15/01/2018 Inside Out London

Hello, I'm Sean Fletcher.

You're watching Inside Out.

Here's what's coming up on tonight's

programme: As we count the cost

of our Christmas spending binges,

we find out how to get out

and stay out of debt.

Now is the time to actually cut

up that credit card.

Fantastic.

Don't sit on it, get help,

there is no debt we have yet seen

that can't be sorted and get

you to freedom.

Sending in the bailiffs.

Why council tax debt

is at an all-time high.

It escalated to £608.75 from £86.75.

I don't know how that happened.

And the baby boomers

funding their retirement

in surprising new ways.

If you've spotted a gap

in the market, have enough

focus and get up and go,

then it's never too late

to start your own business,

become successful and you might even

help the economy.

Christmas shopping sprees will have

spent many of us into the red.

Here in the UK it's reckoned more

than 8 million of us are struggling

to cope with the money we owe.

How do we free ourselves

from the debt spiral and get savvier

about the money we spend and save?

We sent finance expert

Jasmine Birtles to find out how

to get back into the black.

I'm in Birmingham today

with £500, to see if people

are spenders or savers.

So, if I was to give

you a pound, would you like to

spend it or save it?

I'm a spender.

I'll spend it, I'm thirsty,

so I need a drink.

Clever boy!

I will spend it.

I've not got enough money to save.

While the team continue

with our experiment,

I'm catching up with debt charity

community money advice.

They are hosting a road show

here in one of Birmingham's

largest shopping centres.

Hi, Julian.

Good to see you.

January is when we get a lot

of calls across the whole network.

People have spent Christmas

and enjoy themselves,

and really not connected that

with the consequences

of what happens in the weeks

after when all those bills

start coming in.

Just asked for some advice,

because Christmas has been a bit

difficult because I have got myself

into a bit of debt.

Our aim today is to try and break

the taboo that people have

about spending money.

In all the advice we give,

face-to-face with people,

once you get it out in the open

and you start opening the post,

that wall just evaporates.

Out of the 500 £1 coins

we've been giving out,

just how many people decided

to save and how many chose to spend?

148 would save them.

But 352 would spend them.

So it looks like Birmingham

people like to spend.

Our experiment today was just a bit

of fun, but statistics show

we are a nation of spenders.

The average household has £14,000

worth of non-mortgage debt.

One in three households in the UK

has no savings whatsoever.

Getting out of debt isn't easy.

I should know, I've been there.

But a unique project in London

could have a solution.

I'm in the London Borough of Newham

which has the highest level

of problem debt in the country.

One in four people here is behind

on a bill or a credit commitment.

Morning.

Welcome to Money Works.

Since Money Works opened two years

ago, they have seen over 3500 Newham

residents use the service.

Money Works was set up

by the Mayor of Newham.

Clients had gone to a surgery,

and had a financial crisis

and turned to loan sharks.

It was then that he thought,

what can I do for the residents

of Newham to offer more affordable

credit?

Just put in for an £800 loan,

let's see what happens.

What's special about money works

is that it offers loans

in partnership with a credit union

alongside debt advice.

It's not about just giving a loan

and forgetting about it,

it's about working with the customer

and looking at where they are

and how they can move forward.

Michael first came to Money Works 18

months ago, desperately struggling

with £5,000 worth of debt.

I got very depressed.

I tried to take my own life.

Because of the pressure of debt.

Ill-health forced Michael to retire.

This, together with the drop

in benefits, meant he was struggling

to afford basic living costs.

The washing machine broke.

All these things happen around

Christmas time, I don't know why.

Michael could not afford to buy it

washing machine out right,

so he got one from rent

to own company Brighthouse.

At £9.50 a week, it seemed

like a good deal, but the total cost

amounted to over £1600.

You end up paying astronomical

amounts for small items.

Bright House told us

they give people on low

incomes an affordable way

to get everyday goods.

A lot of customers come to us

not even aware of some

of the interest rates are paying.

It's an eye-opener to them.

