The TUC, Trade Union Congress, issued an analysis this week that showed UK household debt has reached a new high. According to news reports.
TUC figures include student debt.
However, the TUC’s figures include student debt. The Bank of England’s figures do not include student debt. Consequently, the Bank of England figures, excluding student loans, give a debt total of half the TUC’s estimate.
The TUC says that, excluding mortgages, average debt per household rose sharply in 2018 to a new peak of £15,385, up £886 in a year, the research says.
The TUC says government austerity and years of wage stagnation are to blame.
The Bank of England says growth in consumer credit has been gradually slowing since the end of 2016. The TUC arrived at its figure for unsecured debt by adding up the total amount owed in bank overdrafts, personal loans, store cards, payday loans, and outstanding credit card debts. It is important to note it also includes student loans. It excludes mortgages.
Millions of households Reliant on borrowing.
As a share of household income, unsecured debt had now reached 30.4%. The highest it had ever been, the TUC said.
It added that millions of households were now reliant on borrowing to get by, with working families on average worse off than before the financial crisis.
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 was “skating on thin ice by relying on household debt to drive growth.”
“Our economy is not working for workers. They need stronger rights and bargaining powers.”
The TUC also called for an increase in minimum wage levels to £10 an hour “as quickly as possible”. The National Living Wage for workers aged 25 and over is currently £7.83 an hour and is due to rise to £8.21 in April.
Why the Bank of England figures are lower.
The Bank of England leaves student loans out of its calculations, which is why its figures come out lower.
Student loan repayments start when people earn as little as £21,000 and take 9 percent of anything those burdened with them earn above that. They thus constrain living standards and make people paying them back prone to other forms of borrowing to make ends meet.
Including student loans brings the total to £428bn.
To show how much that is, here are some other figures. It is more than three times what it costs to run the NHS in England, the 2017/2018 budget for which was just under £125bn. It’s also more than four times the £90bn education budget.
The Bank has pointed out that its growth is at least slowing. But it was still running at an annualised rate of 7.1 percent in November.
“Shortage of good debt advisors.”
Debt charity figures have also shown that there is a shortage of good debt advisors. The need for expert debt advice is more urgent than ever before.
The first step to getting help is always good expert advice. “This is what families need. Getting the right help can turn lives around.”
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Taking that first step is not always easy but is a crucial step towards helping you to find financial freedom.