Boom to bust

The four million figure is far greater than in the early 1990s, when repossessions were at their height. This has sparked fears that it could become a major factor in pushing families to the brink of losing their homes. It took a decade after the 1980s slump for the unemployment rate to come down.

Milton Keynes, the former boom town 60 miles north of London, is one of the places hit hardest by the recession. Its growth – the town quadrupled in size between the 1960s and 1990s – was founded on the expanding ‘new economy’ of financial services, retailing and distribution which were among the first to suffer from the economic downturn.

The town is host to a number of online shopping outfits such as Amazon and Argos, which has its headquarters in Milton Keynes and saw its operating profits down 19 per cent in the past year alone.

Earlier this year, local MPs appealed for government help for the town’s growing army of unemployed. Jobless figures showed an annual rise of 93 per cent in north-east Milton Keynes and a 75 per cent rise in the south-west area. Construction – with new housing developments stalled – joined retail and distribution in bearing the brunt of job cuts.

Martin Creswic’s troubles started when work dried up and his wife became ill. ‘We got behind with payments and things just seemed to go wrong,’ he says.

Neera Saggar, leader of the advice team at Shelter’s office in Milton Keynes, said: ‘We’ve been seeing a lot of people with mortgage debt or rent debt. They include people who’ve taken on debts they can’t afford – an increase in enquiries from people with secured loans they could manage while they had a job, but not when they became unemployed.’

Helene Vancliff, office manager, said: ‘Milton Keynes is an unemployment blackspot. The town has a lot of agency workers, which means jobs are temporary and there’s little security.’

She said the position is made worse than in the early 1990s by changes in housing benefit. ‘In the last recession, if you were unemployed you got housing benefit and it was paid directly to the landlord. Now, it’s paid to the tenant – and with mounting other debts, it’s tempting to use the cash to pay them off instead.

‘We have a number of tenants who have not paid their rent to the landlord and been threatened with eviction. They don’t show up in the statistics because landlords say the tenancy has ended, rather than putting in a claim for arrears.’

People with mortgages, who lose their jobs, could actually be better off under the government mortgage rescue scheme which allows interest payments to be covered. But the scheme does not take account of other debts and, Helene Vancliff says, most people’s debt is far higher than last time. ‘Because of the debts people have, more so than in the 1990s, a lot more are struggling.’

Martin Creswic is a self-employed gardener, who moved to Milton Keynes in the 1980s when he was recruited to work as a manager for the original development corporation. He was caught out last winter when gardening work dried up.

He said: ‘We got behind with payments. We were overcommitted with credit cards and second loans against the property. My wife was ill and wasn’t working, either, so things just seemed to go wrong. We couldn’t sell the house because we’re in negative equity – we owe about £40,000 more than the house is worth.’

He said the scarcity of fixed-rate mortgage deals had added to the family’s problems. ‘What we used to do was to keep switching. You got a teaser rate and when that finished you went back to your broker and he’d get you another deal.’

Shelter advisers negotiated a deal with his lender to pay off the mortgage arrears in instalments of £50 a month. But he still fears for the future. ‘At the moment, interest rates are low, but if they start to go up again we’ll be struggling,’ he said.

David Johnston is in his late 30s and grew up in Milton Keynes – he was stripped of a lifetime’s financial security after being made redundant in the past year. He had never been unemployed before – previously when he’d lost a job, there’d always been another one to go to. But those opportunities had dried up as a result of the recession.

He said he had been applying for up to 40 jobs a week and had only had a couple of replies, which hadn’t gone anywhere. ‘The problem with Milton Keynes, as anyone who lives here knows, is that the town is one big warehouse. They don’t produce anything here – if things go bad they can just pack up and go away…’

He was dealt another serious blow when a letter arrived threatening eviction from a property he’d been renting for more than three years. ‘After I lost my job I couldn’t pay the rent. I didn’t know about claiming benefits and two or three weeks later I got a letter from the agent saying I was being taken to court. That was when I first met someone from Shelter and she sorted everything out.’

Nazir Madha worked for a major distribution company and lost his job after injuring his back. He fell behind with mortgage payments and the lender piled on extra woe by threatening legal action to evict him and his wife from their two-bedroom property.

‘The lender didn’t wait long. I was only three months behind with my payments,’ he said. ‘But when they threatened me after losing my job, I felt like killing myself.’

He said he was scared about going to court. But after contacting Shelter, an adviser went with him and pleaded on his behalf and he was given a six-month reprieve while he searched for another job.

Mr Madha admits the prospects look grim after he has made more than 150 job applications and only been given a single interview. ‘But what Debbie, the adviser, has done for me I can never forget – she saved my house and gave me a new lease of life. She is an angel.’