In the ever-shifting consumer debt landscape, a national debt charity has revealed that many consumers are now struggling to pay off smaller debts than was the case around a decade ago.

Announcing the release of the ‘Decade in debt’ study, National Debtline said that their typical customer 10 years ago was a consumer seeking advice with credit cards, loans or overdraft debt, and that now it is more likely to be contacted regarding issues with debts on everyday household bills such as council tax, rent and energy arrears.

It adds that:

  • 50% of the callers to National Debtline report difficulties in repaying debts of £5,000 or less, whereas the equivalent figure in 2008 was just 22%
  • 48% of callers now report that their income is not sufficient to cover essential expenses, up from 27% in 2009. This prompted the charity to talk of an issue with ‘broken budgets’
  • 30% of callers have council tax arrears, 17% have rent arrears and another 17% are behind with their energy bills. These figures have typically doubled, or even tripled, in the last decade
  • It expects to receive more than 189,000 calls by the end of the year, which would be the highest for five years, even if it remains well below the peak of 305,000 calls received in 2010, in the aftermath of the financial crisis

In light of the findings, National Debtline is calling on the government and other authorities to take action. It has asked that:

  • A formal cross-government strategy to reduce problem debt is formulated
  • The government’s planned ‘Breathing Space’ scheme is sufficiently comprehensive to protect consumers with debts with utility companies, local authorities, the Department of Work and Pensions and HM Revenue & Customs
  • The Financial Conduct Authority takes further action on persistent credit card debt and unauthorised overdrafts and introduces a cost cap on forms of high-cost credit other than payday loans

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that operates National Debtline, said:

“We need to change how we think about problem debt in the UK.

“Ten years ago a typical caller to National Debtline was struggling to pay credit cards and personal loans.  Today, callers are struggling with smaller but trickier debts, usually on everyday household bills – and often caused by ‘broken budgets’, where the money coming in is simply not enough to cover their essential spending.

“The government, regulators, creditors and the advice sector need to work together to tackle these new realities.  There is some good news with the creation of the new Single Financial Guidance Body, plans for a statutory Breathing Space scheme and a renewed focus from creditors on supporting people in vulnerable circumstances.

“However, with debt problems still changing and growing, there is much more to do – including a new formal cross-government strategy to reduce problem debt, which brings together different strands of work into a single, coherent approach.”

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article