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Capital of debt: Londoners more likely to be in the red

4 September, 2018

Londoners are more likely to be struggling with debt than the rest of the UK despite average higher incomes. That's according to our new report, London in the Red, that reveals 100,000 Londoners sought our debt advice, meaning one in six of our clients last year came from London.

We estimate that over half a million Londoners are in problem debt, driven by many having to spend a higher proportion of their incomes on essentials such as housing and fuel.

The capital was the region with the highest demand for our services (17% of all contacts). Londoners also owed more on credit cards, overdrafts and payday loans than those elsewhere, and had higher arrears on essential bills. Higher housing costs in London mean they spent a higher proportion of income on priority bills. Home ownership and mortgage borrower levels were lower in the capital than the rest of the country.

Our London in the Red report is based on in-depth analysis of over 13,100 of our telephone clients and shows that debt is a widespread problem across the capital, creating a social cost of at least £1.5 billion per year.

We're calling for London-wide improved access to and earlier signposting of free debt advice, as well as urging London local authorities to adopt better debt recovery practices and minimise bailiff use. Evidence shows that good debt collection practices result in increased collections over time and reduced operating costs, as well as reducing the harmful impact on individuals.

Phil Andrew, Chief Executive of StepChange Debt Charity said:

“Despite earning more on average than the rest of the country, Londoners have to fork out more to cover essential costs, pushing over half a million people living in the capital into problem debt. We found that higher housing costs are responsible for leaving Londoners with less money in their pockets after paying for household bills.

“As around one in six of our clients come from London, we call on the Mayor of London to work with local authorities and debt advice providers to ensure debt advice is sufficiently and efficiently resourced, as getting help as soon as possible and tackling the problems early on are key to financial recovery. Boroughs and councils need to implement fair debt collection processes so that people in financial difficulty are able to make affordable repayments that don’t make their existing problems worse.”

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Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

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