StepChange Scotland: Essential bills arrears up 29%

The charity said it helped over 28,600 clients with debt advice in 2021, and 8,433 went through a full debt advice process. A growing proportion of clients cited the “cost of living as a reason for debt”, according to its Scotland in the Red update – StepChange Scotland’s annual publication that explains key client statistics, and shows what life is like for Scots in problem debt.

Average client unsecured debt levels dipped slightly in 2021, as the country emerged from the pandemic.

However, average arrears on essential bills soared, potentially reflecting a transition from the Covid phenomenon of 2020, when many clients used credit to cover essentials. StepChange Scotland said this option “may now have been exhausted”.

The proportion of clients with an additional vulnerability sharply increased by six percent, from 48% in 2020 to 54% of all clients in 2021. Their arrears situation was also worse.

StepChange Scotland said vulnerability may be increased due to several factors including physical and mental health conditions, learning disabilities and sight or hearing difficulties.

These clients face “greater complexity” in tackling problem debt, according to the charity. It found that 52% of vulnerable clients risked losing their home, and 75% were in arrears with electricity bills, even prior to the energy price cap rise in April 2022.

Woman have been overrepresented among StepChange clients “for many years”, and 2021 saw a two percentage point increase in the number of women contacting the charity – from 58% in 2020 to 60% in 2021.
Nearly two thirds (63%) of vulnerable clients were women.

The most common household bill for struggling clients continues to be council tax, with 39% of those with a liability to pay (and 44% of vulnerable clients) in arrears.

For the second year in a row, the overall proportion of tenants rose, as did the proportion of tenants in arrears and the average value of rent arrears. Over two in five clients (42%) were at risk of losing their homes due to arrears on their housing costs.

In response to its findings, StepChange Scotland called on the Scottish government and local authorities to commit to additional support which well help the most financially vulnerable households.

It recommended that measures are made permanent that were implemented during the pandemic such as the Moratorium Extension and the Tenant Support Hardship Grant. The former, which has a current emergency provision of six months, has allowed clients to find new employment, get a debt solution in place or maximise their income through welfare, StepChange Scotland said.

The charity suggested this support should also involve looking again at the £150 Council Tax rebate, which it says is not fit for purpose in offering support to people who are in arrears on their Council Tax.

Sharon Bell, head of StepChange Scotland, said: “It’s clear from analysing our clients’ finances that households were already struggling to pay for essential bills for much of last year. The sharp rise in the cost of living that we’re currently seeing risks triggering a landslide of problem debt for people in Scotland.

“Our recommendations to the Scottish Government and local authorities, if actioned, would help to protect households from the huge leap in the rate of inflation we’re experiencing.”