Unsecured debt hits new peak of £15,400 per household – new TUC analysis
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.
- 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.
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