Debt advice charity StepChange says the cost of living was the most commonly mentioned reason for debt among people seeking its help, with 22% of those contacting the charity in August saying it was the main problem. The charity also says more people are in arrears with their gas and electricity bills.
There was also a sevenfold increase in the number of people using its online benefits checker in August compared to July – although this was driven, in part, by an active push to around 97,000 existing clients to remind them about the tool. Meanwhile, around 340,000 people visited the StepChange website in August, and more than 15,000 completed full debt advice.
The most common arrears on essential bills among those clients who had a responsibility for each type were council tax (31%), electricity (30%), water (27%) and gas (25%). Since last August, there has been a decline in the proportion of clients with rent, council tax and water arrears but a rise, unsurprisingly, in those with electricity and gas arrears.
The most common debts held by clients of StepChange were credit cards (64%), personal loans (46%), overdrafts (33%) and catalogue debt (32%). Payday loans or other high-cost credit were held by 10% of clients.
Peter Tutton, head of policy, research and public affairs at StepChange, said: “The debt situation worsened in August, so the announcement of the energy price freeze was met with a degree of relief. However, it still leaves many households significantly more stretched than they were a year ago, and vulnerable to panic borrowing to try to fill the gap between their income and their essential spending. Now, financial market turmoil also opens up an increasing risk for mortgage holders, who in recent years have been far less likely than tenants to experience problem debt, but who will feel the brunt of any sharp rise in rates.
“Our advice for anyone looking ahead and worrying about future affordability is to go through a good budgeting process now, and to research the options that might be available to help. Advice from a trusted organisation like StepChange can help you explore your options and work out a sustainable way forward.”
