By Henry Hall, Insight and Planning Officer
In the first half of 2016, 313,679 people contacted us for help. This is the most in any six- month period since the charity began providing debt advice 24 years ago.
We’ve just published our Statistics Mid-Yearbook, which looks at who the people seeking debt advice are, and what debts they have.
The report shows that while the demand for debt advice remains consistently high, the profile of the people who seek help continues to change.
Who’s in debt in 2016?
Overall, the level of debt among our new clients is steadily shrinking. But with average incomes also falling their debt problems are as complex as ever to deal with.
Compared to previous years, clients are:
· More likely to rent
· More likely to be working
77% of clients are now renting, compared to 55% five years ago. The costs associated with renting are rising, and as a result vulnerability to income shocks and unexpected costs has also grown.
Another key trend in this year’s data is that more clients than ever are taking on loans from family and friends. 28% of clients now have these debts, compared to 20% just two years ago. Rob wrote more about this topic here.
When a person is struggling with debt, they may find things easier to deal with if they have emotional and financial support from people around them. However, borrowing from family and friends can sometimes lead to relationship breakdown, as well as added pressure to loved ones to provide support. This can cause further stress and isolation for the person in debt.
When we polled 1,000 indebted people, around one in five of them reported negative effects on their relationships with friends and family.
Our clients remain vulnerable to falling behind on essential household bills like energy, water, council tax and rent. In the first half of 2016, 41% of our clients had arrears on essential household bills, compared to 1 in 4 clients just five years ago. This tells the story of small but essential bills overcoming many people’s ability to pay them.
What we think should be done
Fundamentally, we believe that problem debt isn’t inevitable. We also believe that the right combination of interventions from the sector will allow the harm that debt causes to reduce and eventually disappear.
We’re working with government to develop a statutory breathing space scheme, whereby those who seek debt advice will be given respite from choking interest and debt collection practices that only serve to make problems worse.
Our idea for a savings scheme for people on low incomes has made significant headway with the Government’s new ’Help to Save’ proposals. Our research has shown that savings of £1,000 would prevent 500,000 families from falling into problem debt.
We’re also working with partners to develop effective alternatives to high cost credit, so that the financially vulnerable can access affordable credit to help them when they need it.