The poorest families in Northern Ireland are paying moneylenders between 100 and 500 percent on loans, Alliance Children’s spokesperson Marjorie Hawkins has said.
The Carrickfergus woman was speaking after charity Save the Children revealed shocking statistics on Beat Poverty Day earlier this week.
Ms Hawkins said: “Poverty affects families with younger children the most, and the poorest in society are most vulnerable to the debt trap. Moneylenders and loan sharks often take advantage of those in greatest need, and that leads to a vicious circle of even more debt, as the interest on these loans is sky high.
“According to Save the Children, over 133,000 people claiming benefits received a loan from the Government’s Social Fund in 2000/01, almost half of them single parents. But three-quarters of lone parents who apply for a loan are rejected because they are already in debt.
“These loans are mostly used for essential household goods, like washing machines or cookers. Although they are interest-free, the repayments are taken out of the claimants benefits.
“Last year over £34 million was deducted from benefits to repay Social Fund loans, a frightening figure. It seems as though current Government policies leave the poorest with little choice but to get into more and more debt.”
Ms Hawkins said that whether someone receives a loan or not is as much to do with where they live as it does with need. She added that because many of those turned down were lone parents, this was having a negative effect on thousands of children.
“Social Fund loan success is dependent on there being money in the local budget. If there isn’t, even those in desperate need cannot be helped. That’s when the loan sharks step in.
“In Northern Ireland, receiving money from an unlicenced loan shark can be a risky business. Sometimes they are connected to terrorist organisations, and we all know what kind of tactics they are prepared to stoop to when payments are late.
“That’s if they don’t take the benefits book out of your hand first.”
Ms Hawkins said she was backing Save the Children’s campaign for a review of the operation of the Social Fund.
“We hear much talk of Targeting Social Need and social inclusion, but there are still shocking levels of debt amongst the poorest in Northern Ireland. Sadly, it is children – who have as much right to health care, education, shelter and protection as the rest of us – who suffer most.
“There are areas that the Government can look at in order to improve the situation. ‘Child Development Grants’ could help tackle child poverty. These would be lump sum payments made at key stages in a child’s life to families whose need is greatest.
“These would help defray certain costs for families in poverty at certain stages of a child’s life. For example, when a child first starts secondary school, buying a new uniform is a major expense for lone parents.”
“We need to recognise that while for many poverty is a difficult trap to get out of, a little help can go a long way. No-one wants to get in debt, and if we are to avoid increasing levels of debt to unscrupulous people amongst the poorest in society, we need to take a hard look at how the Social Fund operates.
“This is something I believe that a Children’s Commissioner could examine, and I would urge the Government to press ahead with setting up such a position despite suspension of the Assembly. Clearly there is a tremendous need for a figure to stand up for the rights of children in Northern Ireland.”