High levels of debt on essential bills have become the "new normal" for many low-income households in the UK, according to the charity StepChange. In a stark warning issued on Monday, the organisation revealed that average arrears for housing, utilities, and council tax all increased last year, highlighting a deepening financial crisis for vulnerable families.
Rising Arrears Across Key Areas
StepChange's data indicates that its clients are grappling with growing financial pressures. Despite a slowdown in the growth of mortgage costs and rents in 2025, the charity reported that clients have fallen further behind on related payments. Specifically, average rent arrears surged by 15% to £2,372, while average mortgage arrears jumped by 22%, rising from £10,239 in 2024 to £12,534 in 2025.
Energy Bill Debt Persists Despite Price Drops
StepChange's figures show significant numbers of households are behind with energy bills, even though prices have fallen from the peaks of 2022. Over a third of clients were in debt to energy companies, a decrease from 40% in 2024, but the average debt grew by £220 to £2,560. This suggests that while fewer people are falling into energy debt, those who are affected are sinking deeper into financial trouble.
Stretched Budgets and Economic Pressures
People's budgets have been severely stretched in recent years due to higher prices for goods and services. Additionally, the crisis in the Middle East has raised concerns about potential new waves of price increases, exacerbating the financial strain on households. Two in five clients seen by StepChange over the year were receiving universal credit, and three in five lived in rented accommodation, underscoring the vulnerability of these groups.
Call for Government Action
Vikki Brownridge, the chief executive at StepChange, emphasised the severity of the situation. "The reality is that rising essential bills and with that rising arrears types across housing, energy, and consumer credit debt, have become the new normal for many households," she said. "The cost of everyday essentials remains prohibitively high for many households, and our client data has reflected this pressure for several years. Rising household arrears show little sign of slowing down."
The charity is urging the government to take more decisive action to prevent people from falling into debt just to meet essential costs. StepChange advocates for the introduction of national social tariffs for energy and water, which Brownridge believes would "bring costs back down to a level that is affordable for those with low incomes or high needs."
Broader Implications for Household Finances
This data paints a concerning picture of household finances in the UK, where debt on essential bills is not only widespread but also increasing in severity. As arrears continue to climb, there is a pressing need for policy interventions to support low-income families and address the root causes of this financial distress.
