More than half of Redbridge residents claiming help are in debt, council data shows

More than half the number of Redbridge residents relying on a council support fund are in debt, with many owing money to loan sharks.

Debt is a “very heavy burden” on residents applying for Redbridge’s household support fund, a government-funded scheme for struggling locals, the council says.

More than 3,000 households have applied to the scheme in the past 18 months, while councillors have expressed concern over the number of people reliant on the service.

A council survey, conducted over the past year, revealed that 53 per cent of applicants were in debt by more than £2,000. A further 32 per cent owed more than £5,000.

Debt to illegal money lenders, or loan sharks, is “frequently seen” amongst applicants to the household support fund.

A loan shark is a money lender who has not been authorised by the Financial Conduct Authority and does so illegally.

Loan sharks will charge very high rates of interest and can take criminal action to collect money, threatening violence or taking away a borrower’s credit cards, according to Citizens Advice.

The majority of applicants (66 per cent) were revealed to be single parents. Lone parents are most at risk of going into debt, the council says, alongside residents living in temporary accommodation.

At a scrutiny meeting in March, committee member Mushtaq Ahmed said: “It is heartbreaking that so many people need help and the situation is so dire.”

During the meeting, deputy leader Kam Rai said a major issue facing poverty-stricken residents was that they were not claiming benefits they were entitled to.

This issue has apparently continued, with officers writing in the May report there was a “significant underclaiming of benefits and many residents fear losing one benefit if they claim another”.

An unspecified majority of residents wanted referrals to bodies that would offer advice on money management and employment specifically.

In response, the council has commission Citizens Advice to offer debt advice in complex cases, after hosting specialist advisers at the Central Library for face-to-face appointments.

Additionally, a sound-proofed kiosk has been installed in the library for residents looking for confidential help.

The strategy is part of its wider plan to eradicate childhood poverty – which affected one-in-five Redbridge children in 2022 – and deprivation in the borough by 2040.

Redbridge will also work with the National Illegal Money-lending Team to train 75 council officers to spot the signs of loan-sharking.

Since the scheme was launched in October 2021, the council has helped more than 77,000 households. The fund has mainly been used to assist residents with food vouchers and rent, while offering support packs for pensioners,

Reducing poverty in the borough would also alleviate pressure on a “vast range” of council services, according to a previous report.

Demand on health and social care services would be lessened as lowering poverty has a “clear link” to improved health and wellbeing, it said.

Before taking on a loan, people are advised to check if the lender is accredited. If they are being threatened, they should call the police, Citizens Advice says.

Sebastian Mann

Local democracy reporter