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“Debt storm brewing” as more struggle with household bills

New research highlights the impact of rising costs for callers to National Debtline

Posted May 10, 2023

  • Debts on council tax, energy, rent and other ‘priority’ debts up 54% since 2018 amongst callers to National Debtline
  • A third of callers surveyed report having to use credit to pay for essentials
  • One in four behind on essential costs due to rising prices

New research from National Debtline, the free debt advice service run by the Money Advice Trust, has today revealed that the average level of priority debt - including council tax, energy and rent arrears – held by callers has risen 54 percent since 2018, from £2,642 to £4,080.

The findings, based on a survey of National Debtline callers in 2022 and new analysis of service data, shows the extent of the impact of the cost of living crisis on people seeking debt advice.

In its new spotlight briefing, Counting the costs, the charity reveals that:

  • One in five (18 percent) callers to National Debtline in 2022 said their income being too low for their basic needs was the main reason for their financial difficulty – the most common reason cited by callers.
  • Nearly one third (32 percent) reported using credit in the last 12 months to cover essential costs like energy or council tax.
  • Nearly four in five callers (79 percent) are worried about being able to pay for essentials due to rising costs.

Falling behind on essentials

The situation facing many people calling National Debtline has worsened significantly since 2021. One in four (39 percent) callers last year said they have fallen behind or further behind on one or more household bill in the previous 12 months.

The three most common bills that callers say they have fallen behind on are energy (25 percent, up from 21 percent in 2021), council tax (17 percent, up from 14 percent in 2021) and food and groceries (15 percent, up from 13 percent in 2021).

Pressure increasing on household budgets

Two in five (41 percent) National Debtline clients now have a ‘deficit budget’, where their income is not enough to cover essential living costs. The findings also reveal that one in three clients surveyed said they had to use credit in the last 12 months to pay for essential costs, including energy and council tax. With consumer credit borrowing up 7.9 percent, and high inflation adding yet more pressure, the charity is warning of an increasing burden of debt for people on the lowest incomes.

To ensure people on the lowest incomes are able to meet their essential costs, the Money Advice Trust has joined the Joseph Rowntree Foundation and more than 90 other charities in calling for an Essentials Guarantee to link the rate of Universal Credit to the cost of essential goods including food and utilities.

Joanna Elson CBE, chief executive at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“Our advisers at National Debtline hear on a daily basis the financial pressure that many people are under. Rising costs are continuing to put a relentless strain on household budgets – and a debt storm is brewing for those in the most vulnerable situations.

“The warning signs were there even before the current cost of living crisis – with the incomes of too many of the people we help already far from enough to cover essential bills. Cost of living pressures since mean that many people are left with few choices but to use credit to plug the gaps in their finances.

“It’s never too early or too late to seek advice – and no one should have to face this alone. Free debt advice services like National Debtline have independent, expert advisers who can help – so I would urge anyone who is struggling to cope to get in touch.”

National Debtline provides free, independent debt advice at:

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