The 19th century American journalist Ambrose Bierce described debt as an ingenious substitute for the chain and whip of the slave driver. If he had been writing in contemporary Ireland, he could have added a special mention for the banker, the property speculator, the big building firms and big businesses which have forced tens of thousands of households into poverty to pay their boom-time debts. Over 50% of Ireland's households are in debt, way above the eurozone average. It is estimated that as many as 250,000 people are insolvent. This debt crisis is a daily nightmare for tens of thousands of people who are in constant fear of the next telephone call or letter from their bank. I recall last year meeting a young woman whose hair had fallen out owing to the stress caused by the constant harassment of her banks in looking for payments that simply could not be made. Debt is destroying people's lives, forcing them into making daily decisions about whether they should leave bills unpaid, not eat or leave their homes without heat in order to pay their mortgages or other creditors, decisions that are impossible for them to make.
The vast majority of people who are in debt are not those who theoretically "lost the run of themselves" in the course of the boom. Their only crime was to provide for their very basic need to have a home.
Despite the hype and spin about the recovery in our economy, we are still in the midst of a very severe debt crisis, which even the Taoiseach has admitted this morning. The latest Central Bank figures show that nearly 118,000 mortgage accounts are in arrears, which amounts to €2.5 billion and represents over 15% of all mortgages. The number of those in serious mortgage arrears is still increasing. There are now just under 37,500 mortgages in arrears of over 720 days, coming to a value of €8 billion. That is 7.6% of total outstanding mortgages.
When the Government came to power in 2011, there was an expectation that something would be done to ease the burden of those in mortgage and personal debt difficulty. The Labour Party even promised a personal debt management agency that would be armed with strong powers to protect people in debt. All we got was a Personal Insolvency Bill which, although it has worked for some, has demonstrated itself to be woefully inadequate, riddled with shortcomings, and a complete failure in dealing with the mountain of debt heaped onto households. The reality of the existing system can be seen in the fact that since the launch of the insolvency service, just 1,600 people have applied for one of those arrangements, and of those, only 548 have been approved. It is a tiny drop in the ocean compared to the debt crisis that exists. In reality, people have been voting with their feet and not engaging with this regime.
With this Bill, the Government had an opportunity to correct the flaws in the personal insolvency system. Instead, it is tying up some loose ends and making relatively minor and technical changes. Nothing is being done about the fact that personal insolvency practitioners, PIPs, are allowed to set their own rates and charge in the region of €2,000 for their services. Some cases have been reported of €4,000 being charged, to people who are in extreme debt crisis situations, and just a consultation with a PIP can cost in the region of €100 to €300. The whole thing puts the process beyond the reach of many who are in debt. There are also cases of personal insolvency practitioners refusing to deal with people in very serious arrears. The profiting off the backs of people who are in vulnerable and difficult situations must end. Organisations such as MABS have called for insolvency practitioners to be provided free of charge to those in debt. We in the Anti-Austerity Alliance support that and believe it could be funded through a levy on the banks.
This legislation will do nothing to tackle the power banks have under this regime. The banks' veto on proposals remains. The exercise of this veto is not an isolated incident but is something the banks are using on a regular basis. The insolvency service reports that to date, 25% of proposals have been rejected by creditors, which is an exercise of that veto. With the re-inflation of the property bubble, the increase in property prices we are seeing at the moment, we are only likely to see further increases in the use of that veto as banks seek to maximise their profits at any cost. This legislation could have been an opportunity to dislodge the banks from the driving seat in this process. We could have seen the introduction of mechanisms forcing the banks to agree to write-downs, but instead, yet again the Fine Gael and Labour Government has decided to back up the banks.
Debt is a personal nightmare for many people, but it should not be. People in debt are victims of the capitalist system that has forced them into buying modest homes at massively inflated prices in order to swell the coffers of the banks, property speculators and big builders. When the inevitable crash happened, who was forced to pay the price? It was not the vultures who had profited, but ordinary working people who have been forced to pay the bill through austerity and massive personal debt, while the developers and bankers were bailed out. Austerity, the debt rip-off and the private misery must end. We need a common struggle to end the debt nightmare. The Anti-Austerity Alliance calls for debt to be written down to affordable levels, and the cost to be put onto those who profited from housing and unsustainable lending during the boom. Repossessions must be outlawed. It is simply not a solution to turf people out of homes, for them to go onto endless local authority waiting lists or be thrown to the mercy of rack-renting landlords and all the associated crisis surrounding homelessness.
Tackling the debt crisis will also have to take place as part of tackling the housing crisis. We need a massive plan for public investment in social housing to provide affordable housing for all to rent and to buy. We also need to take on the rack-renting landlords by introducing rent controls and decent rights for tenants.