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Problem debt and the social security system

Our report shows that inadequate social support is causing hardship and risks causing problem debt.

Download the report

Problem debt and the social security system

National polling commissioned by StepChange shows that 54% per cent of those in problem debt receive support through the social security system. 46% of those in the system are never able to make ends meet.

The link between poverty and problem debt means that it is crucial that the social security works well for those experiencing financial difficulty and problem debt. But we found that this is not the case and the system is falling short.

Number one

A quarter of all people in Britain who receive Universal Credit are facing very serious debt problems

This figure is three times the rate in the general population (8%), and 11% more than those receiving legacy benefits (14%).

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Number two

Two thirds of clients say being on Universal Credit has made budgeting and financial management more difficult

Compared to the shorter payment cycles (typically bi-weekly) of legacy benefits, many people experiencing financial difficulty find the monthly Universal Credit payment challenging.

two thirds of clients on Universal Credit
Number 3

90% of our clients receiving Universal Credit have experienced financial hardship due to the five week wait

The most significant problem linked to Universal Credit is the effect of the waiting period for the first payment and advance loans taken out to help meet expenses. Half of clients (47%) have fallen behind on rent as a result of the wait or the subsequent repayment of advances.

90% of clients receiving Universal Credit

Our report explains how the government can make the safety net work for those experiencing financial difficulty and problem debt by:

  • Ensuring support is adequate and sufficiently stable to allow people to meet living costs without experiencing financial difficulty and problem debt
  • Overhauling the system of deductions in Universal Credit to repay debt to ensure the system supports, rather than undermines, sustainable recovery from problem debt
  • Social security must support people to safely meet peaks in expenditure

This report is based on research using StepChange debt advice client data, a survey of StepChange clients and national polling.

We analysed data held on clients who completed a telephone or online debt advice session with StepChange in the first six months of 2019 – 190,484 clients.

We conducted a survey of clients between 13 November and 2 December 2019. The survey was sent to a sample of clients who receive at least one form of working age social security support, excluding those who receive only Child Benefit. We received 668 unique responses.

52% of respondents were single adults without children, 27% single parents, 13% couples with dependent children and 7% adult couples.

Large national poll conducted by YouGov Plc. Total sample size was 4,972 adults. Fieldwork was undertaken between 28th November - 2nd December 2019. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+). Some % totals in this document may not add up to 100% due to rounding.