Tackling problem debt: Impact report 2016-2017

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

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

Context

Record numbers of people are contacting StepChange for help with debt. 2.9 million people in the UK have severe problem debt, but only 1.5 million seek support. More than 600,000 people a year seek our help and the need looks set to grow. Consumer lending is growing at its fastest rate since 2005 and wages are not keeping up with inflation. Job loss or unemployment (19 per cent), injury or illness (16 per cent), reduced income (12 per cent) and separation or divorce (10 per cent) are the top causes of problem debt seen in StepChange clients. Previous StepChange research demonstrates that problem debt drains the UK economy of an estimated £8.3 billion through its impact on physical and mental health, productivity and through the social welfare costs of supporting those who become trapped by debt.

The study

This is a short annual report demonstrating the impact that StepChange the debt advice charity has had in 2016-2017. It draws on data demonstrating how it is making savings for creditors, influencing policy change, including in campaigning for a ‘breathing space’ for debtors, tackling biggest debt types such as credit cards and overdrafts, and debt trends of concern such as payday loans, council tax, and poor bailiff conduct.

Key findings

In this report Stepchange show a series of snapshot figures demonstrating the impact of their services on clients:

• Between 2016-17, 925,665 people contacted StepChange for advice
• 5.3m people visited their website
• The average unsecured debt of clients first contacting them between those years was £14,309
• 457,270 clients successfully completed a debt advice session
• 30,000 became free of problem debt with their help
• 21% of their clients were single parents compared to 7% of the general population
• 79% of their clients were in rented accommodation compared to 67% of their clients in 2013
• £611m of debt was paid off by their clients
• £136m of debt was written off by creditors.

Additionally, StepChange report the following findings made between 2016-17:

• Saving money for creditors -
  • 94% of their clients were very/quite likely to recommend them to others.
  • £175 million in savings to creditors as a result of the charity’s work.

The report also shows a number of concerns for StepChange:

• Policy change -
  • One in five people struggling financially have been unable to afford food after making unsecured debt repayments.
  • Six in ten of their clients who were not protected from interest, charges and enforcement actions went on to take out more credit to cope.
• Tackling debt -
  • 8.8 million people turned to credit to pay for everyday essentials in 2016.
  • 50 per cent of their clients have an overdraft (an average of £1,722 each).
  • 50 per cent of those who had been visited by a bailiff said they were treated unfairly.
  • 55 per cent of those visited by a bailiff said it made their debt problems harder to manage.

Points to consider

• Methodological limitations:
  • This is an impact report from a single, albeit the largest, debt advice charity in the UK. Therefore the quantitative results reflect only StepChange clients (in other words, people that have sought debt advice) not the general UK population.
• Relevance:
  • This report is relevant to anybody interested in understanding the motivations behind seeking debt advice among UK debtors, and also those interested in the wider economic impacts indebtedness has.

Full report

Tackling problem debt: Impact report 2016-2017 - full report