Growing financial insecurity among consumers

More consumers turned to StepChange Debt Charity for debt advice in 2023 than in 2022.

“Over the past year, we’ve begun to see the impact of the cost of living crisis take hold, particularly among those on low incomes, where household financial insecurity is a growing threat,” states Vikki Brownridge, Chief Executive at StepChange Debt Charity. “We are also seeing a rise in household arrears and unsecured debt, suggesting those struggling are turning to credit to cover their essentials more than ever.”

The charity, in its 2023 Statistic Yearbook published at the end of March, revealed the growing financial insecurity among consumers. Data for the yearbook was derived from the demographic and debt situations of those who fully completed their very first debt advice session, between January and December 2023.

One new client completes debt advice every three minutes

StepChange advised 183,403 new clients in 2023. This is equivalent to one new client completing debt advice every three minutes (172 seconds). Compared to 2022, StepChange provided debt advice to 16,000 more clients, representing a 10% year-on-year increase.

Mounting cost of living pressures

One in four (25%) clients cited ‘a cost of living increase’ as their main reason for debt in 2023, which is unsurprising considering that households have had to navigate high inflation rates. ‘A cost of living increase’ is now the most common reason for debt up by seven percentage points compared to 2022, and up by 19 percentage points compared to 2021 (6%).

Majority of clients are in employment

In 2023, three in five (59%) StepChange clients were in some form of employment which is up by three percentage points compared to 2022 (56%). The proportion of clients in full-time (42%) and part-time (15%) employment increased by two percentage points and one percentage point, respectively since 2022.

More women seek debt advice

The charity has also seen an increase in the number of women seeking debt advice, with three out of every five new clients being women.

Rising costs of essential bills

As the cost of essential bills rose rapidly during 2022 and 2023, the average amount of household arrears among StepChange clients also increased – rising to £3,124 in 2023, up from £2,833 in 2022.

Similarly, the average amount of unsecured debt has reached its highest level since 2013, standing at £14,654 in 2023, up from £13,563 in 2022. This rise has mainly been driven by higher amounts of credit card and personal loan debts.

Lack of financial safety nets

“With the amount of money our clients have leftover each month after covering the basics becoming more stretched, it’s a real concern that people don’t have the safety nets to fall back on if they’re faced with a shock that impacts their finances like ill health or redundancy,” states Vikki.

“As we edge ever closer to a General Election, we’re urging this government and the next to focus on building financial resilience among households. Measures like social tariffs for essential utilities, a robust and adequate benefit system and a commitment to building low-income savings, would make a real difference to the lives of those struggling day in and day out just to get by.”

For more information on how StepChange Debt Charity can help either contact them online or on 0800 138 1111. Monday to Friday 8am to 8pm and Saturday 9am to 2pm.