CONCERNED councillors fear there could be an “explosion” of hard-up people forced to use back-street loan sharks in order to make ends meet.
Figures reveal 10,000 Hartlepool homes are vulnerable to illegal money lenders amid concerns the recession and upcoming changes to welfare system will push more people into their unscrupulous hands.
People often use loan sharks – who lend money and charge massive rates of interest- as a last resort just so they can put food on the table.
But fresh calls have been made for people facing financial difficulty to instead use services such as Hartlepool Credit Union.
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The warning comes ahead of an awareness raising week of action this November in Hartlepool.
An illegal money lender is someone who does not own a consumer credit licence, issued by the Office of Fair Trading.
A report to Hartlepool Borough Council’s scrutiny co-ordinating committee revealed there are three groups most at risk of becoming victims:
● Older people on social housing estates where jobs are scarce, of which there are 4,154 households within town;
● Vulnerable young parents in need of substantial state support, 4,942 households;
● Single people in social housing flats with “modest” social needs, of which there are 1,696 households.
Labour councillor Carl Richardson said: “Come April there is going to be an explosion because the people on low pay are going to be very vulnerable.
“We need to encourage people not to go to loan sharks.”
Officers say it is challenging to collate figures because victims rarely report that type of debt.
But from the available evidence, the Manor House, Jesmond and Hart wards have been identified as loan shark hot-spot areas and evidence shows people have had to sell household items in order to make payments.
Labour councillor Marjorie James said: “We can’t prevent people from going down this route but we should be able to make sure there are far more options available.”
Labour councillor Ged Hall added: “From next April, with the changes to housing benefit and council tax benefit, things will get worse and more intolerable for people.
“It is fine for us to say that they should not get in this situation.
“But when it comes to families heating their homes and putting food on the table, the temptation can be too easy.”
Independent councillor Keith Fisher said: “This is not like the flu, it won’t get better.
“Somebody will need to make it better and I suspect in April next year there will be an increase.”
The England Illegal Money Lending team has received four sources of intelligence regarding Hartlepool over the last year, two of which turned out to be legal money lenders.
But council officers have urged more people to identify loan sharks.
Ian Harrison, principal trading standards and licensing officer, said: “This is something that has been going on for many decades and we are encouraging people to come forward with names and addresses for the national team to look into.”