credit and debt

1. W ifi
2QAG_Guest
Welcome_Guests #ShockAbsorobers September 25
@resfoundation
Stronger shock absorbers
How to build the financial resilience of low-to-middle income
households
Sebastian Burnside, Group Chief Economist at NatWest Group
Vikki Brownridge, Chief Executive, StepChange
Tim Jarvis, Director for Markets, Ofgem
Felicia Odamtten, Economist, Resolution Foundation
Chair: Ruth Curtice, Chief Executive, Resolution Foundation

2. “…"[Having low savings] makes you think about money more and what
could go wrong and where that money might need to go instead.“
“And having a lot of savings makes me feel a bit more... well-prepared,
but at the same time just more happier. I feel more secure… it makes
me feel I’m not in the rat race as much as everybody else.”
“…If the debt outweighs my savings that is a bit of a stress point."
2
We know savings and debt are important to people…
@resfoundation

3. 3
The good news…
@resfoundation

4. 4
Outstanding consumer debt per person, June 2025 prices: UK
Notes: Historic data has been manually break-adjusted to reflect significant changes to the basis of preparation. Balances for quarter-end and are expressed in
June 2025 prices using a CPIH deflator. Up to Q1 2025, quarterly population data is taken from the ONS’s quarterly interpolated series for the UK resident
population. Q2 2025 population has been estimated by extrapolating the Q1 2025 figure based on the latest quarterly growth rate.
@resfoundation
Since the financial crisis, the overall stock of consumer debt
has fallen…

5. 5
Mean per-adult debt of low-to-middle income non-pensioner families, June 2025 prices: GB
£638
£595
£481
£581
£562
£511
£467
£350
£305
£503
£530
£609
£1,014
£970
£757
£888
£695
£867
£0 £500 £1,000 £1,500 £2,000 £2,500 £3,000
2006-08
2008-10
2010-12
2012-14
2014-16
2016-18
2018-20
2020-22
Formal loans
Hire purchase
(inc. cars)
Credit cards
Bill arrears
Overdrafts
Informal loans
Other
Data not available
Data not available
Notes: Low-to-middle-income non-pensioner families are those where nobody is at or above State Pension age whose household is in the bottom half of the
before-housing-costs equivalised income distribution. Problems with income data in the 2008-10 and 2014-16 waves of the Wealth and Assets Survey mean we
cannot show data for low-to-middle-income households in those waves. Debts are summed within benefit units and divided by the number of adults in the benefit
@resfoundation
…and low-to-middle income families also hold less debt than
before

6. 0%
20%
40%
60%
80%
100%
2006-
08
2008-
10
2010-
12
2012-
14
2014-
16
2016-
18
2018-
20
2020-
22
Low-to-middle income households
Higher income households
6
The prevalence of low savings among low-to-middle-income
Britain fell during the 2010s
@resfoundation
Proportion of non-pensioner families with savings of less than £1,000 in June 2025 prices, by income
group and savings definition: GB
Notes: Data is expressed in June 2025 using a CPIH deflator.
Source: RF analysis of ONS, Wealth and Assets Survey.

7. 7
The “not-so-bad-as-we-thought” news…
@resfoundation

8. 8
Proportion of low-to-middle income households with outstanding consumer debt: UK
0%
10%
20%
30%
40%
50%
60%
70%
Sep
2017
Mar
2018
Sep
2018
Mar
2019
Sep
2019
Mar
2020
Sep
2020
Mar
2021
Sep
2021
Mar
2022
Sep
2022
Mar
2023
Sep
2023
Mar
2024
Sep
2024
Mar
2025
Including credit cards
(all credit card debt) Including credit cards
(persistent credit card debt only)
Excluding credit cards
Notes: Low-to-middle income households are those where nobody is aged 65 or above and in the bottom half of the before-housing-costs equivalised household
income distribution.
Source: RF analysis of Bank of England, NMG survey.
@resfoundation
On the debt side, little changed both during the pandemic
and through cost of living crisis…

9. 9
Proportion of individuals living in low-to-middle income non-pensioner families where at least one
adult is saving £10 or more per month: UK
Notes: Years refer to financial years. Low-to-middle-income non-pensioner families are those where nobody is at or above State Pension age whose household is
in the bottom half of the after-housing-costs equivalised household income distribution.
Source: RF analysis of DWP, Households Below Average Income & Family Resources Survey.
@resfoundation
Many were able to continue saving during the pandemic

10. 10
Now, the ugly…
@resfoundation

11. 11
Number of electricity and gas accounts in arrears and average outstanding balance of accounts in
arrears: GB
Notes: Data covers accounts where there is an agreement to repay outstanding debt (what Ofgem refers to as ‘debt’) as well as accounts where there is no
repayment agreement in place (what Ofgem refers to as ‘arrears’). Amounts outstanding have been converted to June 2025 prices using a CPIH deflator.
Source: RF analysis of Ofgem, Debt and Arrears Indicators; ONS, Consumer prices.
@resfoundation
Debt troubles have instead shifted towards priority bill
arrears…

