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1/ In a brief return to British policy (thanks to @CentreforCities , @Paul_Swinney, @MagriniElena 
), I have a new report out today on patterns of unsecured household debt and some stark trends in the sub-prime debt market. A few thoughts.
2/ Caveat: data on debt, esp. sub-prime & problem debt, is limited. To really look at impacts on financial stability, spending & vulnerability, we need household-level income, spending, arrears, assets + liabilities, not averages. We don't have it. I have tried to be creative.
3/ Scope: the report ( https://www.centreforcities.org/wp-content/uploads/2020/04/Household-debt-and-problem-debt-in-British-cities-1.pdf) focuses purely on âconsumer creditâ, but that term hides variation in types of debt. Most of it is credit card, car finance and unsecured personal debt. Important parts of it include a wider range of riskier, sub-prime debt.
4/ Now, some numbers! First, a point about 'levels'. Unsecured debt is much more uniformly spread in the country relative to mortgage debt, which is much more London and South East-centred. https://www.centreforcities.org/wp-content/uploads/2020/04/Household-debt-and-problem-debt-in-British-cities-1.pdf
5/ But levels tell us little about household pressures. When you look at consumer debt as % of income, Northern and Welsh cities emerge as most highly leveraged. Warrington and Swansea have c.20% debt-to-income; Oxford and Cambridge around 7%!
6/ Drilling down, whilst we know little about problem debt in aggregate, we can pick out some stark bits. I highlight one such thing: **court action against those unable to repay debt have shot up by 126% in 6 years**. Now, 400k+ judgements annually for people owing debts <ÂŁ500!
7/ Using bond market disclosure, I show a major driver to be increased data-driven collection strategies in the debt collection market. An indirect driver: @bankofengland macropru policy post-GFC, which has incentivised collection outsourcing from banks to specialists @TheFCA
8/ A worrying thought: using branch location data of a major, new-ish sub-prime lender, I show rising court action being followed by rising sub-prime lending, often in the same local geographies: e.g. Knowsley & Middlesbrough. CCJ growth may have driven more to sub-prime lending!
9/ 2 method thoughts. 1st: More data. No reason why @UKFtweets postcode lending data shouldnât have wider consumer debt + aggregated arrears. CCJ data has nothing on aggregated claimant & defendant characteristics in aggregate. @hmtreasury @TheFCA @MoJGovUK need to crack this!
10/ 2nd method thought. Since leaving govt, I have come to see how useful (public!) commercial disclosure â bond market disclosure, equity research, even plain corporate accounts - can be for public policy research (and how little used and understood they were in govt!). @GES_UK
END/ That's all! Unsecured consumer debt report here: https://www.centreforcities.org/publication/household-debt-british-cities/
Might be of interest for @JohnGlenUK @paul1kirby @jamestplunkett @CitizensAdvice @StepChange!
Might be of interest for @JohnGlenUK @paul1kirby @jamestplunkett @CitizensAdvice @StepChange!
