Consumer research group Markit’s Household Finance Index showed that British households are increasingly dipping into any savings they have and taking on more debt as soaring inflation takes its toll on family budgets.

Some 36% of households surveyed said they saw their financial position worsen in May, compared to just 6% who saw an improvement. That pushed the index’s headline measure to 35.1, its lowest level since March 2009.

Any reading under 50 indicates a decline in households’ financial positions compared to the previous month.
Half of all households expect their finances to worsen in the future, compared to just 19% that anticipate an improvement.

The report found that 29% of households spent more in June compared to 19% that managed to cutback back.

Some 20% of those surveyed said they took on new debt – the second highest amount for two and a half years.

Tim Moore, senior economist at Markit, said: “It may be summertime but the living is far from easy. The decline in the index pours cold water on the tentative signs of improvement seen in the previous month.

“The grim figures show household finances deteriorating at the fastest pace since early 2009, with people eroding their savings and taking on more debt to finance strong rises in living costs, as income from employment continued to fall in June.

“The job security index, which can provide a coalface view of labour market conditions, highlighted how employees in both the private and public sectors remain deeply concerned about holding on to their job. This may help keep inflationary pressures from building further, but it also means that the consumer will act as a drag on an already fragile economic recovery.”

The Office of Fair Trading (OFT) said it found unacceptable failings in the way some private debt management firms operated and is currently consulting on new rules designed to ensure unscrupulous companies treat customers fairly.

The OFT uncovered widespread problems in some parts of the industry from misleading advertising to the quality of advice given by companies charging for advice on how people can resolve their debt problems.

The watchdog will introduce new rules to force companies to make it absolutely clear what services they offer and how much they will charge and to only give advice that is in the customer’s best interest.

Firms will not be allowed to use misleading names or adverts and will be compelled to fully explain the risks and benefits of the solutions on offer.

David Fisher, Director of the OFT’s Consumer Credit Group, said: “This guidance is designed to leave firms in no doubt about the standards the OFT expects and what they must do to comply with the law.

“The failings identified by our recent review are unacceptable and show that debt management businesses must raise their standards or face enforcement action.”

Joanna Elson, chief executive of the Money Advice Trust, said: “Debt management companies have time and again demonstrated they cannot be trusted to treat customers fairly of their own accord. In many cases there is a clear conflict of interest between what generates a profit for the company and what is the best course of action for the individual in debt.”

More than 104,000 people were made bankrupt or entered into an individual voluntary agreement (IVA) or debt relief order during the first three quarters of the year, only marginally less than the total number for the whole of 2008.

There was twice the number of personal insolvencies than in 2005 but a sharp fall in the number companies failing or going bust.

Bankruptcies fell by 20.7% to 59,194 compared to 2009 as debtors opted for newer forms of insolvency. IVAs, which allow debtors to agree a deal to pay off a portion of their debt after which their creditor writes the rest of it off, were up 6.5% to 50,716 while debt relief orders, which are becoming increasingly popular for lower levels of unmanageable debt, rose to 25,179.

Although it is now a simpler process to declare yourself insolvent than it once was, the levels of personal insolvencies today far outstrip the numbers seen during the last recession in the early nineties when around 37,000 people a year were declared bankrupt.

The figures come days after government-funded debt counsellors stopped taking on new cases in advance of the withdrawal of their funding in April and amid concern that there is inadequate help available for people struggling with debt.

The Consumer Credit Counselling Service (CCCS), the UKs leading debt charity, said that levels of personal insolvency were unlikely to drop in 2011 as inflation, public sector cuts and wage freezes pushed more families over the edge.

Delroy Corinaldi, CCCS external affairs director, said: “The picture is bleak, particularly in view of the pressures on advice services. Fee-charging debt management companies must not be allowed to plug the gap left by the reduction in public funding for debt advice. It would compound the situation if overindebted households believed they had no alternative but to pay for debt advice.

“The recent Office of Fair Trading (OFT) report shows that the fee-charging debt management sector is not fit for purpose. It is vital that the OFT steps up its vigilance of the marketing practices of the fee-charging sector to ensure they do not trap people into using their services in the belief that there is no alternative.”

