Richard Lane, Chief Client Officer at StepChange, comments on the number of employed clients whose expenditure exceeds their monthly income.

A new report from StepChange Debt Charity has found that one in five (21%) StepChange clients in full-time employment is in a negative budget – meaning their expenditure exceeds their monthly income, even after full debt and budgeting advice.

The report, ‘In work. But still in debt’ exposes a growing proportion of people whose full-time employment is unable to shield them from problem debt. In 2021, 38% of StepChange clients seeking debt advice were full-time employed (FTE), however, by December 2023 that proportion had reached 44%, a rise of 16%.

StepChange Chief Client Officer Richard Lane said:

It’s extremely concerning to see a growing proportion of our clients coming to us despite being in full time employment. The challenge to keep up with the cost of living is dragging more and more people into a situation where they are being forced to borrow to cope with everyday costs, to the extent that one in five StepChange clients in full time work is now unable to make ends meet.

Urgent action is needed to improve the affordability of everyday costs like housing and energy, even for those in full-time work. Measures like an energy social tariff and boosting council tax support can make a real difference to struggling households. It’s also vital the Government extends and makes permanent crisis support like the Household Support Fund, which has been a lifeline for working households on low incomes facing hardship.

For those on higher incomes, full-time work tends to mean easier access to credit, but that doesn’t preclude them from the pressures of the cost of living crisis that can drive up unsustainable borrowing to cover everyday costs.

Preventing harm from consumer credit debt must be a key focus of the new FCA Consumer Duty, which requires firms to seek good outcomes for customers and take reasonable steps to prevent foreseeable harm. This report should serve as a reminder to lenders that by spotting financial difficulty early and providing effective support and forbearance they can prevent and arrest debt spirals.

Full release: One in five StepChange clients who are in work unable to make ends meet

✉️ Press Office, 0207 391 4598 / press@stepchange.org