Problem Debt Costs the UK £8 Billion Per Year

StepChange, a national debt charity, has carried out extensive research on the cost of what it calls ‘problem debt’ – and the results are quite astounding. After studying the files of more than 100,000 of its clients, it calculated that the total cost to the UK taxpayer is in the reign of £8.3 billion per year.

The charity identified job related problems and housing issues as the two main culprits causing people to get into serious debt. It says the government alone could save as much as £3 billion if it offered better assistance to people with problem debt.


StepChange defines problem debt as debt taken on by individuals that they cannot afford to repay as agreed with the lender., and believe this puts severe strain on the country’s employment, mental health and housing systems.

The single biggest problem that individuals with problem debt often face is having to move to more affordable housing after falling into arrears on rent or mortgage payments. As a result, many then have to be paid housing benefits by the state.

Next on the list are employment-related costs such as individuals taking time off work because of the stress caused by unmanageable debt, as well as the benefits such people have to be paid if the job is eventually lost. The charity says this costs the country around £2.3bn per annum.

In its survey, StepChange also accounted for the cost of children being taken into care, divorce settlements and NHS mental health treatment caused by problem debt.

The debt charity believes that the government should do more to help, but a Treasury spokesperson pointed out that the Money Advice Service already plays a key role in this regard.