All that money, it's

just ridiculous.

Michael was given practical

advice, alongside a loan

to pay off his debt.

We decided to offer him a money

works loan to pay off

house loan and Michael

was £1213 better off.

Michael is now debt free.

Go to somebody like Money Works.

They work wonders.

Money Works is proving

so successful, other councils

are now looking at doing the same.

Half of those seeking debt

help nationally have

mental health problems.

Wayne suffers from bipolar disorder.

This time last year

he was in serious debt.

My wife and myself were experiencing

problems with our rent so we got

a credit card to help us.

Unfortunately, it

spiralled out of control.

Wayne's credit card had

an interest rate of 40%.

He was unable to meet

the monthly payments.

Did you look at the interest rate

or was it just a question of,

who would give you the money?

Who would give it to us.

A loan with us would be better

than paying the high interest that

you pay on that card.

Back in Birmingham, the road

show is in full swing.

For people with credit cards

and debts building up,

the answer to solving the runaway

credit is not more credit.

Now is the time to cut

up that credit card.

Fantastic.

We have had people burst into tears.

At the moment the scissors cut

through, because of the emotional

tag and hold that the idea of credit

has got with someone.

It might come as a shock to most

of us, but by seven years old,

children have already

formed their financial habits.

I've come to this school in Boston

in Lincolnshire to meet an expert

team of super savers.

Hello.

I'm Lilian, the bank manager.

I need to look after

everyone's money and make

sure nothing goes wrong.

My name is Taylor and I am

the assistant bank manager.

I have to supervise all the cashiers

and make sure no one is misbehaving.

When we first started the project

we were asking children

where they think money comes

from and they think it

comes from a cashpoint.

Or it comes out of the till.

They didn't really understand,

which is why we introduced the idea

of working for your money

and then being rewarded.

Children can earn their "Kirts"

by doing well in spelling and times

tables, working in the bank or shop

and for special achievements.

Can I deposit them please?

So this is an actual Kirt,

there is the back of it.

It is worth about 3p,

but for these children

it is worth a lot more.

They can either deposit it

in the bank or once they've earned

enough they can take some out

and spend it in the cut

in store next door.

I'm going to go and have a look.

Children are often saving

for over a year before

they buy anything at all.

The interest has made a difference

as well, they see it as,

if I keep my 50 Kirts in the bank,

over a year I am going

to get an extra 30 Kirts.

It's clear to these children that

saving reaps rewards.

What are you going to buy?

A teddy.

That one?

Lovely.

We are hoping children are actually

understanding and experiencing

the process of saving and learning

to wait for things.

Back at the road show,

the day is coming to a close.

How has it been today?

We are seeing lots of debts

but the most important messages,

don't sit on it, get help,

there is no debt we have yet

that can't be sorted and get

you to freedom.

Jasmine Birtles reporting there.

Jasmine will be live on the BBC

Facebook page straight

after the programme tonight

to answer any questions

you might have about debt.

That's the BBC Money

page on Facebook, live

from eight o'clock tonight.

I will have those details again

at the end of the programme.

Still to come on the show...

If you look at the impact

on all of those people,

starting their own businesses,

aged 55 or over, that's worth over

£7 billion to the UK

economy in any given year.

That's really good news

for our economic prosperity.

Overspending on credit cards can be

a huge problem for people

but an even bigger problem nowadays

as council tax debt.

Local authorities often resort

to bailiffs to recover

what they are owed.

But is this approach too

heavy-handed, especially when some

people simply find themselves

unable to pay?

We sent Mark Jordan to investigate.

The Clink Prison Museum.

For centuries, its bars held

traitors, thieves and debtors.

The traitors were executed.

But for debtors, the only way

they would ever walk free

was to pay up in full.

But how to do that behind bars

with mounting weekly jail charges?

The "rat man", unable to pay,

ate rats until he died.

This is a grim place,

so why is it that a leading London

barrister thinks many councils

are using similar tactics to bring

in their council tax debt?

