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Consumption culture and personal debt

A ‘have it now’ culture of ‘spend now, save later’ is well embedded amongst British consumers. It is more socially acceptable to have high levels of personal debt than for previous generations. As a result Britain has the double the levels of debt than continental Europe. However, there are signs that debt is beginning to grow more slowly.

What are the implications?

• Increased consumer spending and confidence.
• Changes to the UK economy.
• Growing poverty and inequality as those with lower incomes are more likely to get into debt.
• Rise in interest rates in an attempt to stop consumer spending.
• A rise in repossessions as growing numbers of people are unable to pay their mortgages (see housing market).
• This may lead to a rise in numbers of homeless people.
• Empowered consumers who consume now and spend later leading to pressure on VCOs to deliver personalised services that are available 24/7.
• Increased levels of debt may impact of levels of individual giving.
• Increased demand for VCOs that provide debt advice.
• Significant implications for charities that work with people in poverty.
• Significant implications for charities that work with homeless people.

Moving forward

This driver does not have direct implications for VCOs but it will impact on the other drivers listed below as well as many others. (There is often a relationship or interdependency between different drivers, which may be important to your organisation. As you scan each driver, it is important to think about its relationship or influence on others; if drivers are linked, then you need to think laterally to draw in all those that may be relevant.)

Increased consumer spending and confidence

Interest rates

Poverty and inequality

Empowered consumers

Increase in planned individual giving

However, here are some questions for your organisation to consider:

An increase in debt may impact on levels of individual giving.

• What strategies can your organisation put in place now to manage potential future changes in funding?
• Can you diversify your income sources or work in partnership with other organisations?

Organisations that work with homeless people, those in poverty or debt may find there is greater demand for their services.

What role does monitoring and evaluation play in your strategic planning? How could an understanding of changing need help you to develop more effective services in the future? You could think about this in two ways:

• Opportunities to improve: Should you need to change how you work or be more responsive?
• Opportunities to innovate: Should you serve new or different users?

Want to know more?

Consumerism in the UK

Published by: ESRC – a research council for social and economic issues.

Date: 2007

Format: Web

What is it? A statistical overview of consumerism in the UK.

How useful is this? A good introduction to UK consumerism including spending patterns, debt and consumer power.  It provides useful statistics, for instance on consumer spending and consumer complaints.

Other comments:

Too much, too young: Problem debt amongst homeless young people

Published by: Centrepoint – a charity working with young homeless people

Date: 2005

Format: PDF

What is it? This policy report looks at the scale and extent of debt amongst homeless young people and makes recommendations for local and national government.  It includes statistics on debt and draws on the views of homeless young people. 

How useful is this? A good insight as to how the problem of debt, particularly impacts upon homeless young people.  This report looks at the consequences and causes of debt including: poor benefits administration; lack of skills; types of credit; youth and inexperience; and debt collection.

Other comments:

Out of the red: Debt advice in the Citizens Advice service

Published by: Citizens Advice Bureau – a charity providing free information and support on legal, money and other issues.

Date: 2006

Format: PDF (960KB)

What is it? A short paper documenting the work being done by a range of actors, to help those in debt.  It includes a range of case studies.

How useful is this? The paper focuses on the work of the Citizens Advice Bureaux and is particularly useful for those wanting to get involved in or better understand debt advice.  It explains the money advice process and documents several innovative approaches often involving partnerships, i.e. with doctor’s surgeries.

Other comments:

Consumer spending and Debt

Published by: IPPR

Date: Pending

Format: Web and PDF

What is it? A work in progress - this project will look at the implications of consumer culture for lower income households with the aim of influencing policy.  The project outline is available to download.

How useful is this?  One to watch.

Other comments: