Broken economy is driving record levels of household debt, says TUC

By agency reporter
September 6, 2019

Low pay, insecure work and austerity are feeding a growing debt crisis, the TUC has warned. New TUC analysis shows that:

  • Unsecured debt per household rose to £15,880 in the first quarter of 2019, up £1,160 on a year earlier
  • Over half of households report having unsecured debt, most commonly in the form of credit card debt (60 per cent), overdraft (28 per cent), personal loans (25 per cent) and car finance (25 per cent)
  • Young people are disproportionately likely to be in debt. 70 per cent of 18-34 year-olds report having a type of unsecured debt. This drops to 33 per cent among people over 65.

The TUC believes that persistent low pay is the key driver of household debt. Real wages are still lower than they were before the 2008 crisis and working families are struggling to make ends meet without going into the red.

The new analysis also shows that of those households with unsecured debt:

  • One in five (20 per cent) say repayments are a “heavy burden on their finances”.
  • One in seven (14 per cent) have fallen more than two months behind on repayments in the last year.
  • Nearly half (45 per cent) do not feel that they have enough money set aside for emergencies.

TUC General Secretary Frances O’Grady said: “Our broken economy is forcing working families deep into debt.

“Low pay, insecure work and austerity have pushed millions of households to the financial cliff edge. Big corporations are raking in huge profits at working people’s expense. And successive governments have done nothing to avert the crisis.

“It’s time to reset the balance of power in our workplaces and our economy. Government must make more employers negotiate pay and conditions with unions. That will lift wages for everyone and stop working families having to rely on credit cards and overdrafts to get through the month.”

The TUC has published new proposals to ensure that workers get the chance to negotiate better pay and conditions through trade unions. These include:

  • Unions having access to workplaces to tell workers about the benefits of trade union membership, following the model in New Zealand
  • New rights to make it easier for unions to gain the right to negotiate at workplace level
  • New rights for unions to negotiate right across sectors, starting with hospitality and social care

The TUC is also calling for:

  • A £10 National Minimum Wage to be introduced as quickly as possible
  • a ban on zero-hours contracts, and a crackdown on insecure work that means people do not know how much they will earn from one week to the next

* Trades Union Congress https://www.tuc.org.uk/

[Ekk/6]

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