The £25m-a-year Financial Inclusion Fund (FIF) has been paying for 500 debt counsellors to give free advice to people who are struggling to repay money they have borrowed in England and Wales.

Mark Hoban, financial secretary to the Treasury, confirmed in parliament last month that the project would be axed form March as part of the government’s program of cuts to reduce the public borrowing deficit.

Funding for the service is being ended at a time when demand for free impartial advice on debt problems is rising as tough economic times continue. Inflation, interest rate rises and job losses are expected to increase the number of people seeking advice to rise from 1.6 million people last year to more than 2 million in 2011.

Tobias Stapf, an FIF project manager in London, told the Guardian that the government must maintain funding until alternative arrangements can be made: “There is already a lot of interest in funding debt advice among creditors, housing associations, healthcare institutions and others who recognise its benefits. But without a basic infrastructure to build on and a coordinated regulatory framework for debt advice, it cannot be integrated into these other services without risks.

“If the existing debt advice infrastructure disappears, the risk is that going forward debt advice services would be provided in a more dissipated, uncoordinated and inconsistent manner. This would make the service more costly and less efficient, which is why it is in the interest of all stakeholders to retain as much as possible of the existing debt advice infrastructure.

“Most [clients] just cannot afford fee-paying providers, or do not have access to telephone or internet advice services. However, given that we have to already start winding down the project now and stop seeing clients, the risk is that the infrastructure will be lost before any new solution can be found.”

Teresa Perchard, director of policy at Citizens Advice, told the BBC: “It just doesn’t stack up, unemployment is rising, the economy is in a difficult situation and there is an increasing demand for debt advice and at this time to lose frontline services in local communities doesn’t seem to make sense,”

The withdrawal of funding will result in the redundency of advisors and a windfall for private debt management companies that charge a fee for their services.
A Treasury spokesperson said a new web and phone based service would be introduced to replace face-to-face consultations: “We want to make sure that individuals facing financial difficulty can get advice early, rather than wait until their problems become much more difficult to resolve.”

The Scottish National Party’s (SNP) Business Spokesman Mike Weir said that the process of claiming money owed can take years meaning that those who have lost money when a company goes bust are left short changed.

Some 16,554 companies went into liquidation over the past four quarters, around 50 firms a day, with each owing their creditors an average of £584,000. This figure is three times higher than the insolvency rate of 2006/07.

Mr Weir’s intervention was prompted by the announcement that victims of the Farepak collapse might only receive 5p for every pound they lost whilst administrators working on the case have been paid £3 million. Farepak, the Christmas hamper supplier, went bust in 2006 owing £37 million to 119,000 customers.

“The UK Government must take a serious look at the workings of the insolvency industry which appears to be raking in a fortune at the expense of creditors.” Mr Weir said.

“After four years, Farepak victims have been left with pennies while the administrators have walked away with millions, and this by no means is an isolated case. People are actually dying before the insolvency gravy train comes to a halt. Part of the problem seems to be that the industry is largely self-regulated. What’s more, there is no independent complaints investigation procedure or ombudsman to adjudicate on malpractice – there are no questions over fees or delays.

“Just like (regulation of) the banks, current UK insolvency regulation has failed.”

Liquidations have no statutory time limits and some cases have been known to take up to 35 years to resolve.

John Hall, Scottish council member of industry body The Association of Business Recovery Professionals (R3), said: “Insolvency practitioners are highly qualified and experienced professionals who are paid in accordance with the priority list which is set down in statute.

“They have an entitlement to be fairly paid for the responsibilities they assume and the work they perform. It is also important to remember that in every case the creditors agree the basis of the fees charged by an Insolvency Practitioner and that they do have the power to modify them if they do not believe they are justified by the work performed.”

The SLC claimed that the overpayments where a result of the fact that they could not work out the amounts that had been repaid until employers filed their annual tax returns at the end of the financial year.

Which? obtained the figures using freedom of information requests after receiving a number of complaints from people who had noticed that funds continued to be deducted from their wages when their debt should have been cleared.

Instalments are taken directly out of graduate’s pay packets by HM Revenue and Customs (HMRC) and passed onto the SLC until the SLC informs HMRC that the total debt has been repaid.

