One person every 53 seconds contacted us for debt advice in 2016
By Joseph Surtees, Senior Public Policy Advocate
Last year, somebody contacted us for help with their debt problems every 53 seconds, an all time record. And for the first time in eight years the average unsecured debt of our clients increased, going from £13,900 to £14,251.
Those are the main stories of our 2016 Statistics Yearbook, published today.
Demand for debt advice
In total, 599,026 people came to us for help in 2016. The highest demand, both in absolute terms and relative to population, came from London with 102,133 people from the capital seeking debt advice. This is the equivalent of 150 people per 10,000.
The next highest level of demand compared to population came from the north east, where we advised 134 clients per 10,000.
In 2016 there were also 3.3 million visits to the charity’s website, an increase of more than 100% over the number five years ago.
What debts do people have?
The average client has 5.7 unsecured debts, including almost three credit cards. Overall, more than two thirds of clients owe money on credit cards and over half have overdraft debts.
The amount of debt owed on catalogues, personal loans, store cards, home credit and payday loans increased between 2015 and 2016.
In addition to unsecured credit, four in ten people are behind on their household bills. This is an increase of 5% over the last five years. On top of their unsecured debts this amounts to an additional average debt burden of £2,061.
Debt owed by clients to their family and friends continues to grow rapidly. Last year, 28.3% of clients owed money to a relative or friend. In total they owed almost £434 million. This is £135 million more than they owed in 2015.
Who sought debt advice in 2016?
The proportion of clients aged under 40 continued to grow in 2016. They now account for 60% of all clients advised. Five years ago it was 52%.
One in five clients was a single parent. This is double the proportion of single parents in the UK population.
The proportion of clients who rent their home grew from 61% to 77.3% in just five years. The fastest growth in demand has come from those living in private rented accommodation, who now account for almost four in ten clients.
Family wage income continues to stagnate. Average client household take home pay (not including benefits) in 2016 was £46 less per month than it was five years ago.
Wage stagnation means the number of clients unable to cover essential outgoings has continued to rise. Even after a budgeting session, 29% of clients in 2016 did not make enough to cover all essential bills at the end of the month.
How can we improve this situation?
We believe government should commit to a ‘Breathing Space’ scheme to better support hard pressed households who fall into financial difficulty. The scheme would see those who seek advice for debt problems potentially given a period of six months to a year in which interest and charges are frozen and enforcement action, such as visits from bailiffs, halted. Where people can repay their debts at an affordable rate and within a reasonable time, these protections should continue.
A similar scheme is already underway in Scotland — the Debt Arrangement Scheme (DAS). Our research shows the Scottish scheme is delivering major benefits. A survey of those who’ve used DAS found that 81% said it’s easier to repay debts, 78% said they were less stressed and can now sleep, 72% said their finances had stabilised.
Our Statistics Yearbook shows the urgent need for reform of the system of debt reliefs and remedies in England and Wales. ‘Breathing Space’ is the missing piece of the puzzle when it comes to debt solutions.
As levels of personal borrowing approach their 2008 peak, we need a set of policy measures that will better protect those who will inevitably fall into difficulty.
1. Findings based on survey of StepChange Debt Charity clients using the Debt Arrangement Scheme (DAS). Survey conducted in December 2016.