By Asiya Uddin, Research and Insight Officer
Today marks the launch of our latest Statistics Yearbook, which highlights the demographic and debt situations of clients who contacted the charity between January and December 2022 for their most recent advice session.
Like many households across the UK, our clients felt the impact of increased living costs on essential items such as food and energy. For many of our clients, this rise in costs left them unable to afford these everyday essential costs.
In 2022, various government interventions were rolled out to help support households that were at risk of financial difficulty, such as the Energy Price Guarantee, Cost of Living Payments and the Household Support Fund. However, we still saw a 9% rise in the number of clients seeking debt advice from StepChange in 2022 (187,278 vs. 171,232 clients in 2021). Below I have outlined three (of many!) key findings from the Statistics Yearbook.
Clients are feeling the impact of increased living costs
Last year we began to see a shift in the reasons for our client’s debts. For several years a ‘lack of control over finances’ has been the leading cause of debt problems for people contacting the charity, most commonly because of a change in personal circumstances such as redundancy or ill health. Yet in 2022, we have seen the proportion of clients citing a ‘cost of living increase’ as their main reason for debt increase throughout the year, reflecting the ongoing pressures felt by households due to rising household bills and essentials.
In 2021, a ‘cost of living increase’ was the eighth most common reason for debt, whereas by 2022 this was the second most common reason for debt among clients. In 2022, a ‘cost of living increase’ was cited by 15% of clients as their main reason for debt, compared to 6% in 2021. In 2022, seven in ten (69%) of those that cited a ‘cost of living increase’ as their main reason for debt were women.
It is also worth noting that in our monthly client data reports, the proportion of clients citing a ‘cost of living increase’ progressively grew from around one in ten clients in January (9%), to over two in ten clients by the end of the year (December = 22%). A ‘cost of living increase’ (18%) overtook a ‘lack of control over finances’ (17%) as the singular most common reason for debt for the first time in June 2022.
In 2022, clients aged 60 and over (20%) are more likely to cite a ‘cost of living increase’ as their main reason for debt, compared to clients aged under 60 (16%). Clients with children (19%) are also more likely to cite a ‘cost of living increase’ as their main reason for debt, as opposed to clients without children (14%).
A growing proportion of clients are in arrears with their energy bills
Soaring prices for energy meant we saw substantial rises in the average energy bill among clients and a higher proportion with energy arrears. In October 2022, the Government launched the Energy Price Guarantee cap to support households with energy costs. Despite government intervention, one third (33%) of StepChange clients were in arrears with their energy bills, compared to 29% in 2021. Among StepChange clients who are in energy arrears and have disclosed their gender identity, around seven in ten (71%) are women.
In 2022, there’s been a 7 percentage points year-on-year increase in the proportion of clients in dual fuel arrears (52% vs. 45% in 2021), among those with a responsibility for paying this bill.
Electricity (30% vs. 28% in 2021) and gas (25% vs. 23% in 2021) arrears are also up by two percentage points each, compared to 2021, among those who are responsible for paying these bills, respectively.
The average unsecured debt amount per client has increased
The average number of unsecured debts held per client increased from five in 2021, to six in 2022. We have also seen an increase in the average unsecured debt amount held per client and it is likely that the increase in the number of unsecured debts held per client contributed towards this.
In 2022, the mean unsecured debt amount among StepChange clients increased by 25% year-on-year to £13,941, and the median unsecured debt amount increased by 37% year-on-year to £8,700. This is the first substantial increase we have seen in the average unsecured debt amount, following two consecutive years of decline, during the height of the COVID-19 pandemic.
Our client debt advice data enables us to undertake further analysis and draw out even more insights about the situations of clients seeking debt advice from StepChange in 2022, and we’re planning to publish further analysis soon.
Stay tuned and watch this space!