Unmanageable debt is rising in all parts of society

Fall in real incomes, rise in cost of living are making UK householders work harder

A payday loan company in London. Credit: Getty Images

Households in the UK are working hard to reduce their debts and cut spending with decline in real incomes and the rising cost of living, according to debt charity Consumer Credit Counselling Service's (CCCS) statistical yearbook, published today.

Through analysis of the 370,000 clients counselled during 2011, the CCCS found that clients owed an average of £20,023 in unsecured debt, compared to £22,476 last year, while monthly living costs were £1,369, compared to £1,410 in 2010.

The CCCS yearbook found that average client in 2011 had just £44 left over after meeting their basic living costs each month despite cutting down on spending (hardly unchanged from £43 in 2010). It also found that 42 percent of clients under the age of 25 out of work, compared with 27 percent of all clients.

The UK’s leading debt advisor has counselled 17,138 young debtors under 25 in 2011, an increase of 12 percent over 2010.

As per the yearbook, 48 per cent of clients across all age groups counselled by the CCCS said that unemployment or reduced income from employment as main cause of their financial difficulty in 2011.

The economic downturn has affected renters most severely. During 2011, a total of 10,246 renters contacting CCCS for help were in arrears, an increase of 30 percent in three years. Renters in arrears to private landlords were in the worst position, owing £924 in unpaid rent and having a monthly budget deficit of £145.

Demand for debt advice from the over 60s has increased by 15 percent in three years, according to CCCS. This looks like the beginning of a long-term trend, and the service forecasts that in two years almost half of its clients will be over 45.

Lord Stevenson, chairman of CCCS, said:

It is good news that our clients are reporting reduced unsecured debts, but stagnating incomes mean that debtors had no more money available to repay what they owe.

We need to do more to help those in our society who need debt advice and solutions.  We call on the money advice service to do more to ensure that people struggling with their household finances are made aware of the free advice and support available from charities like ours.

Norman Lamb, minister for consumer affairs, commented:

The yearbook shows that unmanageable debt is rising in all parts of society.  It reminds us how vitally important it is to understand the needs of those who seek help, so that we can give them the right kind of help.

We want people to be better informed and able to make good financial choices, taking back control of their money.  I am pleased that there is help available through the fantastic work of the consumer credit counselling service.