One in six adults in the UK are living with problem debt and are struggling to pay their bills, new research reveals.
A total of 8.2 million families find meeting monthly bills a ‘heavy burden’ or have missed more than three bill payments within a six-month period, according to the independent, state-backed financial body the Money Advice Service.
Its report came as debt charity Stepchange warned that the percentage of its clients falling behind on payments had increased to more than 40 per cent.
The average debt of the people it helps has also risen, from £14,251 in 2016 to £14,367 in the first half of 2017.
A total of 8.2 million families (stock photograph) find meeting monthly bills a ‘heavy burden’
Experts warn that if interest rates rise later this year as expected, pushing up the cost of borrowing, more and more families could struggle to meet their loan repayments and wind up deeper in debt.
Last night, City watchdog chief Andrew Bailey urged the Government to step in to help households burdened by debt.
He said that he was concerned about the number of people needing to take out a loan to make ends meet, particularly those in jobs where their hours are not guaranteed.
‘There is a really big question around how do you provide credit. There is a case for people having access to credit, particularly in a world where earnings are more erratic,’ he said. ‘But the question is how do you structure it in a sustainable fashion.’
‘It needs government involvement,’ he added.
The City watchdog’s own research revealed earlier this year that 2.2 million people with debt on credit cards and person loans are in financial distress.
It follows a series of warnings from leading economists and financial organisations that families are taking on more debt that they can afford, putting Britain’s economy at risk.
Official data revealed over the summer that unsecured borrowing on credit cards, overdrafts and car loans had topped £200 billion for the first time since the Financial Crisis.
The Money Advice Service research showed that those living in Newham in East London are estimated to be more stretched than anywhere else in the UK, with 22.7 per cent of people reporting problems.
The average debt of the people it helps has also risen, from £14,251 in 2016 to £14,367 in the first half of 2017
It was followed by Tower Hamlets, London, where 22.7 per cent of people were over-indebted, and Sandwell, West Midlands, with 22.1 per cent in debt trouble.
Those in East Dorset, Mole Valley, Surrey, and Chiltern, Buckinghamshire are reported to have the lowest proportion of over-indebted residents, all under 10 per cent, the research said.
The report also found that those in the North East and Wales are most at risk, with 17.7 per cent reporting debt problems. The South East has fewest residents in serious debt at 13.3 per cent.
Sheila Wheeler, director of debt at the Money Advice Service, said: ‘This research tells us that one in six people in the UK have financial worries, a figure that stands at over 8.3 million.
‘Debt is a complex challenge and one that needs a collaborative approach if we are to successfully address it.’