One in four people in the UK (27%) are currently behind on at least one bill with Citizens Advice warning the situation only looks set to deteriorate in the coming months.
The research estimates household debt, covering things like essential bills and benefit repayments sits at £22 billion. But the charity warns the true figure is likely to be much higher as not all debts, such as water bill and rent arrears, are monitored.
The number of people who are in a negative budget, where their income doesn’t cover their essential costs is increasing. Citizens Advice has found 21% of people have borrowed money to pay for essentials, such as groceries, in the last six months. Energy debts and council tax arrears are now the most commonly encountered problem debt – with 50% of the people helped by Citizens Advice reporting one or both of these debts.
Citizens Advice says people’s situations are becoming increasingly complex as basic costs, such as food or energy bills, outstrip their sources of income each month. Against a backdrop of rising costs, advisers are warning that once people are in debt, they’re finding it extremely difficult to get out of the red as the debts stack up.
Since 2019, there has been a 38% increase in the number of people coming to the charity for help with debt who are in a negative budget with new groups – such as those in employment and mortgage holders – now seeking support.
Currently, the average person the charity helps with debt is £28 in the red at the end of the month while, four years ago, they had a surplus of £21.
Citizens Advice says that current systems contain too many traps and hurdles for people in debt to get a fresh start. If someone misses just one council tax payment they can become liable for a wholeyear’s bill, a scenario which often results in bailiffs knocking at their door. The high level of benefit deductions can eat away at people’s income pushing them into negative budgets, a sure-fire way of slipping into debt. While those seeking a way out of debt are met with upfront fees for debt relief, pricing them out of the right solutions for their situation.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said “We’re now seeing the levels of debt we feared and the picture is only set to get worse.”
“Millions of people are doing their best to balance the books but the numbers simply don’t add up. Too many people are living on empty, unable to pay their bills or even put food on the table. Current systems are stacked against people in debt, instead we need an approach that offers more support and realistic routes out of debt.”
“We need to see reforms that will have a tangible impact. The ball is the government’s court to take action now to avoid debt becoming the lasting legacy of the cost-of-living crisis.”