Londoners are more likely to be struggling with debt than the rest of the UK despite average higher incomes. That is according to London in the Red, a new report from StepChange Debt Charity, that reveals 100,000 Londoners sought their debt advice, meaning one in six of its clients last year came from London.
The charity estimates that over half a million Londoners are in problem debt, driven by many having to spend a higher proportion of their incomes on essentials such as housing and fuel.
The capital was the region with the highest demand for the charity’s services (17% of all contacts). Londoners also owed more on credit cards, overdrafts and payday loans than those elsewhere, and had higher arrears on essential bills. Higher housing costs in London mean they spent a higher proportion of income on priority bills. Home ownership and mortgage borrower levels were lower in the capital than the rest of the country.
The report is based on in-depth analysis of over 13,100 of the charity’s telephone clients and shows that debt is a widespread problem across the capital, creating a social cost of at least £1.5 billion per year.
The charity is calling for London-wide improved access to and earlier signposting of free debt advice, as well as urging London local authorities to adopt better debt recovery practices and minimise bailiff use. Evidence shows that good debt collection practices result in increased collections over time and reduced operating costs, as well as reducing the harmful impact on individuals.