Changing Household Budgets

 
  • National Debtline sees a rise of 140 per cent in calls about household debts since 2007

  • Serious debt problems can be caused by much lower levels of arrears

  • Charity calls for market innovation to meet the demands of a financially changed society

National debt advice charity the Money Advice Trust today reports that more households are becoming susceptible to serious debt problems. A study into household budgets and debt has revealed that more people are falling into debt because they can’t afford basic household bills such as energy bills, water bills, telephone bills, and council tax. In 2013 the charity’s National Debtline service helped people repay more than 150,000 different household bill debts – a rise of 140 per cent since 2007.

The charity’s National Debtline service has seen a radical shift in the types of debt problems it helps people resolve. More people than ever before now need help with energy debts, water debts, telephone debts, council tax debts, and catalogue shopping debts – whilst less people report problems with traditional credit products such as bank overdrafts, loans and credit cards.

Some statistics from National Debtline
 
  • Calls for help with council tax arrears have gone up 95 per cent since 2007
  • Calls for help with catalogue arrears have gone up 97 per cent since 2007
  • Calls for help with energy arrears have gone up 171 per cent since 2007
  • Calls for help with telephone arrears have gone up 230 per cent since 2007
  • Calls for help with water arrears have gone up 305 per cent since 2007

Joanna Elson, Chief Executive of the Money Advice Trust said:

“The gradual erosion of some families’ surplus income in the face of rising prices has led to a new generation of debt problems – one to which more people are vulnerable, one which is harder to resolve, and one which has no definitive solution.

“We’re hearing from more people in serious debt difficulty as a result of debts totaling less than £5,000. When there is little room in a household budget to meet basic expenses, paying off debts can seem impossible.

“With interest rates set to rise it is vital that we can help families on the financial brink. The impressive recovery of the broader economy should provide opportunities to help halt the rise of these debt problems. Recent Government announcement’s such as an increase in the minimum wage is a positive step towards helping these families, but more can be done.

“The consumer credit market has a new regulator in the Financial Conduct Authority. We hope its focus on the consumer can help encourage financial products and services which meet the needs of households managing extremely tight budgets.”       

 
-Ends-
 
 

For further information please contact:

Jane Tully
Head of Insight and Engagement
Money Advice Trust
 

Note to Editors

  • The Money Advice Trust is a charity which helps people across the UK tackle their debts and manage their money wisely. The Trust’s main activities are providing free advice through National Debtline, Business Debtline and My Money Steps; supporting advisers through Wiseradviser and Innovation Grants; and improving the UK’s money and debt environment through policy, research and awareness raising campaigns.
  • National Debtline provided the free, impartial debt advice from experts who care. National Debtline is run by the Money Advice Trust and can be contacted at:

·         www.nationaldebtline.org

·         0808 808 4000 Monday to Friday 9am to 8pm, Saturday 9.30am to 1pm.  Calls are free.

·         National Debtline’s online advice tool can be found at www.mymoneysteps.org

  • The full Changing Household Budgets report is available below:

Changing household budgets.pdfChanging household budgets.pdf