More support required to reduce household debt, says charity

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The number of people with household debt is rising to record levels, a new survey has revealed

The research, published by debt charity National Debtline, suggests that callers are increasingly struggling with arrears on everyday household bills.

The charity said it expects the number of calls to its hotline to increase to a record 189,000 by the end of 2018 – the highest level in five years.

It also found that fewer people are now seeking advice with credit cards, loans and overdrafts, and instead seeking help about debts such as council tax, rent and energy arrears.

The survey found that around three in 10 callers now have council tax arrears, a rise of around 15 per cent compared to the same period in 2008. Likewise, the proportion of callers with rent arrears rose from six to 17 per cent, while the proportion of callers with energy arrears rose from nine to 17 per cent over the same period. In total, half of all callers to the charity were struggling to repay a debt of £5,000 or less.

National Debtline says homeowners are struggling to pay household bills due to an increase in “broken budgets”. In fact, 48 per cent of all callers report having a budget deficit, which means the money they earn is simply not enough to cover essential outgoings.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said there needs to be a shift in the way we think about problem debt in the UK.

“The government, regulators, creditors and the advice sector need to work together to tackle these new realities.  There is some good news with the creation of the new Single Financial Guidance Body, plans for a statutory Breathing Space scheme and a renewed focus from creditors on supporting people in vulnerable circumstances.

“However, with debt problems still changing and growing, there is much more to do – including a new formal cross-government strategy to reduce problem debt, which brings together different strands of work into a single, coherent approach.”