Figures from the Institute for Fiscal Studies (IFS) show that about one sixth of the lowest-income tenth of households are in arrears on repayments or bills.

A further 10% were spending at least a quarter of their monthly income on unsecured debts, such as credit cards and payday loans.

The IFS research, funded by the Joseph Rowntree Foundation (JRF) and the IFS Retirement Savings Consortium, found that while over 60% of unsecured debt is held by households with above-average incomes, and more than half of households with unsecured debts have more than enough financial assets to pay them off, it is the low-income households which appear to be struggling.

The IFS said its data shows debt was a “real problem” for a “significant minority” of low-income workers.

David Sturrock, a research economist at the IFS and an author of the report, said: “Most unsecured debt is held by high income households who look able to manage it, and more than half of those with debts have enough financial assets to pay them off. But debt looks like a real problem for a significant minority of those on low incomes, who are not keeping up with bills and/or spending high fractions of their disposable income on debt repayment. Headline numbers are no guide to the scale of ‘problem debt’: distinguishing between debts that are entirely appropriate and those that look unmanageable is crucial.”