Council tax is Britain's

biggest personal debt

problem, and it is growing.

Some local authorities are going

down the road of bankruptcy,

making people insolvent,

which hugely multiplies their debt.

With the consequence that they lose

their homes, their businesses,

it is utterly devastating.

It's probably in some

ways actually worse now

than being jailed for council tax.

To be honest, I'm losing sleep, I'm

anxious, I have a lot of anxiety.

The worst cases I have been involved

with end in suicide.

Four years ago, Peter Williams

brought trains to a halt

after killing himself

on the railway.

His home had been taken away

for failing to pay £1350

over council tax debt.

The problem was Peter was mentally

ill, nobody realised this

at the time and as a result

he was literally hounded to death

over what was a relatively

small amount of money.

Which was inflated to over £70,000

by the time of his death.

It was all costs, he had

paid his council tax debt,

this was all costs.

I am seeing this kind of stress

repeated every week now

around England and Wales.

My court case...

Contact us now to avoid

further action and costs.

In the past two years,

court action for council

tax debt has risen 40%.

Use of bailiffs is also up.

Notice of removal action,

that means we are coming to get you.

That's your copy there.

We have not received any

payments whatsoever.

I am struggling, at the same time,

I just want to feed my child,

I want to eat, that's all.

I require payment today.

You have got just over £1000 to pay.

What are you offering now?

97% of us pay our council tax bill,

but debt campaigners claim over

200,000 bailiff visits were made

in London to those who don't.

The figures show, if you look

at boroughs across London

and England and Wales

that there is very different

practice in different

boroughs, it's a postcode lottery.

Westminster Council send

bailiffs out over 18,000

times, while Havering

was a tenth of that.

In less than a decade,

government grants to councils have

been cut by a third.

Whoever you are looking

for, it's not me...

Westminster and several other

councils declined to be interviewed,

but all insist they avoid

targeting the vulnerable.

Only using bailiffs when sustainable

repayment plans have failed.

But single unemployed mum

Michelle is watching her £86

council tax debt spiral.

It escalated to £608,

75p from £86.75.

I don't know how that happened.

It's bad enough that

you have to pay that debt,

then they'd chuck that on.

I'm thinking, if I can't pay

that, how am I supposed

to pay that on top?

What is it you want from me?

It's the councils who decide if Dave

the Bailiff comes knocking.

Is there any difference in the way

you work between "can't

pay" or "won't pay?"

No, it's not my business.

The system does not

distinguish at all now

between the can't pay and won't pay.

Council tax has become a kind

of Frankenstein's monster,

for all intents and purposes,

the local authority has now taken

over in terms of council

tax by its computers.

It is the computer which cultivates

your bill and is in charge

of every step of the way.

It's almost like the Terminator

films in that respect,

with enforcement processes

which just go on and on.

One exceptional week, Franklin earnt

£170 on his zero-hour contract job.

So the council computer

cancelled his council tax benefit.

They sent me an assessment

saying I earn £170 a week

so I can afford to pay it.

I said no, I'm not.

Some weeks I was earning £20 a week.

Franklin says he could not

afford the full council

tax now being charged.

And the bailiffs are knocking.

I'm trying to better myself,

I am diagnosed with heart

and kidney failure.

I thought, let me go and get a job.

And try to better myself.

This is the obstacle,

why people don't want to work,

because of the hassle,

not because they are lazy,

it's because of the hassle they get

from the government.

The letterbox's jammed up.

In some cases, where it's impossible

to get the money back,

then there's nothing else we can do.

Are you finding that more and more?

Yes, yes.

People do not have the means to pay.

Mike Thomson was a book-seller

until a devastating illness meant

he could barely work.

His council tax debt would take his

home and lead to recovery costs,

30 times the original

arrears of £2900.

The Council forced sale

of the house, I got just over £6,000

as my share of the proceeds.

The other £85, £86,000 was swallowed

up in the debt itself

plus all the costs that accumulated

along the way.

