Household debt in the UK is close to its all-time high and fuelling a host of social problems, according to a new report from the Centre for Social Justice (CSJ).
Maxed Out, part of the Breakthrough Britain II project, finds that despite signs of national economic recovery, personal debt stands at £1.4 trillion. There is now an average household debt of £54,000 – nearly twice the level of a decade ago.
The CSJ found that an increasing number of people are turning to high-cost lenders to pay for essentials and that debt is linked to numerous social problems, including mental illness and family breakdown.
The report, which was led by former Labour Work and Pensions Minister Chris Pond, says poor people are bearing the brunt of a storm that has seen unsecured consumer debt almost triple in the last 20 years, reaching nearly £160 billion today.
Worryingly, indebted households in the poorest 10 per cent of the country have average debts more than four times their annual income. Average debt repayments within this group amounted to nearly half their gross monthly income, the study highlighted.
The report received widespread media coverage – including two features on Radio 4’s Today programme, one by Home Editor Mark Easton and a separate feature by presenter Justin Webb. The study was also discussed on BBC 5 Live's Victoria Derbyshire Show and the CSJ was interviewed by BBC News, Sky News, ITV and Al Jazeera.
Christian Guy, CSJ Director, said: “Problem debt has taken root in the mainstream of British society and it can have a corrosive impact on people and families. Our report shows how it can wreak havoc on mental health, relationships and wellbeing.
“Across the UK people are up until the early hours worrying about their finances and bills.”
Maxed Out is part of the CSJ’s Breakthrough Britain II project, which will conclude next year with a series of policy recommendations to tackle the root causes of poverty and disadvantage. Previous CSJ reports on serious personal debt are available here and here.