UK Households hit by staggering £22bn debt, with 1 in 4 falling behind on bills

As households grapple with increasing financial pressures, startling new figures have emerged, revealing that 1 in 4 people in the UK are currently behind on at least one bill.

The analysis, presented by Citizens Advice, shows that UK households are drowning in debts estimated at £22 billion.

But the situation may be even more concerning, as the charity warns that actual figures could be significantly higher.

Since the beginning of the year, there’s been a marked increase in the number of individuals seeking help from Citizens Advice, rising by 21% between the second and third quarters of 2023 alone.

These figures serve as a stark reminder of the escalating cost-of-living crisis many are facing, with energy bills and council tax arrears being the leading causes of debt.

Significantly, half of those assisted by Citizens Advice are battling with either energy debts, council tax arrears, or both.

This dramatic shift has seen a rise from a mere £21 surplus at the month’s end, to a worrying deficit of £28 within a span of four years.

This alarming trend underscores the widening chasm between basic monthly costs, like food and energy, and the incomes earned by UK residents.

More and more people are finding themselves in a negative budget, where their earnings fail to cover fundamental expenses. Highlighting the gravity of this situation, Citizens Advice revealed that 21% have been forced to borrow money just to pay for basic essentials like groceries in the past half-year.

Historical data provides a clearer picture: since 2019, there’s been a 38% surge in the number of people approaching the charity for assistance, especially among groups not traditionally perceived as vulnerable, such as employed individuals and mortgage holders.

However, the mounting debts aren’t just a result of rising living costs. The current systems in place are riddled with pitfalls, making it more challenging for individuals to get back on their feet financially.

Missed council tax payments can lead to a liability for an entire year’s bill, with severe consequences like bailiffs getting involved. High benefit deductions and upfront fees for debt relief further exacerbate the situation, trapping people in a cycle of debt.

To address these pressing issues, Citizens Advice is urging a comprehensive reform of the debt collection and management process, championing a more empathetic approach that allows people to repay their debts feasibly without pushing them deeper into financial woes.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“We’re now seeing the levels of debt we feared and the picture is only set to get worse.

“Millions of people are doing their best to balance the books but the numbers simply don’t add up. Too many people are living on empty, unable to pay their bills or even put food on the table.

“Current systems are stacked against people in debt, instead we need an approach that offers more support and realistic routes out of debt.

“We need to see reforms that will have a tangible impact. The ball is the government’s court to take action now to avoid debt becoming the lasting legacy of the cost-of-living crisis.”