If the predictions are borne out there will be a 31 per cent increase this year alone in debt inquiries. Alasdair Christie, the bureau's manager, acknowledges it is a gloomy picture. "The credit crunch has come to the Highlands in a big way," he says. "I think it is going to become even more acute."

During the last financial year Inverness CAB handled 5908 debt inquiries. This year, the projected figure is 7790.

"It is a very large increase," Mr Christie reflects. "We are seeing people struggling to pay their mortgages, people with extreme credit card and personal loan debt. This, coupled with the reduction in the number of jobs available in the area and unemployment rising is making it a very difficult situation for people.

"Obviously, inflation and fuel prices are going up. People are finding themselves caught up in a very dangerous and difficult trap." As further evidence, Mr Christie cites the number of unsold houses in Inverness where house building has been a major factor in the city's economic boom of recent years.

"About 20 per cent of Inverness is new build — Westhill and Culloden, for example. If that is drying up, a lot of jobs associated with that will be gone," he says. It is against this background that the 60-strong trained staff and volunteers at the CAB are battling to help clients. "Inverness is the biggest advice bureau in the Highlands and obviously we are swamped with a vast range of inquiries from housing and debt to relationship issues," Mr Christie says.

Last year the debt team handled more than £4 million of debt but expects this figure to increase significantly in the coming year. For those seeking advice, Mr Christie outlines what they can expect.

"We tell people not to panic," he says. "We will sit down with them, work out their expenditure, how much they owe and what is reasonable to offer to creditors. The main aim is to keep a roof over people's heads and make sure they are able to survive. We will negotiate with creditors if necessary and we give them respite from the continual letters and telephone calls from creditors." Asked whether anyone in particular was to blame for the current crisis, Mr Christie is in no doubt. "A lot is down to irresponsible lending," he says. But whereas the government has bailed out banks, he feels it is a pity such help has not been forthcoming for individuals.

"It is a perverse world we are living in," he says. Mr Christie would like to see this country adopt a similar scheme to one in Australia, where some of the profits made by banks are donated to fund organisations and agencies working in a similar way to the CAB.

"The huge obscene profits the banks have made in the past should have been used to support the voluntary sector to help people in debt," Mr Christie says. Meanwhile, he is unable to predict how long the present situation will continue. "I am not an economist," he says. "We are seeing no end to it at the moment — we are seeing an increase."

As well as individuals, small businesses in the area are feeling the financial squeeze, though it is mixed picture according to Helen Carmichael, chairman of the Inverness and Nairn branch of the Federation of Small Businesses.

"In tourism, some businesses are saying they have had a very good year, while some are saying it is down," she says. "I think the main problem small businesses are facing is with the attitude of banks. If they have overdraft facilities they are not being extended and sometimes they are being pulled back. Obviously that begins to make people feel uncertain about any expansion plans they have. Banks are not lending to each other, and small businesses are at the bottom of the food chain."

She says that during an economic crisis small businesses often manage to soldier on, but cautions: "They can only do that and come through with the help of the banks and local authorities."

Stephen and Catherine Bunn, who run hire company Highland Campervans, have seen their business flourish despite the economic crisis. Gary Anthony

For some businesses at least there has been a ray of light amid the economic gloom. That is the case for federation branch secretary Catherine Bunn and her husband Stephen, who founded Highland Campervans in May last year. The company, based at Culloden Moor, hires out camper vans and has already made its mark, having been among the finalists of this year's prestigious Scottish Thistle Awards, which recognise excellence in the tourism industry. Although the firm's first 18 months of operating have been against a tough trading background, Mrs Bunn, a former RAF officer, remains buoyant and certainly has no regrets about setting up the business.

"For us, we are getting the type of people who still want holidays and are wanting something more economical," she said.

"Highland Campervans offers slightly more flexibility. I am getting people who were planning holidays to Italy, for example, but are downsizing and looking for something else. They are looking to explore Scotland. A lot of Scottish people are taking holidays locally."

She recalls that when the credit crunch started she heard actress-turned-baker Jane Asher giving advice that in a downturn businesses should not cut their marketing budgets and should keep spending.

"That is something we have tried to do at Highland Campervans," says Mrs Bunn, who believes local networking is also important. Another key to survival is for small firms to take a look at how they are running their operations. "They have to re-evaluate where they are going with their business and make sure every penny they spend counts," she says.

Even so, she reveals she has first-hand experience of difficulties arising from the banks' reluctance to lend. The company is having to re-think plans to expand the business by developing a two-acre site. It can get a loan to buy the land but not for building on the land. Mrs Bunn says the plans will still go ahead but it will be harder.

Asked about other people thinking of setting up a small business, she says: "I would still encourage entrepreneurs to take that step — but you have to think about the implications of when things go wrong."

Other sectors experiencing an upturn in trade include the city's charity shops. Izzie MacDonald is the assistant head of retail for the Christian charity Blythswood, overseeing its shops from Caithness to Kent, including the newly-refurbished one in Academy Street, Inverness.

"All charity shops are doing really well," she says. "In a credit crunch, people depend on charity shops. Lots of people I have never seen before are coming in our shops." Such is the upturn in trade that demand is outstripping donations according to Mrs MacDonald, who is appealing for good quality clothes and goods. Toys are also welcome, particularly in the approach to Christmas.

Given the economic climate, she suggests that instead of spending money they may not be able to afford, families may want to set themselves a challenge this year by seeing what presents they can find in charity shops.

"It is going to be very hard for lots of families out there this Christmas all over the country," she says.

v.sweeney@inverness-courier.co.uk

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