StepChange comments on Bank of England lending data, and reveals rise in those seeking debt advice in full-time employment

Commenting on today’s Money and Credit data from the Bank of England, which showed net consumer credit borrowing of £0.4 billion in August, StepChange Debt Charity says that among those hardest hit by the pandemic, borrowing on credit to meet essential living costs remains a widely-used short-term coping strategy.

The charity has also today released its monthly client data report, which shows an uptick in the proportion of new clients who are in full-time employment at the time they seek help. In August, 40% of clients were in full-time employment, having shown a gradual rise over the course of 2021, up from 36% over 2020 as a whole.

The average client rent arrears among those new clients who were tenants stood at £1,733 in August, reinforcing the fact that rent debt is a major impact of the pandemic – the 2020 average was £1,463 and the 2019 average was £1,084.

12,500 new clients took full debt advice in August – still only around half the level of the 2019 pre-pandemic equivalent monthly volume. StepChange attributes this counter-intuitive phenomenon to the support that many households in financial difficulty have been receiving. Such support means many households have not yet reached a point of crisis, which is the point at which most people turn to debt advice (despite the sector’s efforts to encourage earlier intervention). It is unclear, with the withdrawal of furlough, the increase in costs such as energy bills, the withdrawal of the £20 weekly uplift to Universal Credit, and the resumption of rent arrears evictions, how much longer demand will remain suppressed.

The August StepChange data continues to show the same trends as recent months in terms of client characteristics:

  • Around a third of new clients have a negative budget, where essential outgoings exceed household incomings
  • Around a third of clients are claiming Universal Credit
  • More than three fifths of clients are women.

Richard Lane, Director of External Affairs at StepChange, commented: “Lending to individuals in August was restrained overall, but what we continue to see from our perspective as a debt advice charity is a two-speed exit from the pandemic. Some households have managed to cut their costs and cut their debts, but a less fortunate group – typically those who already had less in the way of savings, income and general financial resilience – are still struggling with significant additional accumulated debt, and the prospect of higher costs and reduced income just around the corner. We urge the Government to focus on how to cushion the emerging difficulties for this group by maintaining the Universal Credit uplift and introducing an income-contingent rent debt rescue scheme.”