During the pandemic household debt slowly crept up and, by mid 2022, we had taken on a third more debt than our income.
Hot on the heels of the pandemic, the cost of living crisis prompted an increase in the number of clients supported by debt advice charities. The ONS reported that of the 94% of adults who saw an increase in their cost of living in November 2022, 14% said they used more credit than usual to cope.
Problem debt costs the UK £8.3bn through the damage it causes to family life, mental and physical health, productivity and employment prospects as well as costs to the welfare state, NHS, local government and other agencies. Research by StepChange shows that using credit to cope with financial difficulty compounds problems and people struggle for too long before accessing help.
The government has provided billions of pounds of additional support yet £19 billion of existing benefits is unclaimed every year.
Against the backdrop of a cost of living crisis that isn’t going away soon we look at what frontline organisations can be doing differently to get help to people early enough to avoid crisis down the line
Listen back to learn about
- Findings from new research on journeys into problem debt
- Four council-led interventions that can help
- Understanding illegal money lending in England
- Latest statistics about victims and loan sharks
- The importance of early interventions and work that Policy in Practice is doing to help
View the webinar
The journey into debt is varied. There are many reasons why families fall into debt. Income is only one contributor. The cost of living and major life changes can lead people to accumulate more arrears.
The biggest reason that people borrow from loan sharks is for everyday living expenses. For the first time, in 2022, people told us that they were borrowing for food and fuel.
There is no financial barrier to people falling into debt. It's not just low income households. There are people that are working that just need that short term support but then find themselves into that cycle and the impacts can be significant.