NEW CLIENTS OF DEBT CHARITY STEPCHANGE are increasingly citing the cost of living as their main reason for debt. In July, 20 per cent of clients who completed full debt advice said the cost of living was their primary reason for contacting StepChange, up from 18 per cent in June.
Meanwhile, for the first time in several months, the proportion of new clients with energy arrears has jumped. New clients in gas arrears rose from 23 per cent in June to 26 per cent in July, while those in electricity arrears was up from 28 per cent in June to 30 per cent in July.
StepChange is warning that these numbers are only likely to grow without further support from Government, as inflation continues to weigh heavy on household finances and the energy price cap rise looms.
New data from the Bank of England’s Money and Credit statistics shows consumer borrowing remains high, with £1.4 billion borrowed in July, suggesting a continued reliance on credit to cope with the ongoing pressures of high inflation and energy bills.
StepChange research from earlier this year found that two-thirds (65 per cent) of those using credit as a safety net kept up with credit repayments by missing housing or utility bills, using more credit or cutting back to the point of hardship.
Phil Andrew, CEO of StepChange said: “It’s no surprise to see cost of living pressures continue to take their toll on our clients’ finances. What’s most concerning is the new rise in energy arrears we’re seeing in the middle of summer when energy use is typically low, and the catastrophic effects of October’s new energy price cap are yet to take hold.
“The next few weeks will be crucial. Our next prime minister must hit the ground running with a set of bold measures that catches millions of households before they fall into fuel poverty, problem debt and destitution. We urgently need to see benefits uprated to match the pace of inflation, alongside a financial support package that is in line with the scale of the energy price rise.”
* View StepChange’s monthly client data here.
* View the Bank of England’s monthly Money and Credit report here.
* Source: StepChange