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Our September client data analysis and comments on new Bank of England data

Today (29 October 2020), the Bank of England has released its Money and Credit data for September, showing a slump in the demand for credit following two months of increased net borrowing.

While overall demand for credit is down, this should not be taken as a sign of increased household financial wellbeing, with our latest data suggesting a growing proportion of households are experiencing financial difficulty.

Since May, we have been publishing a monthly breakdown of client trends to try to understand how the pandemic is affecting household debt, and to help focus on the best ways of helping people who are affected.

In September, we gave full advice to 16,000 clients - an increase of more than 3,000 compared to August 2020, and an upward trend we expect to continue as support schemes including payment deferrals and furlough come to an end.

Elsewhere, there are more causes for concern: for the second month in a row the proportion of new clients in employment has decreased from 29% in August to 26% in September, while we saw an increase of clients in receipt of universal credit. 43% of new clients in September were in receipt of this benefit, compared to 40% in August.

Peter Tutton, Head of Policy here at StepChange Debt Charity, said:

“Following two months of consumer borrowing outstripping repayments, this month’s return to net credit repayments should not be seen as an indicator that all is well with household finances.

"Our research in May, at a time when net borrowing was even further depressed, found that 3.8m people had borrowed to make ends meet since the start of the pandemic. We expect that number that will continue to rise, with StepChange’s latest client data suggesting a growing proportion are experiencing financial difficulty.

“After months of relatively low client numbers, we are beginning to see red flags appear across the board at a time when support schemes being withdrawn. Against this backdrop, the banking industry must continue to be forgiving to those who find themselves facing difficulty, while the Government needs to step up its support efforts if we are to limit the levels of defaults and keep more families from falling into poverty.”

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