Now Mike lives in sheltered social

housing, and guess who is paying?

Now the government foots full

housing benefit for me

which is currently about eight

and a half thousand a year.

The lawyers who do this business

for local authorities prosper

mightily, but the local authorities

themselves, actually in the great

scheme of things, lose out big time.

At Hammersmith and Fulham Council,

they have begun to wonder

if bankrupting, seizure of homes

and use of bailiffs is working.

They claim bailiffs only recover 30%

of council tax debt and are getting

rid of them from April.

If a family is trying to keep

the bailiffs away and prioritises

the bill for council tax,

they then might miss their rental

payment and then you are left

with a homeless family,

being traumatised, but then

presenting the public sector a huge

bill in terms of rehousing

and all the other impacts

homelessness can have.

First Credit are in charge

of Hammersmith's ethical

new debt collection.

We don't add any

interest or charges...

They set up a payment plan.

I'm hoping for Hammersmith,

they will end up with the same

amount of money collected or more,

which they can give

back to the residents.

I'm already seeing on cases

they have given up on,

I am already connecting money

on the cases they have given up on,

so I know that will give them more

money back for the residents

which is a win-win.

Are you worried some people might go

out and buy a telly rather than pay

the council tax if you are ethical?

I'm very optimistic this will work.

We are not stopping debt

collection, we are just doing

it in an ethical way.

But the Bailiff industry

warn Hammersmith's

experiment will backfire.

The enforcement industry has

collected a roundabout £650 million

worth of local authority debt.

To dispense with the enforcement

service will come at a price.

I think that in two or three years'

time, the coffers will be looked

at and the question will be asked,

where is the money?

They come up with all sorts

of excuses but you can normally tell

whether they are lying.

Or, I can, anyway.

Now ethical debt collection

in Hammersmith is about to show

whether or not the Bailiff's knock,

like the clink, might become part

of debt collecting history.

We hear a lot about baby boomers

and how lucky they are compared

to less well off generations,

but not all boomers are secure

enough to put their feet up

and let their pensions take

care of everything.

In fact a record are funding

their retirements by setting up

first-time business ventures.

We sent our very own resident boomer

Jo Good to meet some of them.

I'm 62 and I'm still working,

whether it is hosting my daily show

here at BBC Radio London

or presenting films like this one.

I started work at 16, and I'm

freelance so I don't have a pension.

But I often wake up at night

with the fear of what will happen

when I'm no longer flavour

of the month.

Living off a state pension

hardly fills me with glee,

and I realise that some point I'm

going to have to change my life.

But I'm not the only one,

there are lots more like me.

I'm 61 now.

You are getting older

and less employable.

I would like to work

for quite a few more years.

I was unemployable because of my

age, every job I went

for I was turned down flat.

Like many others in our age group,

Lynda Lee and Louise Chung need

to keep the money coming in.

They know they still

have loads to offer.

So they decided to take matters

into their own hands and started

up their own small businesses.

For the first time in their lives.

# The best things in life are free,

but you can give them

to the birds and bees.

# I need money.

Down on Canvey Island,

Lynda is running a small business

making designer wear for dogs.

I do collars, leads, coats,

harnesses, carry bags.

Car seats.

Sometimes I get up at maybe four,

5am and I start cutting patterns.

Four or five in the morning?

Yeah, crazy.

Because there's an awful lot

to do for one person.

But it's not financially secure

at the moment to employ people

or to go the next step.

It will be.

Basically, if I've got work to do,

I have got to get up and do it.

Most of it is online selling,

which to a dinosaur like me,

I've had to learn a lot.

Oh, my goodness.

So snug!

Now I'm shipping them out

everywhere, I have sent

them off to Las Vegas,

Valencia in Spain, so I was not

only going to England,

Scotland Ireland and Wales.

It is going.

When I started this

business, it was with 79p

and a sewing machine.

That was it.

And I'm thinking, there's no

food on the table, yes,

I can go to family and friends,

it wasn't in my nature.

