for basics like food and fuel, says credit union

'Their budgets are stretched, they're finding it really difficult', Cambrian Credit Union manager Ann Francis tells ITV Wales Cost of Living Correspondent Carole Green

Families in Wales are going into debt to pay for basics like food and fuel as the cost of living crisis deepens, according to the Cambrian Credit Union.

Staff at the finance provider have seen a surge in applications to borrow money - although not for treats such as holidays or luxuries, but instead for everyday essentials. 

Prices are rising at their fastest rate for 30 years and it's pushing more low and middle income households into hardship.

The credit union, which is owned by its members, said more people are looking to consolidate their debt in order to have some disposable income.

Ann Francis, General Manager, said people have seen their disposable income hit hard: "People are coming in for top up loans.

"Many were already finding things difficult after the £20 uplift in Universal Credit was scrapped. They are borrowing to cover basics."

An estimated £12 billion could be wiped off discretionary spend in the UK over the next year. Credit: PA Images

Those who earn the least spend a higher percentage of their income on the essentials such as food, heating and fuel.

With electricity bills nearly doubling as the price cap increased earlier this month, and food prices expected to rise by 15% in a year, budgets are becoming evermore stretched.

An estimated £12 billion could be wiped off discretionary spend in the UK over the next year as everything from rents to mobile phone bills and National Insurance (NI) contributions go up.

NI payments rose to 13.5% this month, meaning a typical family in Wales will pay an extra £112 in contributions this year.

More people are having to decide where to save, and those on lower incomes have less financial headroom.The Cambrian Credit Union said it is really important that people ask for help and claim the assistance available.

Many have been pushed into choosing whether to heat their homes or eat as a result of the cost of living crisis. Credit: PA Images

Both the UK and Welsh Governments have support packages in place.

The Welsh Government is providing extra funds to publicise the work of the credit unions across Wales as part of its £380 million pound Cost Of Living support package.

This is designed to inform people on where to access support - and help stay out of the arms of high cost Buy Now, Pay Later money lenders and more debt.

Jane Hutt, Minister for Social Justice, said there is a risk people could turn to illegal lenders.

"There is a significant risk that people in desperation and those with a poor credit history who are unaware of affordable providers such as credit unions, will turn to high cost or illegal lenders.

"To mitigate this risk, we have secured an additional £620,000 in 2022-23 for credit unions to continue an intensive digital marketing campaign and expand their lending so they can support more financially vulnerable people.

"This is in addition to £500,000 already in place to support the work of credit unions.

"A No Interest Loan Scheme will begin in Wales this year, which will support even more people to access affordable credit when they need it."

The Welsh Government announced a £380 million pound Cost Of Living support package earlier this year. Credit: PA Images

However, the Welsh Government said many families are not claiming all the help to which they are entitled.

It is encouraging families to check what help is available by contacting their local credit union, the CAB Cymru or AdviceLink Cymru. 

Simon Hart, Secretary of State for Wales, said the UK Government Chancellor is tackling the huge challenges facing Wales and the rest of the UK, with a package of support to ease the pressures everyone is experiencing around the rising cost of living.

He said: "The reduction in fuel duty, help for working families, and the tax cuts for low and middle earners will help thousands of people across Wales, while the Welsh Government will receive £27 million more funding to support vulnerable families over the coming months."

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