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TUC – Unsecured household debt to rise by “record” £1,660 this year as families continue to struggle with cost of living

Real-terms cash rise is the biggest since records began

  • Findings undermine government claims that “the plan is working”, says TUC 

Unsecured household debt is set to rise by over £1,600 this year as families continue to struggle with the cost of living crisis, according to new TUC analysis published today (Wednesday). 

The analysis shows that unsecured debt (loans, credit cards, purchase hire agreements) is on course to increase by 9.4% (£1,660) in real terms, on average, per household this year. 

The TUC says that this is the largest annual rise - in cash terms - since records began in 1987. 

The union body says the findings “make a mockery” of government claims that “their plan is working”.  

The TUC’s analysis excludes student loans. 

Families under pressure 

Separate TUC polling – carried out by YouGov – shows that millions are continuing to struggle with the cost of living: 

  • 4 in 10 (42%) say they’ve cut back on essentials like food and utility spending this year. And this number rises to nearly 1 in 2 (47%) for women. 

  • 6 in 10 (60%) say they have cut back on non-essential spending like dining out and entertainment since the beginning of the year. 

  • Around a fifth (19%) of respondents say they have fallen behind on household bills this year – a number that rises to over 1 in 4 (28%) for people aged 18-24. 

  • Over quarter (27%) say have they taken out debt (loans, credit) to cover unexpected bills since the start of the year. This number shoots up to over a third (37%) for adults aged 25-49 – when lots of families raise children.   

Families left exposed  

The TUC says working people have been left brutally exposed to rising costs after years of pay stagnation. 

UK workers are on course for nearly two decades of lost living standards with real wages not forecast to recover to their 2008 level until 2026. 

The TUC estimates that the average worker would now be £14,700 better off if their pay had kept up with pre-crisis real wage growth trends since 2008. 

TUC General Secretary Paul Nowak said:  

“These findings show out of touch this Conservative government is with people’s struggles. 

“While the Tories boast about their plan working, households across Britain are being pushed further into debt. 

“No one should have to rely on credit cards and loans to make ends meet. But after 14 years of flatlining wages – and the worst cost of living crisis in generations - many families are at breaking point. 

“The Tories economic record speaks for itself. Pay packets are still worth less today than in 2008 with working people on course to end this parliament poorer than at the start.” 

Editors note

Debt methodology: Unsecured debt is any debt that isn’t backed by property. This includes credit cards, loans and purchase hire agreements and excludes mortgages. For the purpose of this analysis we have also excluded student loans.  

Unsecured debt data for all outturn years (1987 to 2023) is taken from the National Accounts published by the ONS. The data is in calendar years. Unsecured debt is calculated by subtracting secured liabilities (ONS code: NNRP) from total loans (ONS code: NNRE) and then removing student loans (CT9E).  This is then adjusted for inflation using CPI, and is in 2024 prices. Figures for 2024 are forecast based on the Office for Budget Responsibility (OBR) growth forecasts for total financial liabilities, student loans and secure liabilities, taken from the March 2024 Economic and Fiscal Outlook. We also use the OBR forecast for inflation in 2024. 

The TUC has used the OBR forecasts for growth in total financial liabilities (NNPP) to project growth in total loans (NNRE) in 2024. The OBR does not forecast the latter, but loans make up the vast majority of household liabilities (over 90%) and the two therefore tend to grow at very similar rates. 

Household numbers are taken from the ONS Families and Households data, which covers 1996 to 2023. Figures for pre-1996 and post-2023 numbers are projected using the nearest five-year trends.   

Wage analysis methodology: Figures on where wages would be if they had grown at the pre-2008 rate are based on TUC analysis of the latest ONS regular average weekly earnings data, published in June 2024 and covering April 2024. Wages are adjusted for inflation using CPI and April 2024 prices.  

About the poll: The poll was carried out by YouGov between the 13th and 14th of May 2024. All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 2,137. Fieldwork was undertaken between 4th - 5th April 2024.  The survey was carried out online. The figures have been weighted and are representative of all UK adults (aged 18+).    

Original article link: https://www.tuc.org.uk/news/tuc-unsecured-household-debt-rise-record-ps1660-year-families-continue-struggle-cost-living

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