Wages Standstill Sees Over a Million Low-Income Families Struggle with Extreme Debt, Says TUC

More than a million families with a household income below £30,000 are in extreme debt, and ongoing wage stagnation is making the problem worse, according to a new report published today (Tuesday) by the TUC and UNISON. The report, Britain in the Red, finds that total unsecured debt (which excludes mortgages) for UK households rose by £48bn between 2012 and 2015 to reach £353bn. The report looks at how this debt is distributed, finding that millions of households are struggling with high repayment rates relative to their income: 3.2 million households are in ‘problem debt’ – defined as paying out more than 25% of their gross household income on unsecured debt repayments (3.2m is equivalent to 1 in 8 households.) 1.6 million households are in ‘extreme problem debt’ – defined as paying out more than 40% of their gross household income on unsecured debt repayments (1.6m is equivalent to 1 in 16 households.) Many low-income households are under particularly severe pressure. Of the 1.6 million households in extreme problem debt, it is estimated that 1.2 million have a household income below £30,000. For low-income households in employment, extreme problem debt is growing fast. In 2015 9% of low-income households in employment were in extreme problem debt, nearly doubling from 5% in 2014.