Families with children are more than twice as likely to have been trapped in problem debt as childless households, research by The Children’s Society has revealed.

A survey commissioned by the charity found that one in five families with children in England and Wales (20%) have struggled with problem debt in the last year. By comparison, the proportion of households without children who have fallen into arrears with one or more creditors is just under 8%.

The families who have been behind on their debts – a total of 1.4m – are home to 2.4m children, and The Children’s Society is deeply concerned about the damaging impact of debt on their lives. In some cases children are going without basics such as food, clothing or heating, as well as suffering worry, anxiety and bullying.

The survey of 2,000 adults, carried out by Opinium, found that families in problem debt over the last year are juggling an average of four different types of debt. Children in low-income families with multiple debts are at far higher risk of experiencing mental health problems than those in families who owe money to a single type of creditor.

The most common source of problem debt is arrears on energy bills, followed by loans from friends and family, bank loans, and council tax.

While the size of family debt varies, overall almost one third (29%) of parents who have been in problem debt in the last year currently have arrears of more than £5,000. While household budgets up and down the country are under strain, families with dependent children face extra pressures as they are more likely to face unexpected bills and are less able to cope with sudden financial shocks, caused by things like redundancy, reductions in working hours or illness.

The Children’s Society has found that problem debt is putting stress on family relationships, damaging children and trapping families in a downward spiral of borrowing.

As families begin to struggle financially, many feel that taking on credit is the only way to make ends meet. This often marks the beginning of a debt trap as credit repayments take up a larger proportion of income and families find themselves cutting back on essentials.

The Children’s Society’s new survey found that while debt is a problem for families in every part of England and Wales, some areas are struggling more than most. In the East Midlands, more than one third (36%) of families with children have faced problem debt, while in the South East, 13% of families with children have fallen behind with repayments.

The Children’s Society, as part of its Debt Trap campaign, is calling for changes to how creditors treat families with children who fall behind on bills and repayments. It is urging the Government to introduce a 12-month ‘breathing space’ scheme to give struggling families a period of protection from additional charges, mounting interest and enforcement action while they seek advice, put their finances in order, and get back on their feet.

Today the charity is publishing a draft of a parliamentary Bill to make this ‘breathing space’ a reality for hundreds of thousands of families. The Bill is being sponsored by Kelly Tolhurst MP and will be debated by MPs in the New Year.

Matthew Reed, Chief Executive of The Children’s Society, said: “Again and again we have raised the urgent problem of families who are trapped by debt, and whose children often pay the price with their mental and physical health. With unfair and unsustainable repayment plans, hidden charges, soaring interest, visits from intimidating bailiffs and the fear of eviction, the odds are stacked against parents who are desperate to find a way out of their debt. Meanwhile mums and dads are being forced to make impossible decisions between feeding and clothing their children, and paying the bills.

“It is now absolutely clear that this problem is not going away unless the Government takes action to give families the breathing space they need to get their finances back on track. Acting now could have a hugely beneficial impact, not just on family finances in the short term but on the futures of some of the country’s most vulnerable children.”

 

Region

Number of families in problem debt

Number of children in problem debt

Proportion of families with children in arrears

East

136,000

236,000

18%

East Midlands

205,000

356,000

36%

London

231,000

410,000

22%

North East

55,000

93,000

17%

North West

224,000

388,000

25%

South East

134,000

233,000

13%

South West

113,000

195,000

18%

West Midlands

117,000

208,000

16%

Yorks & Humber

120,000

210,000

18%

England

1,330,000

2,320,000

20%

Wales

107,000

183,000

29%

Total (England & Wales)

1,398,000

2,437,000

20%