Age, income shocks and gender imbalance: Additional findings from our latest debt statistics

By Josie Warner, Research Insight and Planning Officer

Today we’ve released our latest Statistics Yearbook, which details some of the key personal and household debt trends we’ve seen across 2018.

The report looks at trends such as who our new clients are, where they come from, what debts they have, and why they’ve fallen into problem debt.

Our key findings include:

• More people than ever (657,930) contacted us for help in 2018
• Single parents are drastically over-represented in our client base (23%), compared to the UK average (6%)
• Over half of our clients are in full-time or part-time employment (55)

Our latest stats are mostly based on data from over 350,000 clients who received full debt advice in 2018. With such a large data set, we’re able to gain a huge amount of insightful analysis. Far more than we’re able to fit into the yearbook document itself.

So, I’ve detailed some further interesting pieces of analysis which didn’t make the cut.

New clients are more likely to have experienced an ‘income shock’

The full list of ‘reasons for debt’ are highlighted in the Statistics Yearbook, however it’s interesting to note that overall the proportion of clients falling into problem debt due to income shocks has been increasing.

For example:

17% of new clients in 2018 said that a reduced income was their reason for debt.

This has risen relatively sharply when compared to 13% in 2017, and 12% in 2016.

Alongside a rise in ‘income shocks’, we’ve also seen a substantial decrease in the proportion of clients contacting us due to ‘lack of budgeting skills’. In 2016, one in five (20%) clients said this was their main reason for debt.

However last year this dropped to just 11% of new clients. ‘Lack of budgeting skills’ covers several issues such as poor financial capability and not having available finances to budget for essentials.

Younger clients are more likely than older clients to have short-term high cost credit debts

Our latest stats show that 18% of our new clients had a short-term high cost credit debt, such as a payday loan, when they contacted us for advice.

This has been steadily rising, despite payday loan market reforms that came into force at the start of 2015.

For comparison, in 2015, 16% of clients had this type of debt.

Digging further into the data, it’s interesting to note that younger clients are far more likely than older clients to have this type of debt.

29% of under 25s, and 22% of 25–39s hold at least one of these debts. This is compared to just 10% of those aged 40–39, and only 3% of over 60s.

Our latest findings match up with what others are seeing elsewhere. We know Financial Conduct Authority (FCA) data released earlier this year showed that payday lending has been rising again and they, like us, also found that financially stretched young people were most likely to resort to using this type of debt.

Gender imbalance of problem debt

The Statistics Yearbook also continues to show an increasing proportion of women contacting us for advice (60% women vs 40% men), and there are interesting differences in the gender split among our key stats.

For example, the average debt level for our male clients is much higher than for our female clients. Male clients have an average of £16,041 compared to £12,791 for females.

Similarly — back to the issue of short-term high cost credit — it’s also interesting to note we advised more men (21%) than women (16%) with this type of debt last year.

However, one of the most striking findings is that 85% of our single parent clients are female.

Additionally, the proportion of our clients who are single parents has also been increasing over recent years. We’ll be focusing on issues which affect single parents in debt in our policy work throughout the year.

What next?

As always, we’ll continue to use these stats to observe trends and gather further insight about longstanding issues affecting our clients.

We’ll also use the data to gain intelligence about new issues impacting those in problem debt.

We know there’s a lot changing in the debt landscape, not to mention society in general. We’ve seen huge developments in the introduction of a Breathing Space scheme, a consultation and call for evidence on bailiff regulation, and the potential introduction of a no-interest loan scheme.

It’s imperative that these legislative and regulatory changes are evidence-led, and we’ll be using this data to continue pushing the government, regulators, policy makers and others to get things right for those experiencing problem debt.

For more statistics and research on debt, take an in-depth look at more than 650,000 new clients struggling with problem debt in our Statistics Yearbook 2018.