| 17.7°C Dublin

Thousands seeking help as debts surge

THE number of people turning to a Government money advice service to save themselves from financial ruin will double this year.

In response, the Government has been forced to hire a new team of advisers to bolster the under-staffed Money Advice and Budgeting Service (MABS).

Despite the public sector recruitment ban, the Department of Finance has given the green light for a team of new recruits.

The extent of indebtedness emerged as it was revealed that up to 500 ESB and Bord Gais customers were being disconnected every month because they could not afford to pay their bills.

Stark new Department of Social and Family Affairs figures reveal:

  • The MABS helpline received more than 12,200 calls in the first six months of 2009. This compares with almost 11,000 for all of last year.
  • MABS staff have been visited by almost 10,000 new clients -- owing an average of €15,100 -- since the beginning of the year.
  • The vast majority of the debt (65pc) is owed to banks or financial institutions. Around 16pc is owed to credit unions, 3pc to energy suppliers, 2pc to debt collection agencies and 1pc each to money lenders and local authorities.
  • Single people are most in difficulty. They account for almost a quarter of all new clients seeking help.
  • Almost one in five new clients in dire financial straits are married couples with children.

The five busiest urban MABS offices will each get a full-time temporary post. Around 14 other offices with increasing caseloads will get an additional part-time temporary post. That will bring to 271 the total number of advisers working at the service.

"We are seeing more and more people across the country experiencing financial difficulties -- whether they lost their job or been put on reduced working hours or have taken a reduction in pay," Social and Family Affairs Minister Mary Hanafin said.

"In the past year there has been a substantial increase in the number of new clients approaching the MABS service."

Up to 500 ESB and Bord Gais customers are now being disconnected every month because they cannot afford to pay their bills, the Irish Independent has learned. Bord Gais last night confirmed that between 350 and 400 customers a month -- most of whom are householders -- are being disconnected for non-payment.

The ESB admitted that up to 4,000 of its customers have been switched off this year because they could not pay their bills.

Half were domestic users.

The stark figures emerged as the Commission for Energy Regulation yesterday warned that consumers face even higher heat and power bills over the coming decade. It blamed our reliance on imported fossil fuels such as coal, oil and gas to generate power.

The comments were made at a public forum discussing plans by Bord Gais to drop consumer prices by almost 10pc next year.

There will not be any reduction for ESB's domestic customers. The ESB has instead sought to freeze prices for domestic electricity customers, while small businesses would see a reduction of 0.4pc and medium businesses would get a 5.5pc reduction.

Bord Gais is seeking permission to reduce the price of gas by 9.3pc for residential customers and 13.6pc for small and medium-sized businesses from October 1. A decision is expected in early September.

Bord Gais last night said that about 4,500 customers a year were disconnected for non-payment.

"Many of those disconnected would then clear their arrears and be reconnected. The rate of payment disconnects overall has increased somewhat in the last 12 months. It had been at a steady 300 to 350 a month for the previous few years," a spokeswoman said.

"We work out a payment plan with such customers, which would aim to clear any arrears that had built up within six to 12 months. Very few of these (disconnected customers) would be businesses, probably less than 10 a year.

"This year we have seen greater debt in the business area, with a good number of liquidations, receiverships and examinerships of businesses occurring where gas bills are outstanding, in line with the downturn in the economy generally."

Dermot Jewell, chief executive of the Consumers' Association of Ireland, said people could not be left without an essential service and needed help to get them over this.

"It's not good enough to just cut them off.

"If we're to really deteriorate to a Third World level, and I see signs of that happening, then we need to move to stop this," he said.