Cost of living pressures continue to weigh heavily on new StepChange clients

StepChange Debt Charity client data for November 2022 shows the cost of living is still the number one driver of debt among new clients, with more than one in five (21%) citing it as their primary reason for contacting the charity. Women (23%) are more likely than men (17%) to cite this as a reason. A ‘lack of control over finances’ (17%) is the second most common reason for debt, which is cited by 20% of men, compared to 15% of women.

The data also shows the continued positive effect government energy bill support is having – the proportion of new clients with electricity arrears fell another percentage point month-on-month to 27% in November, following a three-percentage point drop from 31% to 28% between September and October. While the proportion of new clients in arrears with gas bills has marginally increased by one percentage point to 24%, this is still down from 26% in September.

Meanwhile, The Bank of England’s Money and Credit statistics for November, released today, show an increase in consumer net borrowing from £0.7bn to £1.5bn, driven by an additional £1.2bn of credit card borrowing. The continued rise in net borrowing suggests mounting inflationary pressures are forcing people to turn to credit to get by. With further net borrowing increases expected following the festive period, there is potential for an increase in the number of people vulnerable to problem debt.

Richard Lane, Director of External Affairs at StepChange Debt Charity, said:

“The impact of the cost of living crisis on people’s finances shows little signs of abating. Although government support is continuing to have a positive effect on the proportion of new StepChange clients with energy arrears, energy debt remains high and cost pressures from elsewhere are still driving people into problem debt.

“Today’s Bank of England figures showing increased borrowing even before the traditional festive spending period is also worrying, particularly in light of our pre-Christmas research which found that one in twelve UK adults (8%) would be using credit to pay for Christmas. With financial pressures across the board creating problems for an increasing number of households, there is a real danger that people will increasingly be turning to credit to meet essential spending into the new year and beyond.”