Which? chief executive Peter Vicary-Smith says: “How is it possible that for at least the second year running the Student Loans Company has overcharged ex-students by millions of pounds?

“We know paying off a debt is a stressful experience, so the last thing people need is to find that they’ve been paying out more than they need to. The SLC must ensure it doesn’t keep ex-students in debt for longer than they need to be.”

The SLC is not required to provide borrowers with a regular detailed statement which leaves some former students in the dark about how much they have left to pay and when their payments are due to stop.

It has recently introduced a new policy whereby former students can switch to making their payment by direct debit for the final two years of their payment schedule and it has asked 68,000 account holders if they would like to pay in this fashion.
An SLC spokesperson said: “Switching to direct debit means you can choose your monthly repayment date and we can make sure your repayments stop at exactly the right time.”
Graduates who are unsure of when their payments are due to stop or think they may have been over-charged have been advised to contact the SLC to request a detailed breakdown of their account.

Under the planned rules, an English student studying in a Welsh or Scottish university will have to pay the higher fees whilst a student from Scotland or Wales will be able to attend university at a much lower cost no matter where they study in the UK.

The news came as protesters launched their third day of demonstrations against the planned hike in tuition fees which could see some students paying up to £27,000 for a three year course exclusive of living costs.

Welsh education minister Leighton Andrews said that higher education should continue to receive government subsidy and that the opportunity to study irrespective of ability to pay is a principle that the Welsh assembly will protect: “We do not support full-cost or near full cost fees. We do not believe that higher education should be organised on the basis of a market,” Mr Andrews said.

“Higher education should be on the basis of the individual’s potential to benefit, and not on the basis of what they can afford to pay. Students ordinarily resident in Wales going to university in 2012-13 will be no worse off than if they had gone to university this year.”

The coalition’s flag-ship policy continued to cause problems for the Liberal Democrats yesterday with Nick Clegg, the deputy prime minister, refusing to say he would vote for it five times. Vice Cable said that his instinct was to vote for the bill but that he would follow the will of his party who are overwhelmingly against it. This could result in the business secretary failing to support the bill he drew up.

Aaron Porter, president of the National Union of Students, welcomed the announcement: “Welsh students stand to have their higher fees paid for them, clearly showing that where there is a will there is a way and that fees can effectively be kept at current levels.

“The Government’s proposal to triple fees would leave English students and their families with huge fees and increased debts.

“The claim that there is no alternative to passing huge debts on to the shoulders of the next generation to fund our future has unravelled in spectacular fashion.”

Plaid Cymru education spokesperson Nerys Evans said: “As a Welsh government, we will be protecting Welsh students from the fee hike that has been proposed by the Conservative and Lib Dem coalition in England.

“We know that the thought of a £27,000 debt would put a lot of people off going to university and that is simply not acceptable.”

A study for Myvouchercodes.co.uk found that 89% of people surveyed feared that they would die owing large amounts of money to credit card, loan and overdraft providers.

Of those who said that they expected to die in debt, 19% said that they were not concerned about their liabilities being passed on to their next of kin in the event of their death.

A third of respondents said they thought that they would never be debt free with 54% of those surveyed saying that they would need to continue to borrow to fund their chosen lifestyle.

Nearly 80% think that it is still too easy to borrow relatively large amounts of money from banks despite a tightening of lending criteria over the past three years. Over half of those asked said that they do not feel in control of their financial situation.

Farhad Farhadi, personal finance expert at MyVoucherCodes.co.uk, commented on the findings of the study:

“The majority of UK adults owe money in some way, shape or form; but to see that almost a third think they’ll never be free from debt is quite alarming. When borrowing money from any source, how you are going to repay it should always be in the back of your mind.

“I’d agree that getting money on credit has become all too easy, and many often see it as the easy way out. A lot of people don’t really think about the consequences of borrowing money and it can be easy to get complacent; but keeping it all under control should be a priority from the off. Only borrow what you really think you can afford to pay back.”

The study of 1,722 people aged 18-35 was conducted as an attempt to discover more about people’s relationship with debt and borrowing.

Lenders wrote off £1.83 billion in defaulted debt in the three months to the end of September, some 47% less than the £3.47 billion lost in the previous quarter according to figures from the bank of England.

