The falling value of people's earnings since 2007 has left 3.2 million households in "problem debt," spending at least a quarter of their earnings on repayments, while 1.6m of these in the most "extreme" type of debt are losing at least 40% to repayments, a report published today has warned.
Research by the Trades Union Congress (TUC) and public service union Unison has found 'unsecured' debt for UK households – including credit cards and loans but excluding mortgages – has increased by £48 billion between 2012 and 2015, reaching £353 billion, with one in eight households now struggling with problem debt.
The TUC's report claims the problem is fuelled by a lack of wage growth, with the 'real value' (ie, the purchasing power) of wages falling by 10.4% between 2007 and 2015.
'Too many rely on credit'
TUC general secretary Frances O'Grady says: "The Government must also do more to help low-income families struggling with problem debt in getting access to debt restructuring and insolvency support."
Peter Tutton, head of policy at StepChange Debt Charity, says: "Every week we see thousands of households struggling to keep up with their essential bills and credit repayments. Sluggish wage growth and the rise in insecure jobs have left households even more financially vulnerable.
"Too many households are relying on credit to get by and this massively increases their chances of falling into severe problem debt."