A picture of over-indebtedness

1. Context
2. The study
3. Key findings
4. Points to consider

• Context
• The study
• Key findings
• Points to consider
• Full report

Context

One in six people in the UK is over-indebted but few of them seek advice. Identifying characteristics associated with over-indebtedness and the location of over-indebted people should help to better plan and target effective services.

The study

The Money Advice Service (MAS) aimed to identify characteristics associated with over-indebtedness and the likely concentration of over-indebted people across the UK. Working with CACI, the study used logistic regression to determine factors associated in surveys with over-indebtedness and then used Ocean, CACI’s broad demographic and lifestyle database, to generate the probability of over-indebtedness for 50 million adults, allowing mapping of likely over-indebted people to local authority, region and country. “Over-indebtedness” is defined as finding keeping up with bills and commitments as a heavy burden and/or falling behind or missing payments in at least three of the previous six months.

Key findings

• Number and concentration of over-indebted people:
  • The study estimates that 8.2 million people (16.6%) in the UK are over-indebted.
  • The highest levels of over-indebtedness are found in Northern Ireland (21.0%), Wales (19.6%) and the West Midlands (18.0%), with the lowest levels in the East of England (14.4%), the South East (14.0%) and Scotland (13.2%).
  • The highest levels tend to be found in mostly urban areas (with the exception of some more rural areas in the South Wales valleys and Northern Ireland).
  • There is variation in levels in local authority areas within each country or region, most strongly in London, where Newham has a level of 23.8% and Richmond upon Thames has 11.5%.
• Factors predicting over-indebtedness over-indebtedness:
  • The modelling process tested a wide range of variables and found 16 characteristics that had a strong relationship with over-indebtedness (with relationships significant at the 95% level). Key factors include the following:
  • 25% of people who rent their homes are over-indebted, compared with 12 % of home owners. This figure rises to 29% among social tenants (compared with 21% of private tenants).
  • 20% of adults with children are over-indebted, compared to 13% of those without. This rises to 26% of those with three or more children.
  • 28% of single parents are over-indebted, compared with 18% of two-parent families. This rises to a third of single parents with three or more children.
  • 24% of people with household incomes below £10,000 are over-indebted. Above that income level, about 15% of people are over-indebted regardless of their income band. Factors other than income are comparatively more important.
  • Younger people are more likely to be over-indebted. Among those aged 25-34 , about a quarter are over-indebted, with levels of about 20% among those aged 18-14 and 35-44. The figure falls to about one in 20 among those aged 75 or over. Younger people are more likely to miss payments and older people to find bills a heavy burden.

Overall, the model has identified 16 parameters that suggest an increased or decreased likelihood or over-indebtedness. All parameters are statistically significant at the 95% level, with the exception of “single parent” (Pr>ChiSq = 0.052), “but models omitting this variable performed worse in predicting over-indebtedness”.

The Money Advice Service will work with partners to focus on the groups highlighted in the findings, for instance through working with social housing providers. MAS will share and update detailed data.

Points to consider

• Methodological limitations: While the model is robust, it is essential to be aware that figures quoted derive from modelling: the factors identified refer to observed relationships rather than causation. Full details of the parameters and the modelling approach are available here.
• Generalisability/ transferability: The findings are robust across the adult population of the UK.

Full report

A picture of over-indebtedness- full report