Issue date
07 Jan 2019

New analysis published today (Monday) by the TUC shows that household debt rose sharply over 2018, with unsecured debt (debt other than mortgages) reaching new highs:

  • Unsecured debt per household rose to £15,385 in the third quarter of 2018, which is up £886 on a year earlier.
  • Total unsecured debt rose to £428bn in the third quarter of 2018 – a record high, and well above the £286bn peak in 2008 ahead of the financial crisis,
  • Unsecured debt as a share of household income is now 30.4% – the highest it’s ever been, and above the level it reached in 2008 ahead of the financial crisis (27.5%).

The TUC says government austerity and years of wage stagnation are key reasons behind the increase in unsecured debt.

Working families on average worse off today than before the financial crisis. This means millions of households are reliant on borrowing to get by.

TUC General Secretary Frances O’Grady said:

“Household debt is at crisis level. Years of austerity and wage stagnation has pushed millions of families deep into the red.

“The government is skating on thin ice by relying on household debt to drive growth. A strong economy needs people spending wages, not credit cards and loans.

“Our economy is not working for workers. They need stronger rights and bargaining powers. Trade unions should be allowed the freedom to enter every workplace to negotiate higher wages.”

The TUC says that the main reasons for weak wage growth are:

  • The minimum wage is too low

It should be raised to £10 as quickly as possible.

  • The government prioritised corporate tax cuts over public sector pay

Most public sector workers have seen the real value of their pay cut every year since 2010 – they must get restorative pay increases.

  • Workers have too little power to bargain for higher wages

Trade unions must be given the freedom to enter all workplaces and organise collective wage bargaining; and insecure workers must have stronger rights.

  • UK investment is too low

The UK must increase public investment to at least the OECD average, and establish a National Investment Bank with a remit to target communities most in need of better-paid work.

Editors note

- UK unsecured borrowing in total and per household, 1988-2018

Annual quarter

Unsecured borrowing £billions

Disposable income (rolling annual sum)

£billions

Debt to income

%

Number of households millions

Debt per household

£

1988 Q3

72

337

21.4

22,044

3,264

1989 Q3

83

374

22.3

22,316

3,729

1990 Q3

91

417

21.9

22,544

4,053

1991 Q3

95

461

20.7

22,863

4,170

1992 Q3

92

496

18.6

23,008

4,007

1993 Q3

89

524

17.0

23,140

3,845

1994 Q3

94

549

17.0

23,268

4,020

1995 Q3

101

576

17.5

23,431

4,297

1996 Q3

108

615

17.5

23,583

4,564

1997 Q3

117

645

18.1

23,728

4,915

1998 Q3

130

671

19.4

23,882

5,456

1999 Q3

143

695

20.6

24,067

5,950

2000 Q3

158

744

21.2

24,281

6,493

2001 Q3

173

782

22.1

24,486

7,062

2002 Q3

200

811

24.6

24,609

8,119

2003 Q3

208

834

24.9

24,729

8,392

2004 Q3

229

873

26.3

24,856

9,225

2005 Q3

245

908

27.0

25,060

9,777

2006 Q3

257

953

27.0

25,235

10,179

2007 Q3

271

1,000

27.1

25,420

10,664

2008 Q3

286

1,040

27.5

25,632

11,146

2009 Q3

279

1,070

26.1

25,824

10,800

2010 Q3

283

1,088

26.0

26,038

10,855

2011 Q3

279

1,103

25.3

26,313

10,600

2012 Q3

276

1,149

24.0

26,539

10,390

2013 Q3

284

1,195

23.8

26,723

10,633

2014 Q3

295

1,231

24.0

26,947

10,960

2015 Q3

323

1,298

24.9

27,166

11,906

2016 Q3

360

1,332

27.0

27,399

13,133

2017 Q3

400

1,353

29.6

27,595

14,499

2018 Q3

428

1,407

30.4

27,795

15,385

- Note on methodology: Unsecured debt includes bank loans, payday loans, credit cards, store cards, purchase loans and student loans, but excludes mortgages. The figures are derived from the balance sheet for the household sector, comprising short-term loans issued by UK (NNRG) and overseas (NNRK) banks and building societies and ‘other (i.e. non-mortgage) long-term lending issued by UK residents’ (NNRU). Income is an annual figure derived as a sum of the latest four quarters of household disposable income (QWND). Data sources: UK Economic Accounts, tables 6.1.4 (for income) and 6.1.9 (for debt), Office for National Statistics. Household figures are based on the ONS projections issued 3 December 2018.

- Latest data on consumer credit: The Bank of England released Money and Credit: November 2018 on 4 January 2019. It shows the rate of consumer credit growth slowing, but still high at an annualised rate of 7.1% for November 2018. The annualised growth rate for credit card lending was 7.9% in November 2018, and has been fairly stable at around 8% for the last two years. Full information is here : www.bankofengland.co.uk/statistics/money-and-credit/2018/november-2018

- Student loans data: Consumer credit includes student loans. The latest figures are published by the Student Loans Company:

www.slc.co.uk/media/9134/student-he-loans-balance-by-country-within-the-uk-fy-16-17.pdf

- Debt and low-income households: Analysis by the Centre for Responsible Credit and Jubilee Debt Campaign found that the unsecured debt to income ratio for the poorest quintile of households rose from 55% to 110% between 2015 and 2017. More information is here: www.responsible-credit.org.uk/wp-content/uploads/2018/03/JDC-Household-debt-web.pdf

- Average earnings since the financial crisis: Average weekly earnings are still £18 lower than their peak before the financial crisis in 2008, according to data from the Annual Survey of Hours and Earnings (ONS). The full data is here: www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2018

- UK investment compared to other OECD nations: The TUC published analysis in September 2018 showing that UK capital investment was 16.8% of GDP in 2016, while the average across all OECD countries was 21.5%. UK public capital investment is set to be 2.8% GDP across the current parliament to 2022, which will leave the UK trailing the OECD average of 3.5% GDP. Full details of the analysis are here: www.tuc.org.uk/news/uk-near-bottom-oecd-rankings-national-investment

- Support for households with problem debt: The charity Step Change provides free advice on problem debt. More information can be found at www.stepchange.org

- About the TUC: The Trades Union Congress (TUC) exists to make the working world a better place for everyone. We bring together more than 5.5 million working people who make up our 49 member unions. We support unions to grow and thrive, and we stand up for everyone who works for a living.