This indicator measures the proportion of households in unmanageable debt: either excessive debt repayments/arrears on commitments, or high debt levels relative to annual income.
Source of Data:
The data source is the Wealth and Assets Survey dataset which is owned by the Office for National Statistics (ONS). The unit of measurement is the household.
The indicator is published by ONS as part of the biennial publication Wealth in Great Britain. In this publication, the measure is called âProblem Debtâ and is available broken down by the regions of Great Britain. The publication can be accessed through the ONS website.
The Wealth and Assets Survey is a sample survey including just under 1,700 private households in Scotland and collecting data over two-year periods. The responses of these households are weighted and grossed up to be representative of all private households in Scotland.
Households with unmanageable debt are falling behind with bills or credit commitments and are either having to make excessive debt repayments or are in arrears on monthly commitments (liquidity problems); or they are burdened by high debt levels relative to annual income (solvency problems).
The definition of Unmanageable Debt follows ONSâ definition of Problem Debt. A household is defined as being in problem debt if household members encounter liquidity problems only, solvency problems only or both liquidity and solvency problems.
Liquidity problems are encountered where household debt repayments represent at least 25% of net monthly income and at least one adult in the household reports falling behind with bills or credit commitments; or where at least one adult in the household is currently in two or more consecutive months arrears on bills or credit commitments and at least one adult in the household reports falling behind with bills or credit commitments.
Solvency problems are encountered where household debt represents at least 20% of net annual income and at least one adult considers their debt a heavy burden.
Student loans are very different to other forms of debt as the levels of monthly repayments are determined by the level of income. As a result, they have been excluded from the calculation of debt.
Private households refers to all households that are not communal establishments such as hostels, prisons or hospitals, for example.
Criteria for Change:
- Performance is improving if the indicator decreases for two two-year periods in a row by at least 1 percentage point each period.
- Performance is worsening if the indicator increases for two two-year periods in a row by at least 1 percentage point each period.
- Elsewise, performance is maintaining.