Credit card debt accounted for £740 million of this figure down from £2.1 billion in the second quarter of the year, the lowest since the first quarter of 2008.

The fall has been attributed to an improvement in people’s finances following a slight decrease in the number of bankruptcies and repossessions this year.

David Black, from the financial consultancy Defaqto, told the BBC it was a reflection of more selective and restrictive lending by banks: “It looks as if banks are benefiting from their decision a few years ago to be more careful about who they lend to, especially with unsecured lending.”

Banks regularly write-off delinquent debt on credit cards and other forms of unsecured lending which they then sell on to debt collection agencies at a fraction of its worth. The debt is passed on after the borrower has failed to make satisfactory payment for as little as eight months in some cases.

The sums cancelled by some banks have in the past have amounted to around 10% of their entire book and account in part for the high levels of interest charged on certain products.

The decrease in sums written-off could only be a correction after the very high levels of debt written-off in the previous quarter and could well flatten out over the coming months.

David Dooks, director of statistics at the British Bankers’ Association, told the BBC: “Changes in some banks’ accounting practice during the first half of the year resulted in larger numbers for the first two quarters, however third quarter figures have moved back into line with the previous trend.”

The £7.5 billion the UK taxpayer will pay towards the EU rescue package of £85 billion is roughly equivalent to the money the government plan to slash from public spending each year effectively wiping out one year’s worth of savings.

The chancellor confirmed this morning that the money would be made available to the Irish to prop up their economy which has been hit by an Icelandic-style meltdown as a result of bad debt and poor investment made prior to the banking crisis.

If Ireland were to default on its debts it could cost the country up to £5 billion on toxic loans held by the Royal Bank of Scotland and the Lloyds Banking Group, both part owned by the government. It is thought that Ireland is unlikely to default if the rescue package goes ahead as planned.

Osborne attempted to placate eurosceptics in his own party by saying that this agreement is not a signal that Britain is on hand to bailout any country from the eurozone. He told BBC Radio 4′s Today programme: “What we have committed to do is to obviously be partners as shareholders in the IMF in an international rescue of the Irish economy. But we have also made a commitment to consider a bilateral loan that reflects the fact we are not part of the euro… but Ireland is our very closest economic neighbour.”

The announcement came as a leading British thinktank said that UK taxpayers should not have to “cough up” to support Ireland’s failing economy.
Sam Bowman, head of research at the Adam Smith Institute, said: “The proposed bailout for Ireland is a bad deal for the UK. It puts the interests of the European Union and the eurozone before the interests of Ireland and the British government should have no part in paying for it.

“Asking the British taxpayer to cough up £7bn shows just how audacious the European Union has become in its desperation to keep the eurozone project afloat. The UK successfully avoided entering the eurozone. Ireland was not so lucky, but it entered in full knowledge of the risks involved.

“Bailing out Ireland now would undo much of the benefits that Britain has yielded from keeping the pound and would make a mockery of the spending cuts announced by the coalition last month. In the end, Ireland will have to choose its own path out of this crisis. But the British taxpayer should not be held responsible for past mistakes by Irish politicians.”

Problems for which the under-25s sought help leapt to 729,825 with 80% of them relating to unemployment, debt and housing issues as the recession continued to take its toll on the young.

Requests for help and advice about jobseekers allowance were up 40% on Citizens advice figures for 2008-09 and problems with housing benefit and privately rented property also rose sharply. The rise in the number of young people not in employment, education or training has increased dramatically since the start of the banking crisis and subsequent downturn.

Problems with debt made up a third of all enquiries, benefit issues accounted for a quarter, employment issues 12% and housing a further 10%.

The charity highlighted the case of a young Stockton resident called Stacey who approached them with an employment issue: “I took on a short two-week job to get some cash,” she explained. “A month after I had finished the job I had still not been paid. Citizens Advice helped me write a letter to the employer, but three months later I’d still not had a reply. In the end I made a claim to take it to an employment tribunal – only then did I finally hear from the employer and get my money.”

Citizens Advice are launching a new website to cater for the rise in the number of under-25s seeking help, advice4me.org.uk, that will focus specifically on the debt, benefit and employment problems that young people are facing today.

