Long-term debt worries grow as young bear brunt of downturn

Yorkshire has the country’s highest level of young people who are not in employment, education or training (Neet).

Yesterday, one charity warned that calls for debt advice from this age group in Yorkshire were among the highest in the country.

In the county, almost one-in-five of 16 to 24-year-olds were not in work, education or training at the end of the first quarter of the year – far more than in any other region.

Yesterday, the debt charity the Consumer Credit Counselling Service (CCCS) said its research showed young people, unable to find work, or faced with rocketing student tuition fees, were at the sharp edge of the downturn and increasingly could not be sure they would end up better off than their parents.

A CCCS spokesman said: “Young people in Yorkshire are more in need of debt advice than their peers anywhere else in the UK, and this is something we are extremely concerned about.

“Youth unemployment is a big factor.

“Despite unemployment in Yorkshire falling unexpectedly earlier this year, there remains around 95,000 16-24 year-olds out of work in the region – and this is a key driver of problem debt.

“Younger generations are building up debts much earlier in life than has previously been the case. The danger is that the need to repay this built-up debt will limit many people’s ability to get on the housing ladder or save for retirement.”

Under-25s now make up the largest group of unemployed people in the UK. Unsecured debt levels are relatively low – averaging £5,800 – but this is still a problem because of typical low incomes and high unemployment, among this age group.

The CCCS’s consumer debt and money report for the first quarter of 2012 warns young people are being “disproportionately affected by the deteriorating state of the economy.”

The report says this is particularly true for men, the very youngest and in certain parts of the country, including northern England and the West Midlands.

“At the same time, unemployment in youth casts a long shadow over subsequent lives: research shows that people in their early 30s who have spent time without jobs and not in education or training when younger, earn less than their peers,” the report adds.

The spokesman added: “While people of all ages are struggling, young people are at the sharp edge of this downturn.”.

High tuition fees will add to the debt burden of future generations and the report authors are concerned that the financial burden of repayment means lower savings and thus more risk of debt distress.

The charity says several factors have conspired to make this an unusually challenging time for the young.

It says where previous generations could bank on rising incomes and on improving standard of living those embarking on their careers now cannot be sure that they will be better off than their parents were.

In the first quarter of the year the numbers of 16 to 24-year-olds contacting CCCS for debt advice in Yorkshire hit record levels. However, in some parts of the country, such as the east of England, demand for advice has fallen.

“Parts of the UK that are struggling economically show a higher ratio of young people contacting CCCS per 100,000 population, with Yorkshire and the Humber, the North West and West Midlands generating significantly more calls from young persons,” the report adds.