Nearly a quarter (24%) of Welsh adults are showing at least one sign of financial distress according to new analysis by StepChange Debt Charity.
This includes 8% of the Welsh population experiencing severe debt problems, a higher proportion than the UK average (6%).
The figures outlined in StepChange’s ‘Wales in the Red’ report provide a troubling snapshot of the debt landscape in Wales. Among clients who sought the charity’s help between July 2018 and June 2019, the average level of unsecured personal debt was £10,415. Meanwhile, more than half (54%) of clients were aged under 40, despite just 34% of Welsh adults in the wider population falling into this age group.
The most common reasons cited for being in debt were reduced income (16% of new clients), injury or illness (15%), unemployment (12%) and separation/divorce (10%), highlighting a worrying proportion of people ill-equipped to cope with shocks to their income.
The charity has previously voiced concerns after its research found those in Wales are more likely to have been made worse off by income shocks than those across the rest of the UK. These new figures add to fears that any future economic turbulence or sharp rises in the cost of living could be disastrous for those already under financial pressure.
Other findings from the report reveal more than half (51%) of new StepChange clients in Wales are in arrears on household bills. The most common form of arrears is for council tax, with 36% clients liable for the bill behind by an average of £984. This is particularly worrying given a significant proportion of council debt is passed to bailiffs, whose often intrusive and costly enforcement practices can increase hardship for struggling households.
Single parents are an overrepresented group among Welsh StepChange clients compared to the general population, making up one quarter of (23%) of those who came to the charity. Of all clients with children who came to StepChange, more than half (54%) were single parents, double the proportion (27%) of single parents in the wider Welsh population. The relatively high incidence of single parents may explain why women (60%) make up a higher proportion of new StepChange clients than men (40%).
Commenting on the report findings, North Wales Assembly Member Mark Isherwood, who attended the launch of the report in the Senedd this week, said:
“Of the new 6,434 StepChange clients in Wales between July 2018 and June 2019 identified in this report, 1,240 were in the 6 North Wales Counties, ranging from 98 on the Isle of Anglesey to 320 in Wrexham. This report sends a clear message to policymakers that the time to act on problem debt is now”.
Phil Andrew, Chief Executive of StepChange Debt Charity, said:
“Many of our clients have already reached breaking point, but many more households across Wales are vulnerable to any future economic uncertainty. If they are to keep their heads above water, we need to see provisions put in place for those struggling with debt, so they get the help and protection they need to recover.
“More positively, we are delighted that the UK Government’s new statutory “Breathing Space” and debt repayment plan schemes” will be available for people in Wales when they come into force. The challenge to the Welsh Government is now to get implementation over the line as quickly as possible.”
StepChange is calling on the Welsh Government to work with the charity, and other sector partners, to improve the help and protection those in problem debt receive by making council tax debt recovery fairer and helping the Welsh Government to implement free-to-client debt advice.
