A growing debt crisis is arising as sharp rises in energy and food bills are causing a significant fall in real incomes for Scottish households, a new report has warned.

The publication, from Holyrood’s Social Justice and Social Security Committee, issued the stark revelation as it outlined recommended steps for both the UK and Scottish governments to take in the wake of the cost-of-living crisis.

The committee suggests learnings from the pandemic and the ongoing economic crisis should be utilised to develop a method of distributing emergency funding in a “fair and timely manner”.

More support targeted at the people who are most in need, greater financial support for debt advice services and the development of a debt management strategy covering all Scottish public bodies were also recommended.

The report also highlights a growing pressure being put on debt and money advisers, with many services reportedly being “stretched to breaking point”, leading to long waiting times for appointments.

A number of debt advisers, the committee says, have found themselves experiencing their own concerns over finance, resulting in added stress and some being on the brink of requiring sick leave.

Elena Whitham, convener of the Social Justice and Social Security Committee, said: “Our inquiry has exposed the severe challenges faced by households on low incomes across Scotland.

“We have heard startling testimony about how increasing numbers of people, who have even less money due to the rising cost of living, are being pushed into debt.

“The fact is, people are in debt right now and things will only get worse. Urgent action must be taken to help protect people on the lowest incomes, who are already having to make impossible decisions about how ever more limited budgets should be spent.

“We have also found that public bodies have a quicker and harsher approach to debt collection, for example with council tax, and are falling behind consumer creditors.

“We would like to thank everyone who shared their views with us, especially the lived experience panel that worked with the committee for their expertise and recommendations. Their insights into systems and services were revealing.

“We would encourage other public bodies to ensure they consult in this way to ensure they get the wealth of experience that people with lived experience can offer.”