Red flags across the board

Concerns around debt are particularly pertinent just after Christmas. StepChange, the debt advice charity, has highlighted how the pressure to spend during the festive period pushes people into debt, with a third of people saying they’ll be using credit cards to pay for part, or all, of Christmas . On average, it will take these people 7 months to pay off their Christmas debt.

A quarter of people said they would be using ‘buy now, pay later’ options. Services such as Klarna are increasingly offered by more and more online retailers. These allow customers to buy a product from a website, and put off paying until a later date, usually within the next 30 days.

In its mid-year report for 2019, StepChange was already raising concerns about the level of problem debt in the UK. The charity revealed that a record number of people were coming to it for debt advice , with their CEO, Phil Andrew, explaining:

Across the board we are seeing red flags, including worrying proportions of new clients falling into debt due to reduced income, illness or because they rely on credit to pay for day-to-day living expenses. Clearly more and more households are struggling to hang on and are ill-equipped to deal with any economic shocks the future may hold.

Action needed now, not in 2024

Tackling debt will involve tackling the causes of debt. Working people should be being paid enough to live on, including setting a bit aside to cope with the surprises and shocks that inevitably happen to us all. In reality though, a fifth of working people aren’t being paid a real living wage.

The government’s aim of raising the minimum wage to £10.50 by 2024 isn’t good enough. We need a living wage as soon as possible, not the conditional promise of one in four years’ time. We also need to give unions the right to access workplaces, so we can tell individuals about the benefits of joining a union and help them to fight for better pay.