Household debt problems up 28% from 2012

The young, self-employed and low-income families have been hit the hardest by issues with problem debt since 2012.

A report commissioned by trade union bodies the TUC and UNISON highlight that one in eight households were over-indebted, or heavily in debt, in 2014 compared to one in ten in 2012. This is an increase of 700,000 households or 3.2 million in total.

The ‘Britain in the Red’ report also highlighted

  • In 2012, 6% of self-employed workers with credit commitments were in serious debt. But by 2014 this had nearly tripled to 17%.
  • The number of low-income families with problem debt went up from 9% in 2012 to 16% in 2014.
  • People who took out pay day loans in 2014 spent, on average, 30% of their income repaying them. This was up from 12% in 2012.
  • In 2014 households with store cards spent 21% of their income repaying them – up from 9% in 2012.
  • In 2012 2% of 18-34 year olds with any form of unsecured borrowing were over-indebted. By 2014 this had risen to 10%. Credit card, personal and payday loans, overdrafts and store cards were the main factor behind the increase – not student loans.

The last few years have been tough ones for many working families, who have racked up huge debts just trying to get by. The living standards crisis has left a huge hole in household finances.

Wages might finally be picking up for those in the private sector, but anyone working in health, education, local government and our other public services still has many more years of pay restraint to survive. And soon to be introduced cuts to tax credits will push many low-income families yet deeper into debt.

It is going to take many years for families to get back on an even keel. People having to rely on their credit cards, friends and family, or pay day loans just to get through the month is not a sustainable route for our economy.

Dave Prentis, UNISON General Secretary

The figures listed are likely to rise again as the new benefits cap will reduce income for households claiming benefits. With a possible interest rate rise and new tax rules for landlords being introduced in 2017, which may affect your rental costs, it would be hard not to see this figure of indebtedness rise once again.