Tackling the growing problem of personal debt needs to be a top priority for the next government - Vikki Brownridge

It's not hard to see why. The continued pressure of high inflation since the pandemic has seen many who were previously coping now struggling to keep up with basic living costs. Research we carried out in 2020 found that just 15 per cent of UK adults said they found it difficult to keep up with household bills and credit commitments. Fast forward to May this year and that figure stands at two in five, 40 per cent of adults. For those on lower incomes, the effect of high inflation is significant, as essential costs absorb a much larger proportion of their budgets.

The knock-on effect of both this crisis and the pandemic has been a significant drop in many households’ financial resilience, or the ability to withstand unexpected changes to your household income or spending. Whether this is the cost of fixing a broken boiler or an unexpected loss of income, many households have little to no savings to cover such an incident. Indeed, recent polling from the Resolution Foundation found that around one in four people has less than £1,000 in savings, with the Money and Pensions Service finding that one in six have no savings at all.

The experience of struggling with debt can be isolating. Feelings of shame and stigma can prevent people talking about their problems, and lead to them delaying getting the support they need when they need it.

We are increasingly finding that many of our clients’ incomes are not enough to make ends meet, let alone repay debts. Without available funds leftover in someone’s budget after going through debt advice, none of the recognised debt solutions we offer are considered sustainable. This is known as a negative budget.

A third of those who come to us are finding themselves in this situation, leaving them essentially stuck in a debt trap. Perhaps most shocking is the rise of in work indebtedness – one in five full-time employed StepChange clients are in a negative budget – meaning their expenditure on essentials is greater than their income. This is a clear indication that the cost-of-living crisis is pushing people from higher income bands into difficulty and that for a growing proportion of people, being in work is not enough to protect them from falling into problem debt.

There is no silver bullet here – the issue is multi-faceted and spans a range of policy areas from welfare to employment. But we want to see the political will to take the rise of problem debt and negative budgets seriously, working towards a fairer housing system for both owners and renters, better consumer protections for those in arrears with household bills and facing bailiff action, and a wider strategy for more sustainable financial support and inclusion.

Vikki Brownridge is chief executive of StepChange Debt Charity, based in Leeds.