UK Debt Advice Service Raises Alarm Over Rising Debt Crisis Among Britain's Workers

UK debt charity reports 10% rise in clients seeking help in 2024, with full-time workers, especially under 40s and renters, struggling with rising living costs and reliance on credit.

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Nitish Verma
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UK Debt Advice Service Reports 10% Increase in Clients Amid Cost of Living Crisis

UK Debt Advice Service Raises Alarm Over Rising Debt Crisis Among Britain's Workers

StepChange, a leading UK debt advice service, has reported a 10% increase in clients seeking help in 2024 compared to the previous year. The charity has observed a growing proportion of full-time workers, particularly those under 40 and renting privately, turning to their services due to the rising costs of living and reliance on credit to make ends meet.

The trend is exacerbated by the fact that rent costs have outpaced salary growth by 5.2% over the past decade, leaving renters significantly worse off than they were 10 years ago. StepChange has warned that a new generation of workers is stuck in debt, with about 3 million people in full-time work in the UK currently in problem debt.

Approximately one-fifth of the full-time workers advised by StepChange have a negative budget, and around a quarter cited cost of living increases as the primary reason for their debt. The charity also noted a disproportionate number of its clients in full-time employment are between 18 and 24 years old, with younger workers particularly affected by the twin problems of cost of living increases and lower pay with insecure work.

Why this matters: The findings highlight the growing financial challenges faced by a significant portion of the UK workforce, particularly younger generations and those in the private rental sector. The cost of living crisis appears to be pulling more people on slightly higher incomes into debt, expanding the proportion of income bands vulnerable to falling into financial difficulty.

The warnings from StepChange echo similar concerns raised by Citizens Advice, which found that more than 600,000 households with someone in full-time work do not have the income to cover their basic expenses. The Financial Conduct Authority has also reported that 7.4 million people were struggling to pay bills and credit repayments in January 2024, down from 10.9 million in January 2023, indicating a persistent problem despite a slight improvement.

As the UK continues to grapple with the cost of living crisis, the increasing number of full-time workers seeking debt advice serves as a sobering reminder of the financial pressures faced by many households. "The prospect of home loan rates staying high for longer is not the remedy for lenders' financial results it once was, as mortgage borrowers who had been holding out for more affordable rates had their hopes dashed," StepChange noted in their report, highlighting the compounding effects of high-interest rates and inflation on household finances.

Key Takeaways

  • 10% increase in clients seeking debt advice in 2024 vs 2023
  • Rent costs outpaced salary growth by 5.2% in the past decade
  • 3 million full-time workers in the UK currently in problem debt
  • 1/5 of full-time workers advised have a negative budget
  • 7.4 million people struggling to pay bills/credit in Jan 2024