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Scotland has highest value of Council Tax arrears and payday loan debts in UK

17 December, 2014

People in Scotland have the highest level of arrears on their Council Tax bills among StepChange Debt Charity clients in the UK, according to a report released today by the charity.

Of the Scottish clients who came to the charity in the first six months of 2014, 39 percent were in arrears on their Council Tax bill, an increase of 20 percent since 2010. On average, those who had fallen behind owed £1,534 – almost double the UK average of £798.  

Payday loans are still a problem for Scots. The average payday loan debt of Scottish clients in the six months to June 2014 was £1,438 – the largest of the UK nations, and £129 more than the UK client average.

The findings come as the charity launches its “Scotland in the Red” report, an annual analysis of debts held by clients of the charity in Scotland. Other areas for concern highlighted by the report include the increasing numbers of people falling behind on essential household bills. In 2013, Scottish clients had the largest amount of gas bill arrears (£539) and in the first six months of 2014, the largest amount of electricity arrears (£616), of all the UK nations.

Sharon Bell, head of StepChange Debt Charity Scotland, said: “The rise in people struggling to pay their priority bills is a stark reminder of just how difficult day-to-day living has become for many Scottish households. Keeping a roof over your head and heating your home are basic needs, yet for too many Scottish families, these are constant worries in the run up to Christmas.  Even where families are not in debt, many live on a financial knife-edge with small setbacks enough to tip them over the edge into problem debt."

“We continue to see worrying levels of payday loan debt which are making a bad situation worse for too many Scots. Toxic high cost credit is being used as an emergency safety net and we need to find more sustainable ways to help people cope."

“Anyone who feels they are struggling should seek free impartial debt advice from an organisation like StepChange Debt Charity as early as possible to prevent the problem worsening.”

Key findings

Council Tax

In recent years, Scots have consistently had the highest value of Council Tax arrears in the UK, rising from an average of £1,312 in 2012 to £1,534 in the first six months of 2014. This is nearly double the UK client average of £798.

Scotland also has the second highest proportion of clients with Council Tax debt, at 39 percent by end June 2014. This has risen from 29 percent in 2012, and just 19 percent in 2010. 

Clients from the Lothian Region saw the greatest increase in their average value of Council Tax arrears from £1,443 in 2013 to £2,255 by the end of June 2014 – an increase of £812.  At almost 47 percent, the region also had the highest percentage of clients in arrears.

Housing costs

The average value of rent arrears among clients in Scotland has been increasing over the past 18 months, reaching £595 in 2013 and £665 by June 2014. Of those who pay rent, 31 percent are now in arrears, compared to 20 percent in 2010.

Mortgages are by far the highest value priority debt in Scotland. Approximately a third of Scottish clients have a mortgage and, of those clients, over a third were in arrears in 2013. Scottish clients with mortgage arrears owed £2,606 on average in 2013, an increase of £278 from the previous year.

The 2014 half-yearly results show that 26 Scottish Parliament constituencies were above the Scottish average value in mortgage arrears, and 23 constituencies were above the average value in rent arrears.

Energy bills

Clients in Scotland had the highest gas arrears by value of all the UK nations in 2013 at £539, an increase of £92 compared to 2012 and £31 more than the UK client national average. While the value of arrears has stabilised in the first half of 2014, the proportion of people with gas arrears has risen one percentage point to 12.5 percent.

In the first six months of 2014, Scotland also had the highest level of electricity arrears at £616.

Income and debt

Despite a small increase in wages, many people are still struggling to pay their everyday bills. The average annual net income among clients in Scotland by end June 2014 was £14,657, an increase of £60 from end of 2013. This was slightly above the UK client average of £14,495.

In the first half of 2014 the average debt level for Scottish clients has dropped to £12,359, the lowest of the UK nations and £634 lower than the UK client average of £12,993.

Glasgow Region has consistently had both the lowest average income and lowest average debt amongst Scottish clients. Income has remained fairly level at just over £1,000 per month since 2011, and the average debt level was £11,036 by June 2014. This perhaps reflects the traditional correlation between low income and low borrowing.

Payday loans

Over 18 percent of Scottish clients in 2013 had payday loan debt. The Scottish average payday loan debt of £1,457 at the end of 2013 reduced slightly to £1,438 by June 2014, but this is still the largest among the home nations, and £129 more than the UK client average.

In 2013 the average monthly income of a StepChange Debt Charity client in Scotland with payday loans was £1,274. This is £183 less than the average payday loan debt of £1,457.  Therefore, in order to pay their outstanding payday loan debt at the end of the month, these clients would have to borrow a further £183, and still have nothing left over to meet their living costs.

Read the Scotland in the Red report

Notes to editors

  1. To see a full copy of the report, please contact the StepChange Debt Charity press office.
  2. StepChange Debt Charity Scotland advised 4,369 clients in the six months to June 2014 and 6,584 in 2013. 
  3. Data in the Scotland in the Red report is based on clients contacting the Charity by telephone only.
  4. Data on priority arrears is based on the clients who make payments on that priority expenditure only.

Contact the StepChange news team on:

Tel: 0207 391 4598

Mobile: 07985 404 153

Email: press@stepchange.org

Follow our press team on Twitter: @StepChange