ROOF Blog

The number of young people not in employment, education and training (neets) is expected to total one million by September research by the Local Government Association has found. Much earlier intervention is needed to identify young people who are at risk of dropping out and councils should be allowed to fund employment or training projects, the LGA says.

Shelter has warned the government and mortgage lenders to start preparing for a second wave of arrears and repossessions that will hit the UK in the next two years. It says hundreds of thousands of homeowners face being repossessed or falling into arrears as the effects of rising unemployment, higher interest rates and mortgage support schemes ending start to take effect. Shelter has seen a 250 per cent increase in the number of calls to the helpline regarding mortgage arrears in the past year.

Economic gains in deprived parts of Wales in the past 10 years have been wiped out by the recession, and worse is still to come. A report by the Joseph Rowntree Foundation and New Policy Institute found that, compared with other parts of the UK, economic recovery since 1997 was slower to kick in and markedly weaker, with the danger of further deterioration as the recession continues. Unemployment stood at 6 per cent, but increased to 16 per cent among the 16- to 24-year-olds.

The Financial Services Authority (FSA) has published details of its ‘stress test’ for banks, which assumes that house prices will halve and unemployment will peak at 12 per cent. The FSA’s stress test applies fictional economic scenarios to see how banks’ balance sheets would cope, and the current stress scenario depicts a recession carrying on for at least a further year and a half, a 6 per cent shrinkage in the economy from peak to trough and an increase of an additional 1.5 million people losing their jobs. The FSA is keen to stress that the test is not a prediction.

A financial thinktank, the Financial Inclusion Centre (FIC), has warned that predictions of a fall in the number of repossessions are unfounded as official figures do not take into account sub-prime lenders details. FIC said it expected an increase in the number of repossessions, particularly in middle and lower-income groups who ‘mortgaged themselves to the hilt’, to be driven by rising unemployment. Research showed that sub-prime lenders had a higher proportion of customers likely to lose their jobs and default on their homes, and were also more likely to press for repossession. The warning comes after the Council of Mortgage Lenders said it expected to revise down its prediction of 75,000 homes being repossessed this year.

A package of measures to help unemployed people who are experiencing depression or anxiety to get back to work were announced on the weekend by health secretary Alan Johnson and Work and Pensions secretary James Purnell. There will be a faster roll out of talking therapy services around the country, with services will be available in every area by 2010, and employment support workers linked to every talking therapy service. The NHS will also get a reduction in the rate of VAT to commission complementary services including debt advice and family counselling.

Typical householders have ‘no realistic hope’ of paying off their debts in their lifetime, Citizens Advice said today. People turning to CAB advisers for assistance owed an average of £16,971, an amount that would take 93 years to pay off. The most common reasons for debt were low incomes, over-commitment, illness or disability, and job loss, and more than half had debts of priority bills such as mortgage repayments, rent, council tax or fuel bills. The average debt was two-thirds higher than in 2001.

A new study by the Institute of Public Policy Research has found that there is no evidence to suggest that large-scale migration from eastern Europe since 2004 has had a negative impact on wages or unemployment. Figures out this week from the Homes Office found a 47 per cent drop in the number of migrants coming to the UK from eastern Europe at the end of last year as the recession began to bite.

Public attitudes to the welfare state have hardened during Labour’s decade in power, and even more so among Labour voters, a study by the London School of Economics has found. The study pre-dates the current recession, starting in 1996, just before Tony Blair took power. At the time 48 per cent of voters and 62 per cent of Labour supporters believed that unemployment benefits were too low and causing hardship. By 2006 only 23 per cent adults felt this and among Labour voters this had dropped to 30 per cent.

The head of Barclays bank has predicted that house prices will fall in total by 30 per cent, ahead of the latest UK unemployment figures on Wednesday. The chief executive, speaking in an interview with Sky News painted a bleak picture as he criticised mortgage borrowing levels in the past decade and warned that the UK was only halfway through a slump with house prices set for bigger falls still: ‘We’ve got another 10 to 15 per cent to fall between now and the end of the next year’, as unemployment is likely to go up to at least 7 per cent.