Gillian Guy, the charity’s Chief executive, said: “It can be scary and daunting to seek advice if you have a problem – but more often than not, the sooner you tackle it the easier it is to put right.

“Under-25′s often have specific issues, which is why we’ve pulled together lots of information they might find useful in one place. Our advice is free and confidential.”

The figures are particularly worrying after a 20 month period of historically low interest rates which should in theory have relieved some of the pressure from homeowners struggling with repayments.

Campbell Robb, chief executive of Shelter, told the Guardian that it has been a difficult year for homeowners with many hanging onto properties by the skin of their teeth: “With potential interest rate rises, higher unemployment and steep increases in food and fuel bills on the horizon, it seems unlikely things are about to get easier for homeowners any time soon. Unless we take urgent action, we may well be faced with a sudden surge of people at risk of losing their home in the coming months,”

The results of the survey, carried out by the polling group YouGov, are supported by figures released today by the Council of Mortgage Lenders (CML) which, despite showing an overall drop in the number of repossessions in the UK, pointed to a rise in the number of borrowers with the highest arrears on their mortgage of more than 10% of total loan value.

Michael Coogan, director general of the CML, told the BBC he cautiously welcomed the fall in the number of repossessions but warned against taking the downward trend for granted against an uncertain economic backdrop: “Many households are adept at adjusting their spending and prioritising their bills to manage their way successfully through periods of temporary difficulty. But the capacity to do this will depend on individual circumstances, the extent to which income falls or mortgage costs rise, and how soon they can get back into full employment.”

A separate study by the insurer Bright Grey suggests that seven million Britons are living beyond their means and are borrowing an average of £4,320 annually to make up the shortfall between what they earn and what they spend.

Yesterday’s announcement from the Bank of England that the cost of living is likely to soar over the coming year coupled with the hike in VAT in January, could see these borrowers coming under increasing pressure in the coming months.

An investigation by the Daily Mail has found that graduates who leave university and earn a modest income are likely to still be paying off their student loan when their own children are starting their studies. It’s likely that many will not have repaid of the principle amount of their loans after 30 years when the debt will automatically be written off.

Tuition fees are set to rise from around £3,000 to as much as £9,000 per year which, when coupled with living costs that the NatWest Student Living Survey found can be as much as £8,210 per year, could leave students leaving university with debts of over £50,000.

Money owed to the government will have to be repaid at a rate of 9 per cent of a graduate’s salary over £21,000 a year with interest added in line with the retail prices index (RPI) to RPI plus 3 percent for higher earners. Those on a low to modest income are likely to end up paying more in interest than the amount they borrowed.
According to a data analyst at moneyfacts.co.uk, a graduate who leaves university with a debt of £43,500 earning £21,000 a year and receiving a 3 per cent pay rise each year will have repaid £33,217 in 30 years but, because of the interest added, would still owe £73,659, which would have to be written off.

Chris Tapp, of debt charity Credit Action, told the Mail “We risk creating a generation of students who will never be able to pay their way out of debt. They are going to be lumbered with a lifetime of borrowing. The danger of student loans rising is that other more expensive credit may get put to one side.

“This is just the start of a cycle of problems. Parents may be so worried about funding their child’s education that they borrow to help them out.”

The first batch of students to face repaying their fees and living costs under the coalition’s revised plans will graduate in 2017.

The report suggests that the while nation as a whole is suffering the health fallout of worrying about how to cope with the cost of living, everyday bills and debt, the link between wallet and health is no clearer than among pensioners.

It shows that some nine million pensioners in the UK are enduring the harsh effects of financial worries in their later years as they face symptoms of finance-related stress including anxiety (43%), lack of concentration (22%), insomnia (24%) and feeling depressed (21%). And as the government plan to phase out the default retirement age of 65, more pensioners may be forced to carry on working in fear of developing these symptoms.

In fact, the stress caused by money concerns has reached epidemic proportions across all sectors of the nation, with an estimated 42 million adults of all ages suffering from the syndrome. This is double the number of sufferers of four years ago, when the syndrome was first identified by GP and mental health expert Dr Roger Henderson.