They will say, what are

you eating tonight?

Having this, having that.

Literally just toast.

Getting up the next day

and making something to sell,

because at the end of the day,

you have to rely on yourself.

That's the way I am,

and I'm very proud,

and I was like, I can do this.

# My rent is due, kids

all need brand-new shoes.

# So I went to the bank to see

what they could do...

There are many like Linda,

starting at small businesses later

in life than would be expected.

Barclays Bank have done a lot

of research into this growing trend

over the last ten years.

It's really surprising

what we've found.

There's been a huge growth

in the number of people

in their late 50s, even late 60s

who are starting their own business.

If you think of people

in their mid-20s and early 30s,

we have seen about 20%.

For older people in the late

50s and 60s, its much

higher, 63% growth.

We've seen this new trend

most prevalent in London

and the south-east comparative rest

of the country.

In London, it is up 89% higher

than anywhere else in the country.

One of the reasons many of these

new entrepreneurs are willing

to give it a go so late in life

is that people of our age

have a whole wealth of life

experiences to draw upon.

Starting a small business often

involves getting a bank loan,

and these new entrepreneurs need

a watertight business plan.

This group in Whitechapel

advise them and point out

the possible pitfalls.

The reality is, you need

to have one-to-one support.

You need that mental,

shoulder to cry on, someone

who will give you true advice,

not just going to speak to someone

in the pub or your relatives

who will often tell you the things

they think you want to hear.

What we can do is be a critical

friend, somebody who can point out

where maybe there are some errors

in the business plan,

And where some extra

work is required.

They have been looking

after Indravardhan Patel,

who could not find work,

so tried to get a loan

to open up a post office.

Indravardhan needed help

in finding his funding requirement

and putting up a business plan.

To help him make a credible

application for finance.

We have worked together

on his draft, got into a format that

helped him to make the application,

and ultimately we made

the application and he was

successful with his start-up loan.

After seeing my business plan,

he said we need to make some

changes in this one.

He helped me out.

We made a lot of changes,

and that made my business

plan very attractive,

he helped me to get a start-up loan.

Life is better, better than before.

I was living in hell, months before

I started my own business.

Now I'm really happy.

Not everyone makes the decision

to start afresh because they can't

get a job - Louise Chung

was at the very top

of a hugely successful career.

I've been a magazine

editor for three decades.

A journalist and editor, I've been

at magazines like Vogue, Good

Housekeeping, Psychology magazine.

But Louise noticed things changing

and worried that she could become

surplus to requirement.

In journalism, it is not

entirely but largely

a career for young people.

It is going through enormous changes

because of the Internet.

I'm from the old school.

So five years ago, old school Louise

decided to take a giant step and get

out of the world of magazines,

but surprisingly the business

she started up is based

purely on the Internet.

What I decided to do

was start a site that finds

therapists for people,

so it's basically using an algorithm

to match people looking for therapy

with the therapists most

suited to them.

Of course, I don't literally

know how to do that.

So you use tech developers in this

business, I employ people.

I'm building a business that I hope

will be a major force

and will make money obviously,

and we can maybe even sell on.

Are you making money?

We do make money, yes.

Great news then, that Louise

is already making money.

It turns out that she and others

like her are also creating some good

news for the rest of us.

If you look at the impact

of all those people starting

their own businesses who are aged 55

or over, that's worth over

£7 billion to the UK

economy in any given year.

That's really good news

for our economic prosperity.

It seems if you can spot

a gap in the market,

have enough focus and get up and go,

then it's never too late

to start your own business,

become successful and you might

even help the economy.

Jo Good there, and her bulldog

Matilda certainly looked impressed

with all that designer dog gear!

That's all for this week's

inside out, tonight's programme

will be available on the iPlayer.

Head to our website,

BBC.co.uk/InsideOut

and click on London.

Don't forget you can join

Jasmine Birtles live now

on the BBC Money Facebook page

where she will be answering

all your questions on debt.

Thanks for watching,

see you again soon.