In financial difficulty

Graphs on this page:

Supporting information:

Key points

One in five people households in Wales reported that they were having financial difficulties in 2002.  This is slightly higher than in the rest of Britain, where one in six reported that they had financial difficulties.

Just over half of the households in Wales experiencing financial difficulty in 2002 reported having had financial difficulties a year earlier too.  For most, though not all, their financial problems had not got worse over the period.

Among clients of Citizens Advice, the ratio of average household debt to average net monthly household income is higher in Wales than in other parts of the UK.  The average monthly income of Citizens Advice clients in Wales is some £700 while average debts are about £11,000.  The resulting ration of debt to income of 16 compares with ratios of 14 in England, 12 in Scotland, and 10 in Northern Ireland. 1

The number of reported debt problems has been increasing faster in Wales than in other parts of the UK, with debt enquiries at NACAB Cymru having risen by two-thirds in the five years to 2002.  This compares to an increase at a UK level of a quarter. 2  The greatest increase has come in relation to consumer credit enquiries, which now constitute around two-thirds of all enquiries. 3

Financial difficulties, particularly over-indebtedness, can have a detrimental impact on people’s lives.  People can suffer from anxiety, depression or stress as a result. 4  Around 60% of people experiencing debt problems which are ‘difficult to resolve’ report related stress and ill-health. 5  Over indebtedness can also act as a deterrent to those entering employment can lead to homelessness and can often reinforce the cycle of deprivation. 6

Definitions and data sources

The graph provides the breakdown of households that are experiencing financial difficulties or were doing so a year previously, with the data shown as a proportion of total households.  For comparison purposes the equivalent data for Great Britain excluding Wales is also presented.

The data source is a 2002 over-indebtedness survey undertaken by the Department of Trade and Industry combined with an additional Wales booster sample commissioned by the Welsh Consumer Council (the data is not publicly available).  In each case, households were asked to describe their financial position compared to a year previously.  The data is unweighted as the weights for the two samples are not obviously on the same basis.

Overall adequacy of the indicator: limited.  While the data itself is considered reliable, it is only a very partial indicator of financial problems.

1. CAB clients’ experience of debt, Citizens Advice, 2003.
2. NACAB Cymru, 2001. In Borrowing and debt in deprived communities: indications from five areas in Greater Gwent, Welsh Consumer Council, 2001.
3. CAB clients’ experience of debt, Citizens Advice, 2003.
4. CAB clients’ experience of debt, Citizens Advice, 2003.
5. Causes of action: civil law and social justice, Legal Services Research Centre, 2004.
6. Social justice annual report, Welsh Assembly Government, 2005.