StepChange debt charity reports 15% surge in advice demand

StepChange Debt Charity’s client data reveals a 15% year-on-year increase in demand for debt advice in March, marking a consistent trend of significantly higher client volumes each month in 2023.

The charity warns that this may signal the onset of an escalating debt crisis following a sustained period of high inflation.

Simultaneously, the Bank of England’s Money and Credit statistics show that consumer credit borrowing remains elevated, with the annual growth rate for all consumer credit reaching its sixth consecutive month of increase, from 7.7% in February to 7.9% in March.

StepChange’s data indicates a rise in clients citing the cost of living as their primary reason for debt, accounting for over a quarter (26%) of cases, and has been the leading cause of debt since June 2022.

Energy arrears among new StepChange clients have consistently increased since the beginning of the year.

In March, 55% of clients responsible for dual fuel bills were in arrears, a four percentage point increase since January 2023.

The proportion of clients in gas (29%) and electricity (27%) arrears also rose compared to the previous month, up by two percentage points and one percentage point, respectively.

Although energy bills may decrease later in the year, interest rates are still expected to peak.

StepChange stresses that the government must not overlook the financial strain caused by the cost of living crisis, the full extent of which is only now becoming apparent.

StepChange Debt Charity Chief Executive Vikki Brownridge commented on the first quarter’s consistently higher client volumes compared to most months in 2022.

She noted the impact of price rises on essential bills and food costs significantly outpacing the average rate of inflation.

Brownridge warned that without further government intervention, more people might resort to credit to make ends meet, many of whom are already in arrears on energy bills, council tax, rent, and mortgage.

To prevent the worsening of problem debt, Brownridge urged the government to consider both immediate and long-term solutions to address the crisis.

She recommended introducing targeted funding to write off arrears when someone in debt with energy bills cannot afford to pay. In the longer term, a social tariff for energy could serve as a permanent solution to protect financially vulnerable households from debt and fuel poverty.