The charity behind the Drop The Debt initiative in Latin America and Africa has now turned its attention to Britain, calling for government action to write off as much as £40bn in spiralling consumer debt.
The Jubilee Debt Campaign is launching a campaign to cancel the debts of struggling British consumers in one of its first-ever drives in an advanced economy.
As reported by The Guardian, the charity is best known for aiding African nations at the turn of the millennium, alongside the likes of Bob Geldof, Bono and Muhammed Ali.
Now, as household borrowing returns to levels unseen since the financial crisis and with a quarter of the UK’s poorest households getting deeper in debt, the group has announced the new initiative in the UK.
The intervention by the Jubilee Debt Campaign is significant as the charity has typically focused on developing countries in the past, having helped 35 highly indebted nations in Africa and Latin America cancel about $130bn (£94.2bn) of borrowing since 2000.
The charity is working with the Centre for Responsible Credit thinktank and will hold an event in parliament this week to make the case for a write-off of household debt.
The group said: “A [write-off] is essential if we are to tackle the UK household debt overhang and right the injustices faced by low-income households.”
The charity is proposing a package of measures to help the poorest borrowers, including calling calling on banks and credit card firms to modify their existing agreements to reduce the level of repayments and charges to a maximum of 30% of a person’s income if they are stuck with problem debts.
The charity also wants the government to buy up and cancel loans which banks sell to secondary debt management firms, as well as capping the cost of borrowing like they did for payday lenders.
A cap on the cost of credit would force lenders to write off amounts owed where a consumer has already repaid 100% of their borrowing in interest and charges.
Personal borrowing on credit cards, loans and overdrafts has reached £239bn, with consumers now trapped in credit card debt for longer than ever before. Interest rates set by the Bank of England are also expected to rise in May and as many as 8.3 million people in the UK now face problem debts.
Last week, the City watchdog introduced new rules which could save struggling credit card holders up to £1.3bn a year, although only after they’ve been stuck in persistent debt for 36 months. More than 3 million UK credit card holders are currently believed to be in persistent debt.