Strength Against Shocks:
Low-income families and debt

Author: Dalia Ben-Galim and Tess Lanning
Contributors:
Price: Free
Publication Date: 07 February 2010

The current economic crisis has cast a sharp light on broad cultural trends across all income groups. Consumer-led aspirations and a national obsession with home-ownership are deepseated cultural developments with both social and economic drivers. But for many families, having access to products and homes means relying heavily on debt.

In the decade to 2008, average household debt in the UK increased substantially – from 93 to 161 per cent of disposable income. The profile of borrowers widened to include lower income groups, which some suggest has led to greater opportunities for social and economic inclusion. But low-income households are the ones that are most vulnerable to debt problems, and ippr’s new research illustrates that our reliance on debt – far from creating opportunity – has created vulnerability during this recession.

ippr’s innovative research with 58 low-income families in London, Newcastle, Nottingham and Glasgow aimed to understand what the expansion of household debt has meant for the lives of low-income families. In-depth interviews, an income and expenditure diary and regular telephone conversations over four months explored patterns of income, spending and borrowing.