News and Views
UK Faces Personal Debt As Millions Struggle To Pay Rent Or Mortgage
Millions of families are on the brink of financial collapse, a worrying new report has shown.
Many do not have enough money to cover their rent or mortgage for more than a month, while thousands are being made homeless every year because they are unable to meet their payments, new research has shown.
Poor people are bearing the brunt of a "perfect storm" of rising living costs, falling real wages, low savings and expensive credit that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion.
Rising personal debt has become a "significant problem" for people in Britain, with millions of families left struggling, the study by the Centre for Social Justice (CSJ) said – with the average household debt now standing at £54,000, nearly twice the level of a decade ago.
More than 26,000 UK households were accepted by councils as homeless in the last five years because of rent and mortgage arrears, including more than 5,000 last year, the think-tank said.
Former work and pensions minister Chris Pond, who chaired the report, said that with falling real incomes and increasing costs of basic essentials, many – especially the most vulnerable – are sliding further into problem debt.
"The costs to those affected, in stress and mental disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation, measured in lost employment and productivity and in an increased burden on public services."
The report, called Maxed Out, said households in the poorest 10% of the country have average debts more than four times their annual income, with their average debt repayments amounting to nearly half their gross monthly income.