£700m debt is 'tip of the iceberg' as cost-of-living crisis grows

New analysis from Citizens Advice shows the struggle that many people, particularly single-parent families, have with debt as the cost of living crisis starts to bite. 

Citizens Advice’s figures show that around 280,000 people in England and Wales sought one-to-one help with debt in 2021, with many more using its website. Of those, almost 70,000 went on to complete a full debt assessment, which examines their income and spending, as well as their debts. 

This reveals that those who did this assessment had debts totalling £693 million, averaging nearly £6,000 per person. The true scale of debt held by those helped by the charity is likely to be far larger.

Alarmingly, of those who completed a debt assessment in 2021: 

  • 1 in 4 people were in single-parent families , twice as many as the number of couples with children we helped. This is despite single parent families making up fewer than 15% of families in the UK.

  • A staggering majority (88%) owe money either to the government or on essential bills, with £284m owed to these creditors. 

Issues with energy debts rose sharply in 2021, increasing by 51% compared to 2020. Problems with paying back benefit overpayments also grew. This was particularly the case with Universal Credit overpayments issues which rose 117% compared to 2020. Both are now significantly higher than they were before the pandemic.

Citizens Advice’s analysis suggests that this situation is only going to get worse in 2022.  From April, significant increases are expected in council tax and on essential bills, particularly on energy costs, which are estimated to rise by £700 a year in line with the price cap. 

To help people in this cost-of-living crisis, the charity is urging the government to bring forward a package of support to help people with their bills. This includes a one-off Energy Support Grant to be paid through the benefits system this April and an expanded Warm Home Discount scheme.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“While all of us face the cost-of-living crisis, there are thousands of people who are already held back by their debts. The £700m of debt our advisors helped with in 2021 is likely to be just the tip of the iceberg. With more price rises on the way, support is urgently required for those most in need.

“If you’re worried about your debts, taking action early is vital. Citizens Advice and other charities are here to help you find a way forward.” 

Citizens Advice’s Top Tips for Dealing with Debt

Work out how much you owe - Make a list of who you owe money to and add up how much you owe. 

Prioritise your debts - Work out how much you owe on rent or mortgage costs, energy bills and council tax. These are called priority debts as there can be serious consequences if you don’t pay them. Talk to these priority creditors and try to agree on a repayment plan.

Work out how much you can pay - Create a budget by adding up your essential living costs, such as food, housing and other essential bills, and taking these away from your income. Any money you have spare can be put towards your debts. 

Paying urgent debts - You might have to contact priority creditors quickly in urgent situations, like if you are about to be evicted. Tell them you're seeking debt advice and ask if they can give you time to find a way forward. 

Make sure you’re getting all the help you’re entitled to - You might be eligible for benefits, grants from the government or other charitable support that you aren’t currently claiming.

Paying non-urgent debts - If you have any money left after paying monthly bills and priority debts, but not enough to make your full payments on non-priority debts, consider getting advice on the best way for you to start getting on top of your debts. Or contact your creditors and offer them what you can afford to pay.  

If you can’t pay your debts - If you’re worried about being able to pay your priority debts, or can’t afford basics like food, seek advice from Citizens Advice straight away. If you get debt advice, your adviser may be able to get you a 60-day breathing space to give you time to sort out a plan or find a debt solution.

Notes to editors

  1. Citizens Advice’s debt and money advice web pages received 4.9m pageviews in 2021, with the commonest pages visited being Check if you have to pay a debt , Stopping bailiffs at your door , and If you can’t pay your bills because of coronavirus .

  2. 68,180 people completed a Budget Planner in 2021. This is a detailed examination of the finances of someone in debt which considers their income, expenditure and any existing debts they hold.

  3. 18,329 Budget Planners were completed by single people with dependent children, compared to 9,114 completed by couples with dependent children.

  4. Essential bills and government debts include utilities, telecoms, rent and mortgage debts, as well as debts on taxes, fines, and benefits overpayments and advances. Consumer debts include credit cards, unsecured loans, catalogue and mail order, overdrafts and high cost short-term loans.

  5. In 2021, 61,017 people sought Citizens Advice’s help with fuel debt issues, compared to 40,389 in 2020.

  6. In 2021, 3,874 people sought Citizens Advice’s help with issues around Universal Credit overpayment debt compared to 1,784 in 2020. Across all benefits payment overpayment issues, 24,734 people sought help in 2021, compared to 20,532 in 2020.

  7. Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.

  8. Our network of charities offers impartial advice online, over the phone, and in person, for free. 

  9. We helped 2.4 million people face to face, over the phone, by email and webchat in 2020-21. And we had 40 million visits to our website. For full service statistics see our monthly publication Advice trends.

  10. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,600 service outlets across England and Wales.

  11. Citizens Advice is the largest provider of free, multi-channel debt advice. Providing that help gives Citizens Advice unique insight into the types of debts people struggle with.

  12. Citizens Advice is the statutory consumer advocate for energy and postal markets. We provide supplier performance information to consumers and policy analysis to decision makers. 

  1. You can get consumer advice from the Citizens Advice consumer service on 0808 223 1133 or 0808 223 1144 for Welsh language speakers.