The Archbishop of Canterbury, Dr Rowan Williams, has called on the Government to do more to protect the poorest and most vulnerable from the likely consequences of an economic downturn.
Speaking in the House of Lords on Friday, the Archbishop highlighted the fact that Government targets on alleviating poverty, particularly child poverty, risked not being met and warned that in a period of economic decline the poorest in society, who carry a higher proportion of personal debt, were most at risk.
In the debate, called by the Archbishop, he suggested ways in which the Government might help low income families avoid entering into cycles of unsustainable debt by improving financial education in schools, enforcing tighter controls on doorstep credit agencies and by helping to foster responsible alternatives to doorstep lending, such as those offered by Credit Unions.
In his speech the Archbishop talked about the ‘poverty trap’ and the effect this has, particularly on children: “One of the matters I wish to underline in this debate is that, because of a variety of problems around debt and credit, children in poverty are in fact caught in a particularly toxic version of the ‘poverty trap’: families with children face heavier pressures in regard to basic expenditure, pressures that push their outgoings beyond their weekly income levels.
"And this is not to do with purchasing luxuries: it is a matter of school uniforms, adequate diet and heating in the home, access to routine leisure activities (how much does it cost to travel to the nearest swimming pool?) and so on – never mind the extra expectations around Christmas or birthdays.”
He called for greater financial education to help prepare young people nderstand the risks of borrowing: “There is an urgent case for more support for financial education in schools and FE institutions. Young people are vulnerable to considerable pressure – sometimes from banks themselves – to embark on risky and costly ventures into borrowing.
"They need skills in assessing risks, in interpreting borrowing conditions, in factoring in to their decisions some better awareness of the uncertainties of the whole system. And this needs to start early. The present situation is not good."
He pointed to estimates from Credit Action that less than 5 per cent of secondary schools in the UK give adequate priority to education in money management as part of their citizenship and PHSE curriculum.
He spoke of how Credit Unions provided a better, alternative source of credit for borrowers, encouraging the government to do more to foster their growth:
