Concerns over benefit changes forcing Milton Keynes people into debt

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A ban on ‘pay day loan’ companies advertising on city streets could help hundreds of hard-up people getting into more debt, councillors have decided.

Instead struggling residents will be encouraged to join non-profit-making credit unions to save cash or borrow money to tide them over.

The stance against high interest instant loans is part of a list of proposals from the council’s Welfare Reform Review Group, which is worried debts will increase when the new Universal Credit benefit system is introduced locally.

The council is currently awaiting a date from the government for Milton Keynes’ switch to Universal Credit, the single payment that will replace Income support, Jobseekers’ Allowance, ESA, Housing Benefit, Child Tax Credit and Working Tax Allowance as part of the ongoing welfare reform system.

But already many councillors, charities and voluntary groups are pessimistic about the effect it will have upon jobless, sick or vulnerable people – though experts estimate 50 per cent of city claimants do not know the change is imminent. The review group, chaired by Labour councillor Margaret Burke, states in its report: “The welfare reform changes are likely to have a disproportionate effect upon some groups.”

Already 10,000 low earners in MK have lost a chunk of their council tax benefit under the reform. Spare Room Subsidy, or ‘bedroom tax’, has affected 1,437 households.

A council consultation with eight city charities revealed a surge in the number of people seeking help for money problems.

The Citizens Advice Bureau stated: “The service is stretched to the limit and therefore extra resources will be needed”, while Moorlands Family Centre at Beanhill said vulnerable people were “bewildered” by the benefit changes.

Milton Keynes Council has also teamed up with Swan Credit Union to offer loans to people in financial need in a bid to beat the loan sharks.

For further information, phone Swan Credit Union on 030303 00147 or MK Council on 01908 253040.