The Hertfordshire town suffering from debt more than most

Watford is one of the worst towns for rising debt. But why?

A fortnight ago we talked about the UK towns with the most debt; Slough came top, rising above a host of other London commuter-belt towns to the dubious honour of having the highest average debt in the UK during 2010.

But that only shows part of the picture – we should also look at where is debt falling, and, more importantly, where is it rising.

Falling personal debt

We mustn’t forget that average personal debt levels are falling across the UK. From a high of nearly £28,000 in 2005, the average unsecured debt reported to us last year was £19,338, a welcome fall of 31% across five years. Between 2009 and 2010 it fell by 9.95%.

The reason for this is pretty obvious – the ease of obtaining unsecured credit during the mid-2000s boom disappeared with the 2008 financial crisis and resulting recession. People are probably not taking out as much new credit nowadays, which is a good sign (as long as they’re not going to loan sharks and illegitimate credit providers instead, of course).

This is backed up by a report released this week by the British Retail Consortium stating that transactions involving credit cards dropped 12.9% in 2010. Rather than putting it on plastic, shoppers are using cash and debit cards more and more.

As the Director General of the BRC, Stephen Robertson, said to the BBC, "Hard-pressed customers are switching to cash and debit cards for the reassurance that they can't spend what they haven't got.”

Postcode lottery

Despite this more positive picture, some pockets of rising debt survive.

Average debt fell in 117 of 121 UK postcode areas in 2010; however, in four areas, average debt bucked the downward trend and rose instead.

In two of those areas, the EC postcode districts of London and Dundee, debt didn’t ‘rise’ as much as ‘stagnate’. While both saw a small increase in the amount of debt reported, both were by less than £100 across the year.

But what of the other two?

Those who called us from a Belfast postcode reported the largest rise in debt during 2010. The average debt in Northern Ireland (the Belfast postcode covers the whole province) went up by 4.9% last year compared to 2009.

Northern Ireland does have lower personal debt than the national average, but that’s of little comfort given the median wage in the province is £23,000, over £2,000 less than the UK median.

However, the real ‘winner’ when it comes to rising debt is Watford. The Hertfordshire town came second in the overall debt charts, but more worryingly, the average debt there also rose by 4.6% during 2010 – or by over £1,000 per person. Compare this to the UK-wide fall in debt by £2,000 and it clearly shows how much trouble Watford (and Belfast) is in.

In essence, Watford had nearly the highest debt in the country and the situation is getting worse not better. Even Slough, 2010’s top debt town, saw a 7% fall in the amount of debt reported.

The Shetland Islands and Llandrindod Wells

In contrast, some areas of the country are seeing massive falls in the amount of debt reported. We’ve previously mentioned how inhabitants of the Shetland Islands have the lowest debt of any postcode area in the country. They’ve also seen a 50.3% fall in the amount of debt reported between 2009 and 2010.

However, given we only gave nine counselling sessions to Shetland Islanders last year, we can probably assume that the data’s a bit unreliable (the same goes for the area with the second biggest fall in average debt, the Hebrides).

So we need to look further south, to Llandrindod Wells in mid-Wales. The Powys town saw a 29.9% fall in average debt reported in 2010, to £18,323.

This is still a sizeable amount of debt – there’s no two ways about it – and the town is suffering from the closure of its manufacturing base over the past few years, but it’s heartening to see that in some areas of the country debt is falling by nearly three times the average for UK as a whole.

Perhaps Watford needs to twin with a town closer to home, to find out how the citizens of Llandrindod Wells are positively reducing their debt.

If you’re from Watford, Worcester, Wakefield or Wigan and suffering from debt problems, it doesn’t really matter if your town’s average debt is rising or falling. Use our online counselling to find out how to get out of the gap.

And finally, why is Watford seeing this huge rise in debt? Do you have any ideas why this commuter town, over all others, suffered so much in 2010?