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New StepChange data: Demand for debt advice continues to rise

4 May 2023

Demand for debt advice is up 15% year-on-year according to StepChange Debt Charity’s client data for March, released today. This continues a consistent trend of markedly higher year-on-year client volumes in each month of 2023. The charity says this indicates the beginning of an escalating debt crisis following a sustained period of high inflation.

Meanwhile, the Bank of England’s Money and Credit statistics today show consumer credit borrowing remains high. The annual growth rate for all consumer credit marked the sixth consecutive month of increase, from 7.7% in February to 7.9% in March.

StepChange’s client data shows a rise in the proportion of clients citing the cost of living as their main reason for debt, which now stands at more than a quarter (26%), and it has been the leading cause of debt since June 2022.

Energy arrears remain high among new StepChange clients, steadily increasing since the start of the year. In March, among clients who had a responsibility for paying dual fuel bills, 55% were in arrears with this bill type, up four percentage points since January 2023. The proportion of clients in gas (29%) and electricity (27%) arrears has also increased compared to the previous month, up by two percentage points and one percentage point, respectively.

While energy bills may start to come down later this year, interest rates are still expected to peak. StepChange says the government must not ignore the scale of financial difficulty caused by the cost of living crisis, which is only fully starting to be realised now.

Vikki Brownridge, Chief Executive of StepChange Debt Charity, said:

“During the first quarter of this year, we’ve consistently seen higher client volumes each month than during most months in 2022.

“Households faced a series of price rises across essential bills last month, and the cost of food is still significantly higher than the average rate of inflation. There’s a clear risk that without further interventions from the government, more people will be turning to credit to make ends meet, many of whom are already in arrears on their energy bills, council tax, rent and mortgage.

“To prevent problem debt from escalating further, it’s important that the government considers how to address this crisis both immediately and in the future. When someone is in debt with their energy bills and simply cannot afford to pay, targeted funding to write-off arrears should be introduced. In the longer term, a social tariff for energy would act as a permanent solution to protect financially vulnerable households from debt and fuel poverty.”

Notes to Editors

  1. StepChange’s monthly client data for March can be found here.
  2. The Bank of England’s Money and Credit data for March can be found here.

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