A ‘blight affecting millions’

A quarter of the poorest households are struggling with bills or debt, with 10 per cent forking out more than a fourth of their salary on credit card payments, a report has found.

The Institute for Fiscal Studies (IFS) said a sixth of Britain’s least wealthy households are in arrears on bills and repayments.

Another 10 per cent are estimated to be using a quarter of their monthly income on paying back pay day loans and credit cards.

Although the report found that most debt is held by people on above average incomes, the IFS said the analysis reveals a “real problem” with debt for a “significant minority” of poorer families.

Report author David Sturrock said, “Debt looks like a real problem for a significant minority of those on low incomes, who are not keeping up with bills and/or spending high fractions of their disposable income on debt repayment.

“Headline numbers are no guide to the scale of ‘problem debt’: distinguishing between debts that are entirely appropriate and those that look unmanageable is crucial.”

In total, the IFS said data from 2012-14 reveals that around half of all households had some form of unsecured debt – with 10 per cent owing at least £10,000.

Those on lower incomes were likely to owe smaller sums, however, more than a third of the poorest 10 per cent had debts amounting to more than their financial assets – a figure that fell to just one-in-10 for the richest 10 per cent.

‘Widespread erosion’

Unite assistant general secretary Steve Turner said, “The Tories have presided over years and years of widespread erosion to job security and pay. Nor is the problem of debt restricted to just the poorest and most vulnerable. It is a blight that affects millions of families for whom financial security has become a distant prospect.

“The truth is that under the Conservatives the rich have got richer, while everyone else has got poorer.  “It’s time for a change of direction that rows back on the glaring inequality created by the Tories. Only a Labour government would raise the minimum wage to ÂŁ10 so that people can actually live on their earnings. Labour would invest in the services, industry and infrastructure this country needs to create a strong economy and decent jobs.”

To find out more about Unite’s Credit Union Service, which aims to provide members and their families with access to affordable finance and competitive savings products, click here.