How the UK government can reduce the £8.3 billion social cost of problem debt
The British economy is recovering, but many families are still waiting to see their household finances return to a genuinely steady footing.
Many are living on the edge, with 21 million people in Britain struggling with their bills, 18 million worried about making their income last until payday, and some 2.9 million people are in severe problem debt.
Many more families could find themselves falling into problem debt as they struggle to deal with shocks and changes without resorting to credit unsustainably. This leads people into a ‘debt trap’ where stress and anxiety compounds people’s difficulties and makes it harder for them to get back on their feet.
The consequences of debt – lost jobs, homes, broken relationships, mental health and support needs – leads to social costs of £8.3 billion.
The Government therefore has an opportunity to offer better help for people in debt get back on their feet and contributing to the economy, and prevent the next generation from falling into the same trap.
View our infographic for more of the statistics contained within our Action Plan.
We want to see the Government rise to this challenge by committing to a Debt Action Plan to ensure families come out of the next five years more resilient and better able to weather shocks to their finances. The Government should commit to:
- Ensure that every family has £1,000 in savings to cover a sudden cost or income shock.
- Ensure all low income households can access low cost credit products.
- Scale up free debt advice so that it reaches the 1.4 million people who urgently need advice but aren’t getting it.
- Ensure everyone dealing with problem debt gets the protection against interest, charges, enforcement and collections they need.
- Protect children and families from the harm of aggressive debt collection practices.
- Ensure debt solutions are fit for purpose, and do not have a disproportionate impact on people’s life chances.
Together, these policies will help people already in difficulty and those on the edge of their finances from falling into the debt trap.