Bold moves needed to help households drowning in debt

Just how difficult week-to-week life has become for many Irish families is evidenced by this week's Irish League of Credit Unions survey which shows nearly 47 per cent of household in the country have only €100 of discretionary spending left at the end of each month after paying their bills and necessary household expenses. It makes for depressing reading and is another stark illustration of the economic crisis that has engulfed families and individuals right across the land since the economic crash started to gain momentum in 2008. Almost two-thirds of those surveyed have less to spend now than they did in 2011, while 16 per cent of respondents said they had nothing left at the end of each month. Some six per cent said they have less than €20 left at the end of each month after bills were paid. Close to 70 per cent were worried about not paying their bills while nearly half of those questioned said they were unable to save any money at all. It means a total of 1.6 million people in Ireland have just €100 to spare at the end of each month, with half the country feeling they are just "living to work". Over 40 per cent believe there is no longer a future for them or their family in Ireland. Disposable income has come under pressure for a majority of Irish consumers, with over 60 per cent saying the amount of money left over after they pay priority bills has fallen in the past year. Over half of people have experienced an actual fall in their disposable income compared to six months ago. It's a disheartening picture and one which shows that people who would have considered themselves relatively well-off during the boom years are now struggling to make ends meet. While the country is still struggling to emerge from the property and banking crash that has trapped consumers in debt, the human picture that is now emerging is of a middle class whose spending is crucial for the domestic economy finding themselves under severe financial pressure, in many cases. In the same week, we learned that one in five Irish children has reported they they either went to school or bed hungry in 2010 because there was not enough food at home. One of the government-appointed Special Rapporteurs on Child Protection has described the Health Behaviour in School-Aged Children Survey as "a violation of basic human rights" after the finding that more than 20 per cent of children surveyed had at some stage gone to bed or to school feeling hungry. Geoffrey Shannon described it as "very worrying" and said an immediate review should be carried out to see how the government can improve the provision of breakfast clubs in school. As the debate on the fact that householders will have to foot the bill for new water meters - on top of the household charge and new septic tank charges - gathered momentum this week, many have been asking whether of nor the government really has a true sense of the dire predicament many families are faced with, having already been subjected to a raft of additional taxes and levies or even lost their jobs. Everyone is aware that the government is in a difficult predicament in trying to balance the books but this is a time of great hardship for many households as they grapple with the challenges of living on a lower income while also attempting to obtain the day-to-day necessities of modern life without falling further into debt. Recent figures from the Money Advice & Budgeting Service (MABS) bear out the difficulties for families with a record number of new clients being dealt with by the service in the first quarter of this year. What is considered particularly worrying is the profile of the majority of those seeking help, those aged between 26 and 40, who have to service big mortgages and are struggling to repay other loans, utility bills and credit cards bills. In this context, the household debt reduction policies, up to and including possible mortgage writedowns, as suggested by the International Monetary Fund (IMF) as a way to gain significant economic benefits - and as happened in Iceland - needs to be debated properly in this country. In its World Economic Outlook report last week, the IMF said such policies can mitigate "excessive contractions" during recessions, adding that recessions and housing slumps are usually worse when they are preceded by a buildup of household debt, as is the case in Ireland. With debt continuing to act as a brake on economic growth, it is crucial that all avenues be explored that can help release that brake.