Three million people fear falling into debt in next six months

(Image credit: Getty images)

published 30 March 22

Around three million people fear being pushed into the red within the next six months as part of a growing household debt crisis.

Research by anti-poverty group Jubilee Debt Campaign found that 6% of adults who are not currently in debt expect to be in six months - the equivalent of three million adults.

Nearly a fifth (19%) are in moderate debt and a further 26% are not in debt but are concerned about falling into it at some point, according to the poll of more than 2,000 people across Britain in March.

One in 25 (4% of people) are already in serious debt, as incomes stagnate and living costs rise.

Households are facing a cost of living crisis, with inflation hitting 6.2% over the year to February, marking a fresh 30-year high.

Rising energy and council tax bills will put a further squeeze on household budgets this spring.

People facing a "tsunami of debt"

Heidi Chow, executive director of Jubilee Debt Campaign, urged the government to take “urgent action” to help people facing a “tsunami of debt”.

The study also revealed that people of black and minority ethnic backgrounds are almost twice as likely to be in serious debt as white people (7% versus 4%).

Meanwhile, a third of people polled with incomes under £21,000 are over-indebted and are paying at least 40% of their monthly income on debt repayments.

Chow said: “As struggling households choose between starving or freezing in the face of soaring costs, it’s scandalous though no surprise that there is a tsunami of debt on the horizon for half the adult population of Britain.

“The debt-poverty cycle is a downward spiral and the government needs to take urgent action to address this debt crisis by writing down large amounts of problem debt and widening access to insolvency solutions.”

Support for struggling households

The Office for Budget Responsibility said last week that households are facing the biggest squeeze in living standards since records began in 1956-57, with inflation potentially reaching a 40-year high of 8.7% in the final three months of 2022.

Measures announced by the chancellor in last week’s Spring Statement to help offset surging household bills include a 5p per litre cut in fuel duty on petrol and diesel until March 2023. Changes to the National Insurance threshold in July will benefit almost 30 million workers.

An extra £500 million was also announced for the household support fund, doubling its total amount to £1 billion to support vulnerable families with short-term crisis funding from local authorities.

In February, the government announced that those living in properties in council tax bands A to D would receive a £150 rebate from their local authority.

It also said that about 28 million households in England, Scotland and Wales would receive a £200 upfront discount towards their electricity bill in October - but unlike the council tax rebate, this will need to be paid back.

Anyone struggling with debt should consider talking to a specialist debt charity such as StepChange, and use a benefits checker to ensure they are getting all the benefits they are entitled to.

Additional reporting by Press Association

Ruth Emery

Ruth Emery is contributing editor at The Money Edit. Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times. A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service. Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.