Money on my mind - Understanding the savings, debt and financial resilience of low-to-middle income families

12th September 2025

This paper is part of our Unsung Britain project, which explores the everyday economic reality for low- to middle-income families. It shifts the focus beyond income, looking instead at the savings, debts, and arrears that shape households’ ability to weather financial shocks.

We show that while some households are managing to save more and carry less debt, many remain just one setback away from difficulty.

Savings levels are worryingly low, arrears have grown sharply – particularly on essentials like energy and council tax – and while debts have fallen, this largely reflects tougher credit conditions rather than greater security.

The research shows why policymakers must look beyond headline income figures to address financial resilience, with action needed to boost savings, expand affordable credit, and reduce exposure to arrears.

Key findings
British households are carrying far lower levels of consumer debt than in the past. Among the poorer half of families, average debt has fallen from £2,617 in 2006-08 to £2,256 in 2020-22 – a 14 per cent real-terms drop. Higher-income households have seen an even larger fall of 21 per cent over the same period.

Over two-in-five poorer households still have less than £1,000 in liquid savings, leaving them exposed to even modest financial shocks. But saving behaviour has picked up: a third of poorer households (33 per cent) reported having money left to save in 2018-20, compared with just a fifth (20 per cent) in 2006-08.

But while levels of consumer debt have fallen, other problem debts, like falling behind on ‘priority’ household bills have risen. Council Tax arrears in England have risen from £4.6 billion in 2019-20 to £6.7 billion in 2024-25, an increase of almost half in just five years. Nearly one-in-five of the poorest families (18 per cent) are now behind on at least one priority bill.

The number of energy customers in arrears has more than tripled since 2012, reaching over 1 million electricity accounts and 0.9 million gas accounts.
The average energy debt has surged from under £500 to about £1,500 – a 51% rise in just over a year.

Arrears are also creeping up the income distribution: around one-in-ten middle-income households are now behind on a priority bill, compared with fewer than one-in-twenty a decade ago.

Read the full report HERE
Pdf 37 Pages.