Section 8: Debt and High Cost Lending

UK Average Debt Statistics 

Table 8.1

Oct-18 Oct-17 Annual Change
Average household debt in the UK (excluding mortgages) £7,926 £7,549 +£377
Average household debt in the UK (including mortgages) £59,288 £57,432 +£1,856
The average amount owed per UK adult £30,965 £30,176 +£789
The average amount owed per UK adult as a % of average earnings 113.00% 113.70% -0.70
Average consumer borrowing per UK adult £4,140 £3,966 +£174
Estimated outstanding mortgage per household w/ mortgage debt £125,860 £122,235 +£3,625
Source: The Money Charity, December 2018

Average household debt in the UK (excluding mortgages) was £7,926 in October 2018. The figure has increased by £377 on the previous year. Average household debt in the UK (including mortgages) was £59,288 in October 2018. The figure has risen by £1,856 on the previous year.

The average amount owed per UK adult (including mortgages) was £30,965 in October 2018. The figure has risen by £789 on the previous year. The average amount owed per UK adult (including mortgages) was 113% of average earnings,slightly down by 0.7percentage points on last year.

Average consumer borrowing per UK adult (including credit cards, motor and retail finance deals, overdrafts and unsecured loans) was £4,140 in October 2018, up £174 on the previous year. It is estimated that the average outstanding mortgage per household that carry mortgage debt was £125,860 in October 2018, this is up £3,625 on the previous year.

Total Value of the High Cost Lending Market

Table 8.2

2016 2009 2016-2009 change
UK £14.8bn £7.5bn +£7.3bn
Leeds estimate* £178m £90m +£88m
Sources: OFT Review of high cost credit, 2010 and FCA Review of high cost credit, 2017

*the Leeds estimate is calculated based on ONS midyear population estimates 2016 for 18+ adults

The total value of the high cost credit sector has almost doubled since 2009.  Nationally the sector was valued at £7.5bn in 2009 and grew to £14.8bn by 2016. Using Leeds population figures, it is estimated that the high cost credit sector in Leeds was valued at £178m. The value of the sector is broken down further in Table 8.4.

Market Breakdown of the High Cost Lending Sector

Table 8.3

 Sub-sector Value of the high cost lending market – sub sectors
UK adults Leeds Estimate*
Catalogue credit £4.0bn £48,000,000
Retail finance £6.0bn £72,000,000
Store card £0.7bn £8,400,000
Payday £1.1bn £13,200,000
Home credit £1.1bn £13,200,000
Rent-to-own £0.5bn £6,000,000
Other running account £1.0bn £12,000,000
Guarantor £0.3bn £3,600,000
Logbook £0.1bn £1,200,000
Total £14.8bn £177,600,000
FCA Review of high cost credit, 2017

*the Leeds estimate is calculated based on ONS midyear population estimates in 2016 for 18+ adults

The high cost credit sector is made up of a variety of high cost products such as payday loans, rent-to-own stores, store cards etc as displayed in this table. The total sector was valued at £14.8bn in the UK in 2016 and this figure has been broken down further by sub-sector. For example, £1.1bn worth of payday products were sold to customers across the UK, of which £13.2m is estimated to have been sold in Leeds. The rent-to-own sector was worth £500m in the UK, £6m of which is the estimated value of the market in Leeds. Retail Finance and Catalogue Credit are the largest sub sectors of high cost credit, worth a combined £10bn in the UK and 120m in Leeds

Proportion of Adults with outstanding high cost credit debt

Table 8.4

2016 FCA Prop of UK adults Total no of people with outstanding high cost credit debt
  UK adults Leeds Estimate
Catalogue credit 14.7% 7.6m 90,690
Retail finance 10.2% 5.3m 62,928
Store card 3.7% 1.9m 22,827
Payday 3.1% 1.6m 19,125
Home credit 3.1% 1.6m 19,125
Rent-to-own 0.8% 0.4m 4,935
Other running account 0.6% 0.3m 3,702
Guarantor 0.2% 0.1m 1,234
Logbook 0.1% 0.1m 617
Total 36.5% 18.9m 225,182
FCA Review of high cost credit, 2017

*the Leeds estimate is calculated based on ONS midyear population estimates 2016 for 18+ adults

The FCA estimate that 14.7% of UK adults have outstanding debts on catalogue credit.  This is approximately 7.6m UK adults, when the same proportion is applied to the Leeds over 18 population, it can be estimated that 90,690 Leeds adults have outstanding catalogue debts. 3.1% of UK adults have outstanding payday debts, estimated to be affecting 19,125 Leeds adults.

