More than a million households are in "extreme problem debt", according to a report published by the Trades Union Congress.
After analysing official data and surveys, the umbrella organisation for the UK's unions estimates that 3.2 million households are in problem debt - spending more than 25 per cent of their income on debt repayments, says The Guardian.
Some 1.6 million are in extreme debt, where 40 per cent of their total income is servicing their borrowings, and of these, "more than one million" have a total household income below £30,000 a year, the TUC adds. The Financial Times says the true figure is estimated to be around 1.2 million.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
The report blames the fall in real wages over the past decade – according to the Organisation for Economic Co-operation and Development (OECD), average UK pay adjusted for inflation has fallen by 10.4 per cent since 2005 – and says "ongoing wage stagnation is making the problem worse".
The proportion of working households in extreme problem debt has almost doubled from five to nine per cent since 2014.
Frances O'Grady, the TUC general secretary, says: "Families can't continue relying on credit cards and loans to get by, but with the average wage still worth £40 less than before the 2008 crash, lots of families have little choice.
"Higher wages must be at the heart of the government's economic plan. We need a return to proper year-on-year pay rises, and a higher national minimum wage."
A government spokesman told Sky News [4] it is doing just that - sticking to its plan to raise the minimum wage for those over the age of 25 at its fastest-ever rate. The idea is to make it the highest in the G7 by the end of the decade, under the so-called "national living wage".
The spokesman added that average living standards have increased due to near-zero inflation and that millions of low-income individuals are now paying less income tax.
This coincides with a period during which interest rates have hit record lows, making borrowing cheaper than ever.
