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Life on the Edge: our major new report on the state of the nation's family finances

Download our Life on the Edge report
 
Life on the Edge report

Household debt: our main findings

Household debt has barely been out the news in the last few years. From payday lenders, to big numbers such as the 8.8 million people over indebted, and the £1.4 trillion personal debt we British households owe, debt has become a major media debate.

But little has been made of the real reasons that so many families across the country find themselves falling into unmanageable debt, and the policy solutions that are needed to prevent people from falling into debt in the first place.

Our Life on the Edge report looks at the factors that are driving people into financial difficulty, and which groups are most likely to be living on the edge. We carried out a major YouGov survey to find out exactly how families up and down the country were coping.

  • 15 million people report one or more signs of financial difficulty – such as falling behind on bills, using credit to last until payday, or using credit to keep up with existing credit commitments.
  • Those on average income, families with children and people in full time work are most at risk of falling into debt
  • People who’ve seen their essential bills increase in the last year are more than twice as likely to be showing signs of financial difficulty.
  • People who’ve experienced financial shocks – such as losing a job or losing hours at work - are almost three times as likely to be showing some signs of financial difficulty.

people most at risk of debt

Our research found that millions of people are simply unable to cope with changes to their finances – whether increased costs or a drop in their income:

  • 13 million people do not have enough savings to keep up with essentials for a month if their income dropped by a quarter
  • Only 1 in 10 believe that welfare support would be enough for them to meet essential costs.

As a result, some 16 million people would turn to credit to make ends meet if they had no other sustainable way of coping. Credit has become a ‘distress safety net’ for people who fall on hard times. But as our debt advisers know, debts can quickly snowball into unmanageable problems as interest and charges mount. 

13m people can't cover essentials for a month if income dropped

With an economic recovery that could be turbulent for many – whether in insecure work, or affected by an illness or relationship breakdown that could topple their finances – we believe that policy-makers need to take urgent action to put family finances on a steadier footing.

People need a new promise from policy-makers that if they do their best in straitened times they will get the support they need to keep them away from the edge. We want to see policy-makers take action to:

  • Help people build their personal resilience by reducing costs, boosting incomes, encouraging saving, and ensuring fairly priced credit is available to help people smooth significant essential costs.
  • Ensure that safety nets respond swiftly and comprehensively to people when they fall into financial difficulty, by closing loopholes in Universal Credit and making sure creditors and essential service providers complement the welfare system by giving people support and flexibility when they are struggling with money.

To make this a reality, we believe that a national debt strategy, led by a senior government minister is needed to make sure all the organisations that have a role in our family finances play their part when we fall on hard times. And we need a strong free debt advice sector, helping people get all the support that’s available to them and helping to build their finances back up.

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Our Life on the Edge report

Households across the nation are struggling to make ends meet

Download the report

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

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.

*This is the average rating of our service on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2016