In this latest report, pensioners emerged as among the worst affected, with three-quarters admitting to feeling stressed about their finances – particularly about the cost of living – over the last 12 months and well over half saying their stress had worsened in that time.

About 60% of pensioners blamed the high cost of living on their woes, compared to just 40 per cent of high-level managers and around 50% of manual workers. Pensioners also believe cost of living will remain the key factor driving their money worries over the next 12 months.

Pensioners are also the most concerned of all groups about their situation deteriorating over the next year with 53 per cent expect it to worsen compared to 36 per cent of top managers. This is perhaps not surprising as the government move to link pensions with the less valuable CPI rather than RPI, leaving pensioners facing even more cuts in their pocket in 2011.

However, pensioners are also among the least likely to have taken any practical action to get out of their financial fix. While 36% of pensioners have taken some practical steps to take control of their finances, the worrying aspect is that just over a third of pensioners have done nothing at all to help deal with their stress. The report shows that just 5% of pensioners sought the help of an independent financial adviser, while about 1.5% visited a debt counsellor. About 5% spoke to a doctor and 3% have taken prescription drugs to help with their stress. The reports also showed that 13% turned to food and 13% to drink for consolation.

Eugene Farrell, Head of Psychological Health and Wellbeing at AXA said:

“Pensioners today have a lot to contend with. And while it’s no surprise to find money worries are a concern for them, it is deeply worrying that it is affecting their health in such a way. As an aging population, such financial and health issues are a major concern for us as nation and the consequences are likely to only get worse in the years to come. Central to dealing with Money Sickness Syndrome is to have a plan of action that not only reduces the burden of debt but in doing so helps to reduce the physical and psychological symptoms.”

For example, the consumer champion’s research reveals that consumers could be spending as much as £1,140 a year on unauthorised overdraft charges if they bank with Santander. And the disparity around charges doesn’t end there. While First Trust charges customers £185 a year for using a £200 authorised overdraft six days a month, whereas Coventry BS has no charge for a £250 authorised overdraft. Furthermore, each bank has very different ways of charging for overdrafts, making it difficult for consumers to compare accounts.

Even customers who stay out of the red are not getting a free ride from the banks. Which? found that lost interest and fees for using their card abroad could be costing consumers as much as £57 a year – and much more for those who travel overseas regularly.

Which? chief executive, Peter Vicary-Smith, said:

“Contrary to popular belief, banking is not free. Whether it’s through low interest rates or high charges, we all end up paying for our current account in the end.

“The complicated ways banks present charges makes it difficult for people to work out whether they’re getting a good deal. If you regularly go into the red or want a better return on your money, then the figures speak for themselves – it’s worth making the switch to a more suitable account.”

The report, released today, states:

“The recovery continued in the United Kingdom, with output growth across the first half of 2010 close to its historical average. But the level of economic activity remained well below its pre-crisis peak. The revival in the world economy also proceeded, albeit unevenly. The UK recovery is likely to continue, underpinned by the considerable monetary stimulus, further growth in global demand and the past depreciation of sterling. But the risks to growth remain weighted to the downside. Spare capacity is likely to persist over the forecast period, although its extent will depend on the strength of demand and the evolution of supply, both of which are uncertain.”

“CPI inflation remained well above the 2% target, elevated by temporary effects stemming from higher oil prices, the restoration of the standard rate of VAT to 17.5% and the past depreciation of sterling. And the forthcoming increase in the standard rate of VAT to 20% will add to inflation throughout 2011. As these effects wane, downward pressure on wages and prices from the persistent margin of spare capacity is likely to pull inflation below the target. But the pace and extent of that moderation in inflation are impossible to predict precisely. Under the assumptions that Bank Rate moves in line with market rates and the stock of purchased assets financed by the issuance of central bank reserves remains at £200 billion, inflation is a little more likely to be below the target than above it during the second half of the forecast period, although those risks are broadly balanced by the end.”

Martin Gahbauer of Nationwide commented:

“The reduction in the MPC’s expectations for economic growth comes as no surprise, as this is the first set of forecasts that takes into account the austerity measures announced in the Emergency Budget. The recent softening in many survey indicators – including this morning’s sharp fall reported in Nationwide’s Consumer Confidence Index – certainly supports the MPC’s more cautious assessment of the UK’s economic prospects. Yet even this more pessimistic forecast projects a relatively robust pace of economic recovery over the next several years, with only a small probability that the economy falls back into recession.

