Cost of living remains biggest driver of problem debt

2nd June 2023

Debt charity, StepChange’s latest client data for April 2023 has revealed over a quarter of new clients (27%) cite the cost of living as their main reason for debt, up from 15% a year ago (April 2022).

The new StepChange client data shows that after a year of inflated prices for gas and electricity, more and more households are struggling with energy debt. Almost three in five new clients (58%) are in arrears with their dual fuel bills, which has increased by three percentage points compared to the previous calendar month, among those with a responsibility for paying dual fuel bills.

For the fourth consecutive month, client volumes have been higher than during the same month in 2022. In April 2023, 14,512 clients accessed full debt advice, which is 15% higher than April 2022 (12,629).

Commenting on the data, Vikki Brownridge, CEO at StepChange Debt Charity, said “It’s been a concern for some time that the knock-on effect of high inflation would be unmanageable and long-term problem debt among households.”

“Arrears on household bills continue to grow and while energy bills are set to come down in summer, prices will remain unaffordable for millions of lower income households, who are also grappling with increased costs across other utilities, rent and mortgage payments.”

“With the news that food prices are at historically high levels, and the Bank of England could further raise the base rate, this crisis shows little sign of slowing down. Without further intervention from the Government, financially vulnerable households will face real hardship as widespread problem debt becomes more prevalent. To address energy debt, we’re calling for funding to write off energy arrears for people who simply cannot afford to pay. In the longer term, a social tariff for energy would protect households from increasing financial difficulty and fuel poverty.”