Scots in debt face prospect of being ‘trapped’ as costs soar
Scots in debt face the prospect of being trapped by soaring supermarket and energy prices, an advice charity has found.
Citizens Advice Scotland warned on Sunday half of its most complex debt cases have no cash to pay off the money they owe once they cover essentials, leading to calls to increase benefits “in line with the cost of living at least”.
Jemiel Benison, the organisation’s financial health spokesman, warned that “people in debt face the prospect of being trapped into longer repayment periods because of the cost-of-living crisis”.
“What we see is more people with no money left every month not able to pay down their debt – so facing longer periods to clear it,” he said.
“Those with disposable income every month had seen a huge drop, just as prices and bills soar.”
According to the charity’s living standards report, between spring this year and last there had been a rise in clients paying out more than they earn each month, an increase from 42% to 48%.
One in two people they see with complex money issues also have no cash to pay down their debts after covering the essentials.
And, the advice charity found, disposable income had plunged in the year by £80, falling from an average of £228 in 2020/21 to £148 the following year.
But the situation could deteriorate, Mr Benison warned.
“This data is from spring 2021 to earlier this year – so people in debt were already feeling the impact of the cost of living crisis,” he said.
“If the worst is to come in terms of inflation or a recession, that is very worrying indeed.”
The report, released on Sunday, looked at around 3,000 of Citizens Advices’ complex debt clients from across it network.
The charity defines one of these clients as someone who has multiple debts to different creditors, or a single liability which requires specific legal or administrative work.
According to the research, there had also been a 65% increase in people taking five to 30 years to pay off their debts.
Mr Benison said: “What is also clear is that the decision to cut £20 per week from universal credit has had a devastating impact on those in debt.
“It reiterates the essential need to uprate benefits in line with the cost of living at least.”
A Department for Work and Pensions spokesman said the UK Government was “determined to support the most vulnerable with the rising cost of living and we are providing £1,200 in direct payments this year to over eight million low-income households across the United Kingdom, as part of our £37 billion support package”.
“As is the usual process, the Secretary of State is currently conducting his statutory annual review of benefits using the most recent prices and earnings indices available,” he added.