“Despite the upward revisions to the inflation forecast in the near term, the MPC still does not believe that above target inflation will persist over the medium-term. As a result, interest rates are unlikely to rise for the rest of this year at least.”

The survey reveals that Brits are not looking after the pennies when it comes to making the most of loose change. Two thirds of Brits (65%) regularly find loose change in a variety of places which could be put to better use.

With the average Brit thinking they have £1.61 in loose change down the back of the sofa, we could literally be sitting on nearly £43 million.

But loose change doesn’t only lurk in sofas. Pockets top the loose change league table with two fifths (39%) of Brits regularly finding loose change in them. This is closely followed by loose change lurking at the bottom of a bag (36%), in the car (27%) and down the back of the sofa (23%).

The research revealed that the highest value of loose change is likely to be found in a desk drawer (£3.59), closely followed by pockets (£3.38) and in the car (£2.44).

Brits also estimate they have an average total of £17.69 floating around in these places. This amount falls to £15.43 for women but rises to £21.03 for men.

When it comes to picking up money in the street, the average minimum amount Brits would pick up is 50p (£0.54) However, this rises to 61p for men, where as women will stop to pick up an average of 47p.

Younger generations will only stoop for higher amounts compared to older generations. For example, those aged 25-34 years would bend down for a minimum of 87p compared to those over 65 years who would stop to pick up an average minimum of 24p.

Out in the regions, stooping snobbery comes in to play with residents in Yorkshire and the Humber bending for an average minimum of 94p compared to their neighbours in the North East, who will pick up a minimum average of 24p.

However, two thirds of Brits (66%) said if they saw a penny lying in the street, they would pick it up for good luck. This rises to three quarters of women (73%) but falls to three fifths of men (58%). Residents in Wales are most likely to pick up a penny (78%) with those in London most likely to leave it lying in the street (53%).

It does still appear that Brits like to save their coins with three quarters (74%) keeping their loose change in a set place, such as a jar. For half (47%) of hoarders, the coins are mainly coppers, with a fifth (17%) storing mainly silver coins and just 5% reserving it for £1 or £2 coins. A third (30%) said they save any coins.

Flavia Palacios Umana, Head of Products, Halifax Savings, said:

“These figures prove that we should no longer ignore our loose change but manage these small sums more wisely
. The old saying ‘take care of the pennies and the pounds will take care of themselves’ continues to be firmly the case. We need to recognise this, instead of leaving our loose change languishing down the back of the sofa.”

There were 34,743 individual insolvencies in England and Wales in the second quarter of 2010. This was an increase of 5.0% on the same period a year ago.

This was made up of 14,982 bankruptcies (which were down 20.6% on the corresponding quarter of the previous year), 13,466 Individual Voluntary Arrangements (IVAs), (which were up 10.2% on the corresponding quarter of the previous year) and 6,295 Debt Relief Orders (DROs).

In the second quarter of 2010, 85.7% of bankruptcies were made on the petition of the debtor, comparable to the levels for recent quarters. The percentage of bankruptcy orders involving trading debts (self-employed bankruptcies) was 12.7% in the first quarter of 2010 (second quarter 2010 figures for trading-related bankruptcies are not yet available), similar to the level for 2009 as a whole.

Commenting on the drop in personal insolvency figures, Tim Moss, head of loans and debt at moneysupermarket.com said:

“On paper this looks like great news, however I’m inclined to see this as the calm before the storm. Many people are just about making ends meet due to the low Bank of England interest rates keeping the cost of mortgages down. However, the only way base rate can really go is up, and when this happens we could see many households tip over the edge as a result.

“With job losses in the public sector, VAT rises in January and the cost of living increasing, we may see many households plunge into further difficulties so although we should welcome the drop in insolvencies, we shouldn’t assume we are out of the worst of it.”

Debt charity Consumer Credit Counselling Service (CCCS) has seen a dramatic rise in calls from people in rented accommodation seeking help with eviction.