12. 12
Real-terms stock of Council Tax arrears at fiscal year-end: England
Notes: Amounts have been converted to June 2025 prices using a CPIH deflator.
Source: RF analysis of MHCLG, Collection rates for Council Tax and non-domestic rates in England; ONS, Consumer prices. @resfoundation
…with Council Tax arrears rising by almost a half since before
the pandemic

13. 13
Real-terms change in Citizens Advice clients’ average debt levels relative to 2019 levels, three-month
rolling average by debt category: UK
-40%
-30%
-20%
-10%
0%
+10%
+20%
+30%
+40%
+50%
Jun 2019 Jun 2020 Jun 2021 Jun 2022 Jun 2023 Jun 2024 Jun 2025
Credit card
Energy Council Tax
Rent
Notes: Data is converted to real terms using a CPIH deflator.
Source: RF analysis of Citizens Advice, Our Debt Data; ONS, Consumer prices. @resfoundation
Priority debt levels for those seeking debt advice rose by
almost 40 per cent in some cases

14. 14
Proportion of individuals living in families behind on at least one priority household bill, by income
group: UK
17%
9%
4%
2%
15%
6%
4%
2% 0%
14%
9%
4%
1% 0%
15%
14%
5%
2%
18%
15%
6%
3%
0%
5%
10%
15%
20%
1 2 3 4 5
Poorer ← Net equivalised household income quintile, after housing costs → Richer
2019-20 2020-21 2021-22 2022-23 2023-24
More recent data
Notes: Priority household bills consist of electricity, gas, other fuels, water, telephone, insurance, Council Tax and rent.
Source: RF analysis of DWP, Family Resources Survey. @resfoundation
And this trend is no longer confined to just the poorest
households

15. Bills are much higher than before with both energy prices and council tax well
above pre-pandemic levels., but also..
• Borrowing costs more – since late 2021, credit card and loan rates are up.
Lenders have also tightened access, hitting poorer households hardest.
• Penalties for arrears softened – Regulators have tightened protections so that
gas/electric disconnections are rare, and forced prepayment meter installations
stopped for a while, and are now very tightly regulated.
15
Why are arrears rising?
@resfoundation

16. “…My bills are paid like touchwood. I have never ever ever ever missed a
bill in my life. And if I don't have money to eat, I'll put that on a credit
card. I would never, ever, ever miss a bill - that just doesn't happen
“I'd rather take advantage of the interest-free [rate] on the credit card
instead of using my cash savings. So, it gives me a little bit longer to pay it
off and it doesn't take a massive chunk out of what I've got left.
“…[Bills] We always prioritise those. So, Council tax and rent and electric
and everything like that, we always do those first. The other thing I'll fall
behind on is my own personal debts, those loans and the credit card is mine
and they are my responsibilities. I have fallen behind on those due to the
nature of my work.”." 16
There is a complex and unique interplay between savings and
debt across households…
@resfoundation

17. 1. Boost savings – through auto-enrolment, sidecar savings, and targeted incentives like Help
to Save.
2. Expand fair access to credit – so low-income households aren’t locked out of
affordable borrowing.
3. Improve financial education– ensuring people understand loans and debt when they
actually need to make decisions.
4. Tackle high essential costs head-on – with social tariffs on energy and stronger
council tax support.
5. Relieve the stock of priority debts – including a capped debt relief scheme for energy
arrears on means-tested benefits.
17
What can we do to improve financial resilience among
Unsung Britain?
@resfoundation

18. W ifi
2QAG_Guest
Welcome_Guests #ShockAbsorobers September 25
@resfoundation
Stronger shock absorbers
How to build the financial resilience of low-to-middle income
households
Sebastian Burnside, Group Chief Economist at NatWest Group
Vikki Brownridge, Chief Executive, StepChange
Tim Jarvis, Director for Markets, Ofgem
Felicia Odamtten, Economist, Resolution Foundation
Chair: Ruth Curtice, Chief Executive, Resolution Foundation

19. 19
Audience Q&A
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20. W ifi
2QAG_Guest
Welcome_Guests #ShockAbsorobers September 25
@resfoundation
Stronger shock absorbers
How to build the financial resilience of low-to-middle income
households
Sebastian Burnside, Group Chief Economist, NatWest Group
Vikki Brownridge, Chief Executive, StepChange
Tim Jarvis, Director for Markets, Ofgem
Felicia Odamtten, Economist, Resolution Foundation
Chair: Ruth Curtice, Chief Executive, Resolution Foundation