UK household crisis: Dramatic rise in families seeking help for utility bills, council tax and rent arrears

23 April, 2013

The squeeze on UK household budgets is reaching crisis levels according to StepChange Debt Charity, which last year saw a dramatic rise in people unable to pay their rent, gas, electricity, water and Council Tax bills. 

As overall debt levels decrease, households are now struggling with ‘priority debt’ such as rent, utility bills and Council Tax, types of debt the charity’s clients had previously been able to meet. Over a third of those seeking help from the charity are now in arrears on at least one household bill.

• Average total arrears on household bills rose from £2,134 in 2011 to £2,258 in 2012.
• Over the same period the proportion of clients with arrears on at least one household bill has increased from 27 percent to 35 percent.
• Clients over 60 appear to be particularly affected with the highest overall levels of arrears. 
• Single parents have the highest levels of rent, Council Tax and water arrears. 

Council Tax

• The proportion of clients with Council Tax arrears increased from 8.7 percent in 2011 to 13 percent in 2012. 
• The average level of arrears has increased by £65 over the same period to £782.
• Single parents struggle most with Council Tax bills, owing £917 in Council Tax arrears, £130 more than any other household type. While seventeen percent of single parents advised by the charity have Council Tax arrears, compared to 12 percent of all other clients.

Energy arrears

• Just under nine percent of clients have electricity arrears and 6.3 percent of clients gas arrears, the level of electricity arrears (£488) is higher than gas arrears (£455).
• A high proportion of clients appear to be in fuel poverty (26 percent). The situation is worse for the over-60s (41 percent), and single parents (33 percent). 

Rent arrears

• There has been a sharper rise in the proportion of clients with rent arrears than mortgage arrears.
• Over the past two years, the proportion of clients with rent arrears has increased from 5.6 percent to 8.6 percent.
• A breakdown of the rent data suggests greater difficulties facing clients in the private rented sector, who have much higher levels of rent arrears (£1,044) than those renting from local authorities (£641) or housing associations (£781).

Mortgage arrears

• The proportion of clients with mortgage arrears has risen since 2011 (from 9.3 percent to 9.5 percent of clients). 
• The average level of arrears has increased from £3,086 to £3,338, even though average monthly mortgage payments have declined. 

Incomes and employment

• The average income of clients has fallen by 4.4 percent since 2009.
• If it continues to stagnate over the next three years 59 percent of clients will have a negative budget, less money coming in to their household each month than they need to pay for essential bills and day-to-day living costs.
• Thirty-six percent of households where one member is unemployed have a negative budget, compared to 11 percent of households where both members are in full-time employment.

Commenting on the findings, Delroy Corinaldi, external affairs director of StepChange Debt Charity said: “Five years on from the credit crunch, the full effects of the economic downturn are being felt in the homes of people throughout the country.

“At the moment there is considerable speculation about the financial implications of welfare reform on different sections of society.  Much concern has been expressed for particular groups, such as the young, single parents and the disabled.  

“Time will tell but going forward, we will certainly be monitoring the impact of these reforms on the ability of households to service their debts.”