More people falling behind on essential bills, as richer households start to struggle

A new report from the Resolution Foundation shows a worrying trend: while families are carrying less consumer debt overall, more households are falling behind on the bills that matter most.

Debt down, but arrears up

The good news is that average consumer debt has been falling. Among the poorer half of families, it dropped by 14% in real terms between 2006-08 and 2020-22. For higher-income households, it fell even further, down 21%.

At the same time, saving habits have improved. A third of lower-income households had some money left to save in 2018-20, compared with just a fifth a decade earlier.

But the picture isn’t all positive. More people are now struggling with priority bills – the essential costs you must pay before things like credit cards or personal loans.

• Council tax arrears have risen from £4.6bn in 2019-20 to £6.7bn this year - an increase of almost half in just five years.
• Nearly one in five of the poorest families are behind on at least one priority bill.
• Energy arrears have surged, with over one million electricity and 0.9 million gas accounts in debt. The average amount owed has jumped from under £500 to around £1,500 in just over a year.
• Even middle-income families are feeling the squeeze. A decade ago, fewer than one in 20 were behind on a priority bill. Now it’s around one in 10.

What to do about energy arrears

Falling behind with your gas or electricity bills is known as being “in arrears.” Because energy is essential, these are treated as priority debts – meaning they should be dealt with before things like credit cards or overdrafts.

Here are some steps to take:

1. Contact your supplier – Tell them you’re struggling. They should work with you to find a solution.
2. Try to agree a payment plan – This will include an amount towards your arrears and an amount towards ongoing use. Suppliers must take into account what you can afford.
3. Repay through your benefits – If you receive certain benefits, the Fuel Direct scheme can take a fixed amount straight from your payments to cover arrears.
4. Ask about grants – Many suppliers have hardship funds or grants to help customers in debt.
5. Join the priority services register – If you’re vulnerable, you can register for free and get extra support from your supplier.

Read our full guide on energy arrears.

What to do about council tax arrears

Missing a council tax payment puts you into arrears. Councils have strong powers to recover unpaid bills, so it’s important to act quickly.

Here’s what happens and what you can do:

1. Respond to reminders – If you miss a payment, you’ll usually get a reminder after two weeks. Pay within seven days, and you can continue as normal.
2. Don’t ignore a final notice – If you fall behind three times in a year or don’t pay after a reminder, you may be asked to pay the rest of the year’s council tax in one go.
3. Liability orders – If you still don’t pay, your council may apply to the courts for a liability order, giving them permission to take enforcement action (such as deductions from wages/benefits or using bailiffs).
4. Talk to your council – They should consider other options first, like agreeing an affordable repayment plan or checking if you’re entitled to a council tax reduction.
5. Know the risks – In extreme cases, councils can secure debt against your home, apply for bankruptcy (if you owe over £5,000) or even ask for imprisonment – but this is rare and usually only if someone deliberately refuses to pay.
6. Seek debt advice – We may be able to help you apply for breathing space, giving you 60 days where interest and enforcement action are paused while you work out a long-term solution.

Read our full guide on council tax arrears.

Here to help

If you’re struggling with arrears of any kind, we can help you make sense of your options and find a way forward.

Start your debt advice journey today.