Charity report highlights debt issues in Scotland

A new report produced by a Scottish debt charity Stepchange has highlighted the extent of the debt burden in Scotland.

In its report, Scotland in the Red, StepChange Debt Charity Scotland outlines the financial situation of Borderers who have sought their assistance with managing debts. The report draws on data from telephone debt advice sessions with clients of the charity.

Stepchange believes that there are nearly 700,000 people in Scotland in, or at risk of, problem debt. It’s primarily a symptom of poverty, poor housing conditions, welfare cuts, ill-health, and insecure work.

The report found that that there is more consumer debt with Council Tax arrears. In 2018, 46% of clients were in Council Tax arrears. They owed, on average, £2,017 in arrears.

The report suggests that consumers are in debt because of reductions in income or benefits. In 2018, 25% of clients said a reduction in income or benefits was the main reason for their financial difficulties.

In addition, more clients are falling behind their household bills/ The average level of electricity arrears has increased by 23% since 2014. In 2018, clients were an average of £826 in arrears.

As a result of the report, Stepchange has made the following recommendations:

  • Urgent action on Council Tax: We want Local Authorities to work with the advice sector to develop a best practice toolkit to address Council Tax arrears. We also want them to consider separating the water and sewage charges from Council Tax bills to make it clearer to everyone what they are paying.
  • Scotland needs a coordinated action plan for addressing debt: The social cost of problem debt in Scotland is around three-quarters of a billion pounds. People who are at risk of debt are also vulnerable to public policy choices, therefore a Minister is required to develop a high impact action plan to address the crisis.

The Head of StepChange Debt Charity Scotland, Sharon Bell, is particularly troubled by mounting Council Tax debts. She said “I am increasingly alarmed by the increases in the proportion of our clients who are struggling with household bills, particularly Council Tax.”

Our research shows that our clients in Scotland are significantly more likely to have Council Tax arrears compared to elsewhere in the UK.”

“We are seeing a record level of demand for help with problem debt with over a third of our clients having an additional vulnerability, such as illness.”

“We need more signposting to free debt advice, as the earlier someone gets debt advice the greater their options may be and the less harm they could experience.”