Previously, it was homeowners rather than renters worried about losing their home who were contacting the charity for help with avoiding eviction. CCCS says that this is no longer the case and is receiving more and more calls from private tenants and those living in social housing who are struggling to pay their rent.

Although over half (50.9%) of all people who sought help with their debts from CCCS last year lived in rented accommodation and had an average of 5.5 unsecured debts, most had been able to pay their rent in 2009. The charity is warning that this sudden rise in renters seeking help with eviction may lead to increased homelessness and says that rent is a priority debt which should be paid before any non-priority debts.

Laura Carver, CCCS helpline manager says: “Up until now, almost all of those calling for help in staying in their homes were owners who were struggling to keep up with their mortgages. We have been surprised by the sudden rise in people in rented accommodation phoning us for help with eviction.

“While we have always had more people in rented accommodation calling for help with their debts, they have usually been able to maintain their rent payments. This suggests that the personal finance situation for those in rented accommodation is deteriorating to the extent that they many end up homeless.”

According to new research by uSwitch.com, new mothers are being forced back to work by debt and financial concerns.

Over half of new mums returning to the workplace do so because of debt and financial considerations (52%) compared with just 22% who want to continue their career. And such is the financial impact of going on maternity leave that one in ten (9%) feel forced to return to work earlier than they would like to make ends meet.

The average family sees a 34% drop in their net monthly household income during the maternity leave period with income dropping from £3,431 a month to £2,266 a month while on statutory maternity pay. At the same time costs rocket with the average mum spending £2,152 on baby items prior to giving birth. However, the expense doesn’t stop there. While on maternity leave mums spend an additional £2,521 on baby items – accounting for 90% of the average net monthly household income during the statutory maternity pay period.

Almost six in ten mums (56%) are not adequately prepared financially to survive on a reduced income while meeting the additional costs of a baby. Just a quarter (25%) are fully equipped to fund their maternity leave and have enough money saved in advance while a lucky one in ten (9%) don’t need to worry as their partner’s income is enough to see them through. Over a quarter (29%) save less than £1,000 to help cushion the blow, but on average expectant parents save £3,265 to help limit the impact of losing a large chunk of their net household income.

As well as not saving, almost three in ten new mums (29%) are not aware of their company’s maternity package prior to taking maternity leave, while a further three in ten (30%) know that the package isn’t ideal but don’t want to wait any longer to have children. But whether women are aware or not, the effect can still be the same with many struggling to keep their heads above water once the reality of living on a reduced income kicks in. In fact, over a quarter of new mothers (27%) say that going on maternity leave has a much greater financial impact than anticipated, while four in ten (41%) say it is as tough as expected.

Four in ten new mums (41%) end up in debt during maternity leave. The average debt incurred is £1,329. This, coupled with other financial pressures, forces many to change their plans. One in ten (9%) end up re-thinking their intention to be a stay-at-home mum, while a further one in ten (9%) are forced to cut their maternity leave short, returning to work sooner than they would like in order to make ends meet.

But despite debt and financial considerations being the biggest driver behind new mothers returning to work, 40% of those who return end up taking a pay cut to go part-time. Tellingly, just 21% of new mothers returning to work believe that their future progression and earning capacity is unaffected by their maternity break.

Ann Robinson, Consumer Policy Director at uSwitch.com, said:

“Debt and financial considerations combine to be the biggest motivating factor behind new mothers returning to the workplace. Despite women being told that they can ‘have it all’ and can choose whether to be a working or stay-at-home mum, the fact is that most have this choice stripped away from them by the financial realities of modern life.

“With the new Government planning to cut child trust funds and the impending budget causing concerns over pay freezes and redundancies, family finances are under more pressure than ever. The high cost of living coupled with the often crippling cost of a mortgage means that many households today need two incomes to get by. Unfortunately, new mothers are often paying the price for this by seeing their choices taken away.

“Preparation is key for those planning a family. Check out your company’s maternity policy, calculate how much you will need to survive, save money in readiness and cut down on household bills and unnecessary expenses. By keeping a tight lid on your household budget hopefully you will remember your maternity leave for the right reasons and not for the financial headache and debt it can bring.”