Certus Login   Client Area   ☏ 0844 880 9808  

Household debt spiralling out of control

Average household debt in the UK jumped to £9,000 last year according to PwC. That's a £20bn, or 9%, rise. If you include mortgages, the total jumps to £29,126. Worse still, The Office for Budget Responsibility (OBR) claims that the figure could rise a further 62% by 2020.1065 Coin stack and piggy bank

Public delusions

The Office for National Statistics may have revised its UK economic growth figures up from 0.5% to 0.6% in March, but industrial output figures are disappointing and the trade deficit is worsening. This suggests that the UK's feeble recovery is far too dependent on consumer spending.

However, far from acting to increase exports and rebalance the economy, the government, lenders and retailers look to be continuing to aggressively market the "improving economic situation" in a bid to encourage consumer spending and re-inflate the housing bubble.

It's working too. PwC's research found that just 16% of people were worried about debt repayments: down from nearly 33% last August. Debt attitudes are unlikely to improve either. Enormous student loans have numbed Britain's young people to the potential damage that debt can do.

The economic reality

As Brits buy into the illusion and mire themselves deeper in debt, they run the risk of greater reliance on "last resort" credit. Payday lenders may have taken a hit when their exorbitant interest rates were capped, but up to 20% of 35-44-year-olds are still reliant on credit cards to pay essential bills.

In the poorest households, the situation is even more precarious. Insecure jobs and zero-hours contracts are rising, and periods of joblessness are now twice as frequent among low-paid workers. In light of this situation, it's worrying to note that a mere 2% increase in interest rates from today's record lows of 0.5% would lumber the average household with an extra £1,000 per year in costs: no small sum for struggling families.

So if the situation worsens, we're at risk of seeing a renaissance of the illegal loan sharking industry, or even a spate of personal bankruptcies. Both of which would be catastrophic for individuals and the wider economy.

What we can do

Michelle Highman, chief executive of The Money Charity, has been keen to emphasise the value of "well-resourced financial education in schools, and support for adults throughout their lives", and that's an excellent start for campaigners. But while charities campaign for state, Dukes Bailiffs believe that our industry, alongside financial services companies and councils, has a duty to inform and engage with clients and debtors.

That means actively campaigning to raise awareness of the responsibility to repay loans and tax arrears, accompanied by honest, realistic portrayals of what can happen when these responsibilities aren't met. It also means making ourselves available, approachable and effective to try and remove the "us and them" mentality that is dangerously close to becoming the norm.

To do so, we must find new ways to contact and connect with clients and debtors, and place a renewed focus on finding affordable solutions to debt problems. Costly legal action and negative publicity benefits no-one.

Contact Dukes Bailiffs for an ethical way to collect your debts.

Talk to us