A poll by affordable housing provider Circle Housing Group has revealed that about 10m Britons have taken out loans this year just to put food on the table and to cover energy bills.
Surveying more than 2000 adults in the UK, CHG found that a third of borrowers used loans to pay for food and basic living essentials, while one in five needed help to cover mortgage and credit payments.
Moreover, 56 per cent said they expect to do the same in the next year, compared to only 8 per cent who have not taken out a loan this year.
Matt Earnshaw, group financial inclusion manager for Circle, said it was important that people sought to get some form of debt and savings advice to help them through this situation.
1. Write down all the family’s finances accurately, identifying spending that can be reduced.
2. Use organisations such as the Citizen’s Advice Bureau, Step Change Debt Charity, and the National Debtline to help access free debt guidance
3. Set a realistic timeframe to get out of debt.
Ian Lowes, managing director of Newcastle-based Lowes Financial Management, said: “It is true that some sort of recovery is occurring but that is really only for people who are already okay; for everybody else you could call it a Wonga-recovery only, as seen in these figures.
“The key to stopping people from having to take out very short-term loans at insanely high interest rates is for banks to be compelled to lend to businesses that need the money, and that will gradually feed through into the rest of society.”