Unscrupulous money management firms and zero-hours contracts have been partly blamed for an alarming rise in debt across Perth and Kinross.
New data reveals the region’s Citizens Advice Bureau has dealt with nearly £8 million worth of debt in the last year – almost a million more than the previous 12 months.
The charity’s busy Perth office has helped more than 620 people struggling with often crippling financial problems.
The biggest worry for the vast majority of clients continues to be huge bills run up using store and credit cards, with council tax arrears, bank overdrafts and personal loans also causing grief.
The office, which has 20 staff and 66 volunteers, found that 76% of clients had household incomes below the poverty line, even though more than half of them were in employment.
However, it looks like payday loan companies may soon be consigned to the history books, with many of the firms – once the scourge of the CAB – going out of business.
David Ogston, debt advice manager in Perth, warned many people are now turning to profit-drive debt management companies and ending up owing more.
“There are companies which advertise online and try to reel people in,” he said. “People see their ad and click for more information. One thing leads to another, and they find themselves on the phone to a company representative.
“They say, I’ll be in Perth tomorrow night, why don’t I just call in at your house?
“The next thing that happens is they come round and the person has signed onto an arrangement which they will be stuck with for the next four or five years.”
He said: “One person who came to see us was put onto one of these debt arrangement schemes and they ended up increasing the size of their debt by about 50 per cent.”
Mr Ogston said: “People get into debt because of unstable income, loss of employment or because they are working on zero hours contracts.
“It’s very hard to pin down the main problems, because no two cases are ever the same.
“This is not a high income part of the world and there is a lot of rural poverty. For example, if someone stays in Crieff and they can’t afford to run a car then there a are certainly very limited opportunities for them.”
He said: “The debt we’re now handling because of payday loan companies is mostly historic, because thankfully people aren’t going to them in the same way.
“A lot of these companies were always fly-by-night and have now gone out of business. We spent a lot of time trying to track down some of the firms and the addresses we found for them turned out to be a disused airfield in Surrey.”
The CAB service, which is based at Atholl Crescent, is mostly funded by Perth and Kinross Council.
City centre councillor Peter Barrett has praised the team’s work over the 2015/16 period.
“The figures in their annual report demonstrates the complexity of multiple issues that local residents face,” he said. “The CAB’s role in unpicking and resolving them holistically makes a real and tangible difference to improving the quality of life for local people.”