StepChange Clients – Arrears on selected essential household bills

Table 8.5 

Arrears type 2017 2017 2016 Annual Change
Average arrears amount Clients in arrears % of clients Clients in arrears % of clients No % Change
Council Tax £1,021 71,342 30.1% 67,040 30.1% +4,302 +6.4
CCJs £1,822 5,481 17.2% 5,321 20.2% +160 +3.0
Electricity £684 38,135 14.3% 33,974 13.3% +4,161 +12.2
Gas £537 22,186 11.5% 20,874 11.6% +1,312 +6.3
Court Fines £607 792 4.6% 1,600 9.7% -808 -50.5
Mortgage £3,125 11,243 20.6% 13,559 22.9% -2,316 -17.1
Rent £947 47,861 21.5% 44,630 23.5% +3,231 +7.2
TV License £77 18,288 7.7% 17,409 7.7% +879 +5.0
Water £709 52,484 23.7% 51,102 24.2% +1,382 +2.7
Hire Purchase £884 11,998 20.2% 9,216 17.9% +2,782 +30.2
Source: StepChange Yearbook Statistics on Personal Debt 2017, March 2018

Clients that contact the debt charity, StepChange on average have a debt of £1,021 owing to council tax. Nationally 71,342 clients contacted Stepchange about council tax debts. Council tax arrears make up just over 30% of all StepChange clients in arrears. The proportion of clients with council tax arrears have increased by 4,302 since 2016 at a rate of %.

The number of clients experiencing Court Fines and Mortgage arrears have declined over the last year. However, sharp rises have particularly been seen in Electricity bills arrears and hire purchase arrears.  The average amount owed by clients in Electric bills was £684 in 2017 and the number of clients with these arrears grew by 12.2%.  The average amount owed in hire purchase arrears was £884, and the number of clients with these arrears grew by 30.2%.

StepChange Debt type, proportion of clients

Table 8.6

National UK Data 2017 2016 2015 Annual Change 2016-2017
Credit Card 67.6% 67.0% 65.7% +0.6%
Overdraft 49.8% 52.1% 55.1% -2.3%
Personal Loan 45.7% 44.4% 42.6% +1.3%
Catalogue 35.0% 35.8% 34.7% -0.8%
Payday Loan 16.8% 16.3% 15.7% +0.5%
Store Card 11.8% 12.2% 12.5% -0.4%
Home Credit 7.7% 8.0% 9.1% -0.3%
Source: StepChange Yearbook Statistics on Personal Debt 2017, March 2018

In their 2017 Yearbook, 67.6% of clients calling into Stepchange had credit card debts, 49.8% had overdraft debts and 16.8% had payday loan debts.

StepChange Debt type, average value

Table 8.7

National UK Data 2017 2016 2015 Annual Change 2016-2017
Personal loan £8,332 £8,920 £8,637 -£588
Credit card £7,690 £8,304 £8,403 -£614
Catalogue £1,939 £2,003 £1,937 -£64
Overdraft £1,607 £1,700 £1,725 -£93
Home credit £1,592 £1,487 £1,424 +£105
Payday loan £1,519 £1,415 £1,308 +£104
Store card £1,108 £1,098 £1,063 +£10
Source: StepChange Yearbook Statistics on Personal Debt 2017, March 2018

When clients called into Stepchange in 2017, the average debt owed on their personal loan was £8,332, the average owed on credit cards was £7,690 and the average owed on Payday loans was £1,519. Home Credit, Payday Loan and Store Card average debt figures have all seen a rise on 2016.

Debt Advice provided in Leeds

Table 8.8

Money Advice Service – Debt Advice 2017/18 2016/17 Annual Change 2016-2017
No %
Number of clients receiving debt advice 4,554 4,751 -197 -4.1%
Source: Citizens Advice, Leeds Debt Advice, April 2018

This table displays just part of the debt advice provision in Leeds for 2016/17 that was funded through the Money Advice Service (MAS). 4,554 clients across Leeds have received free independent debt advice from providers across Leeds; the providers are Citizens Advice Leeds, Ebor Gardens, St Vincent’s and Better Leeds Communities. Client numbers have fallen by 4.1% in the past year.