Unmanageable debt

Commissioning Brief 

Research question

• What interventions affect the impact of unmanageable debt on health and health inequalities?

Having ‘unmanageable’ or ‘problem’ debt can be described as the situation in which an individual encounters problems with the size of their debt or scale of financial repayments. When the level of debt is unmanageable, it may be experienced as a burden. The Office for National Statistics defines 'problem' debt in terms of liquidity and/or solvency problems, for example occurring when household debt repayments represent at least a quarter of net monthly income and when one adult is behind with their bills or credit commitments. The experience of unmanageable debt can place significant stress on individuals and families, damaging relationships, and impacting negatively on physical and mental health and wellbeing.

There is evidence supporting a positive relationship between financial status and health outcomes. Unsurprisingly, there is also a correlation that exists between unmanageable debt and health outcomes. The relationship is bi-directional and can lead to many individuals finding themselves trapped in a cycle of poor health and unmanageable debt. Whilst much research to date has focused on the mental health impacts of problem debt, impacts can extend to social wellbeing, choices, and behaviours (that may be constrained), and the wider determinants of health. Those groups most at risk of experiencing unmanageable debt include individuals and households on lower or insecure incomes, those whose housing situation is precarious, and people with other vulnerabilities including those who have recently experienced a sudden and severe health issue that may lead to financial insecurity.

The cost-of-living crisis, in combination with the long-term impacts of the COVID pandemic, continues to have a significant impact on the ability of individuals and families to access sufficient financial resources. Impacts will not have been felt equally by all groups – being greater, for example, for those on lower incomes or already experiencing long-term problem debt, households with an adult unable to work or who has recently died, and migrants who have no recourse to public funds (NRPF). Individuals may also experience more complex debt issues, with debts owed to multiple agencies and authorities, which presents a potentially greater impact on health and wellbeing as well as being difficult to resolve.

Of those who participated in an assessment of their debt with Citizens Advice Wales in 2021, 88% owed money either on essential bills (utilities, telecoms, rent, and mortgage) or to a government body (taxes, fines, and monies related to benefits overpayments and advances­), highlighting a key role that the public sector may have in relation to debt. There may also be an interplay between the benefits system and debt, whereby debts on essential bills can be deducted from benefits payments, driving a recipient’s income down to unsustainable levels. Noting that a considerable amount of debt is owed to public sector organisations, it could be valuable to consider public sector debt collection practices and the potential impact on debtor health. Concern has been raised that practices are operating below industry standard relative to the private sector and may be both ‘aggressive’ and ‘unfair’ in nature.

It may be the case that specific parts of the UK are doing strategic work in relation to addressing the issue of debt, aimed at supporting their local populations, informed by data on indebtedness. 

It is possible that individuals struggling to access sufficient financial resources to make debt repayments (including debt owed to organisations in the public sector) may be rejected by legal, authorised creditors for credit and turn to illegal money lenders (known as loan sharks) as a last resort. Loan sharks levy extremely high interest rates leading to repayments that can quickly become unmanageable, and often use intimidation and violence to collect payments from debtors. The Illegal Money Lending Team in England (commonly known as ‘Stop Loan Sharks’) estimates that 80% of those in debt to loan sharks had previously applied to, and been rejected by, legal creditors. It is likely that there are differences in the impact of using legal creditors (including but not limited to credit cards, bank loans, overdrafts, and credit unions) and loan shark services on individuals experiencing unmanageable debt, across a variety of factors including those related to health.

The PHR Programme is predominantly interested in the evaluation of interventions operating at a population level rather than at an individual level and which should address health inequalities and the wider determinants of health. We recognise that interventions are likely to impact different (sub)populations in different ways and encourage researchers to explore such inequalities of impact in their study design.

Research areas of interest could include (but are not limited to) evaluation of:

• Interventions that take into account differing types of creditors, for example legal and illegal money lenders
• Interventions that seek to work with individuals and/or families experiencing pre-existing debt
• Interventions that take into account unmanageable debt experienced at different stages of the life course, including unmanageable debt experienced towards the end of life
• Interventions that offer support tailored to the type of debt experienced, such as priority and non-priority debt (priority debt being debt that may carry more serious consequences if not paid, such as losing one’s home)
• Interventions related to debt owed to public sector organisations and associated debt collection practices
• Interventions that seek to work with legal creditors to improve practices and hence customer experience
• Interventions that take a multisectoral approach to addressing unmanageable debt and its health impacts (for example, that involves public authorities working in partnership with third sector debt support and advice providers to find sustainable ways to deal with unmanageable debt, which may be owed to multiple agencies and authorities)
• Interventions that seek to prevent a worsening of debt for people who are already in financial difficulty, or who are on the verge of having (unmanageable) debt
• Interventions aimed at people from vulnerable groups including, but not limited to, those with pre-existing health conditions, migrants with NRPF, and those who may be digitally excluded
• Interventions aimed at those on lower or insecure incomes, people in receipt of benefits, whose housing situation is precarious, or who have other risk factors – including consideration of how well those interventions reach those who could benefit.

Of particular importance to the PHR Programme is an understanding of inequalities in impact of policy and access to services by people from ethnic minority backgrounds in the UK. Evaluations of interventions seeking to reduce health inequalities experienced by people from ethnic minority backgrounds are also of specific interest to the PHR Programme.

The Money and Pensions Service (MaPS) is the largest funder of free debt advice in England, funding community-based debt advice alongside nationally accessible digital and telephone services.

MaPS undertakes an annual assessment of the need for debt advice across the four nations. We also work closely with the devolved nations to understand and share best practice in the delivery of debt advice. MaPS would like to offer applicants interested in applying to this commissioning brief the opportunity for a discussion regarding the current debt advice landscape, potential collaboration, and data related to debt advice customers in England. Please contact Ruth Puig-Peiro (Health Systems Strategy Lead) for more information.

Understanding the value of public health interventions – whether the outcomes justify their use of resources – is integral to the PHR Programme, where resources relating to different economic sectors and budgets are potentially relevant. The main outcomes for economic evaluation are expected to include health (including health-related quality of life) and the impact on health inequalities as a minimum, with consideration of broader outcomes welcomed. Different approaches to economic evaluation are encouraged as long as they assess the value and distributive impact of interventions. Applications that do not include an economic component should provide appropriate justification.

For further information on submitting an application to the PHR Programme, please refer to the Stage 1 guidance notes and PHR supporting information. These can be found by clicking on the relevant commissioned call on the main funding opportunities page. This also includes closing dates and details about how to apply. 

In order to apply you will need to carefully review the:

• Stage 1 guidance notes
• PHR supporting information

Please consult the NIHR Specialist Centre for Public Health (SCPH) about the design of your research as soon as possible. Successful applications generally require a long time (several months) to develop.

All primary research projects are expected to establish a programme appointed Study/Trial Steering Committee and it is important that you read the Research Governance Guidelines before completing your application. Costs incurred by this committee should be included in the budget as appropriate.

We recommend you view the PHR tips for success in applying.