Fears of growing mountain of debt facing Luton people

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Younger people are being hit hardest

Luton is one of the highest areas in the south of England for the average level of debt.

Drawing on a dataset of nearly 300,000 insolvent UK consumers currently struggling with their personal finances, Aryza’s new UK Debt Statistics report found that Preston has the highest level of average personal debt in England, standing at £19,473. Luton has ranked 12th with an average debt level of £18,393.

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The vast majority of the locations in the top 20 debt levels were found in the Midlands or North England. Luton and Harrow are the only locations in the South of England.

Debt levels in Luton are concerningDebt levels in Luton are concerning
Debt levels in Luton are concerning

The report, from financial management solutions firm Aryza, says: "In what has been a turbulent six-month period for many people in the UK, it’s unsurprising that we are seeing the average debt levels increase as individuals struggle with their personal finances.

"Uncertainty in the jobs market, the announcement that the uplift in Universal Credit will end, rising utility bill prices, the furlough scheme ending, and the end of payment and mortgage holidays have together created a ‘perfect storm’ of conditions to put pressure on people - especially on lower incomes.

"It’s clear in the data that increasing debt levels are largely being driven by soaring household bills, and this is proving most detrimental to people on lower earnings, where even the slightest increase in expenditure is enough to push them into debt and financial difficulty".

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Chief Executive Officer Colin Brown said: "The data in this report examines how debt is impacting on the UK population. It shows an increase in debt across the younger age brackets, and this is perhaps unsurprising, given that younger people are more likely to have lower paid or part-time jobs, working in industries such as hospitality and retail.

"Those with jobs in sectors that have been hit hardest by the COVID-19 pandemic - restaurant staff, bar staff, taxi drivers, retail workers and supermarket assistants - all find themselves on this list. It’s also disheartening to see nurses struggle with their personal finances, after working in the toughest conditions imaginable throughout the pandemic.

"As people’s incomes decrease - more are using credit to subsidise basic living expenses - with ‘credit’ listed as one of the most common reasons listed as ‘reason for financial difficulty’. One in five people struggling with their personal finances already owe money to utility companies, increasing prices for gas and electricity over the winter months and rising fuel and food costs look set to put many more people in a vulnerable position.

"With individuals on lower paid and part-time jobs feeling the brunt of the debt crisis, and the end of the Universal Credit uplift costing the most financially vulnerable people over £1,000 per year, there is a danger that with the cost of living increasing, thousands more people will be forced to seek help with their own financial situation and compound the UK debt problem".

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Household and motor vehicle debt is currently causing large numbers of people to struggle with their personal finances and enter into insolvency, the report found. Energy and utility bills are responsible for nearly one in five people analysed in this report falling into debt. With the UK’s energy price cap rising in October 2021, it seems likely that additional financial pressure will be placed on households over winter as gas and heating expenditure is set to rise.

"Debt on Hire Purchase agreements and to Local Authorities, in the form of unpaid Council tax are both found in over 10% of records. These debt sources are joined by banks, overdrafts, personal loans, and payday loans as people are struggling to repay money they have borrowed to supplement their incomes."