Context

One in six people in the UK is over-indebted but few of them seek advice. Identifying characteristics associated with over-indebtedness and the location of over-indebted people should help to better plan and target effective services.

The study

The Money Advice Service (MAS) aimed to identify characteristics associated with over-indebtedness and the likely concentration of over-indebted people across the UK. MAS worked with CACI on this research. The study used logistic regression to determine factors associated in surveys with over-indebtedness and then used Ocean, CACI’s broad demographic and lifestyle database, to generate the probability of over-indebtedness for 50 million adults, allowing mapping of likely over-indebted people to local authority, regional and national level. Over-indebtedness is defined as finding keeping up with bills and commitments as a heavy burden and/or falling behind or missing payments in at least three of the previous six months.

Key findings

• • The study estimates that .
  • The levels of over-indebtedness are found in Northern Ireland (21.0%), Wales (19.6%) and the West Midlands (18.0%), with the levels in the East of England (14.4%), the South East (14.0%) and Scotland (13.2%).
  • The highest levels tend to be found in mostly urban areas (with the exception of some more rural areas in the South Wales valleys and Northern Ireland).
  • There is variation in levels in local authority areas within each country or region, most strongly in London, where Newham has a level of 23.8% and Richmond upon Thames has 11.5%.
• • The modelling process tested a wide range of variables and found 16 characteristics that had a strong relationship with over-indebtedness (with relationships significant at the 95% level). Key factors include the following:
• 25% of are over-indebted, compared with 12 % of home owners. This figure rises to 29% among (compared with 21% of private tenants).
  • 20% of are over-indebted, compared to 13% of those without. This rises to 26% of .
  • 28% of are over-indebted, compared with 18% of two-parent families. This rises to one-third of single parents with three or more children.
  • 24% of are over-indebted. Above that income level, about 15% of people are over-indebted regardless of their income band. Factors other than income are more important above this threshold.
  • Younger people are more likely to be over-indebted. Among , about a quarter are over-indebted, with levels of about 20% among those aged 18-14 and 35-44. The figure falls to about one in 20 among those aged 75 or over. Younger people are more likely to miss payments and older people to find bills a heavy burden.

Overall, the model has identified 16 parameters that suggest an increased or decreased likelihood or over-indebtedness. All parameters are statistically significant at the 95% level, with the exception of 'single parent' which had borderline statistical significance.

MAS will work with partners to focus on the groups highlighted in the findings, for instance through working with social housing providers. MAS will share and update detailed data.

Points to consider

• While the model is robust, it is essential to be aware that figures quoted derive from modelling: the factors identified refer to observed relationships rather than causation. Full details of the parameters and the modelling approach are available here.
• The findings are robust across the adult population of the UK.

Full report

A picture of over-indebtedness- full report