Households on ‘collision course’ with the cost of living crisis

  • 1 in 7 adults (an estimated 7.9m) is behind on one or more household bill
  • 1 in 8 (an estimated 6.2m) have gone without energy, water or electricity

·         Charity is calling for urgent government support to avert cost of living crisis

 

One in seven (an estimated 7.9 million) UK adults is behind on at least one household bill and one in eight (an estimated 6.2 million) have gone without heating, water or electricity in the last three months as a result of rising costs, according to new research from the Money Advice Trust.  The charity, which runs National Debtline and Business Debtline, is warning that with energy and other household bills continuing to rise and an increase in National Insurance on its way in April, millions of households will be unable to cope.

The findings, published in advance of next week’s Spring Statement and based on a Opinium survey of more than 2,000 UK adults, paint a worrying picture for household finances:

  • one in five (19 percent) adults say they are likely to borrow or use credit in the next three months to cover essentials, including food, clothes and bills,
  • more than one in five (22 percent) worry about money every day,
  • only one in five (20 percent) feel prepared to deal with rising costs.

Households already under pressure

The findings show that households are already feeling the strain of rising costs.  One in ten (11 percent) say they either cannot afford to or are struggling to pay their household bills.  Energy bills are the most common bill people are behind on (7 percent), closely followed by council tax (5 percent) and water (5 percent).

This is mirrored in calls in to the charity’s National Debtline service, with the proportion of callers with energy debt significantly higher so far this year compared to 2021 (32% in 2022, up from 23% in 2021).

Going without to tackle costs

To tackle increasing costs, three in ten (30 percent) adults have already taken steps, including selling personal or household items (12 percent) or turning to family and friends for financial support (10 percent).

Worryingly, an estimated 6.2 million (12 percent) UK adults have gone without heating, water or electricity and an estimated 4.1 million (8 percent), have skipped meals or gone without food as a result of rising costs.

Risk of growing debt problems

The charity’s findings show that two in five adults (39 percent) said that while they could currently afford their bills, they were worried they would fall behind.  With inflation continuing to rise, energy prices soaring and tax rises on the way, the challenge of meeting essential costs is only set to get harder – with the risk that millions more households will be pushed into financial difficultly in the coming months. 

More support for households needed

While the Government’s council tax and energy bill rebates will help some households to a small degree, the Money Advice Trust is calling for more targeted support to help, low-income households, in particular, who are hit hardest by rising prices. 

Ahead of the Chancellor’s Spring Statement next week, the charity is calling on the Government to:

  • significantly uprate benefits to avoid a real-terms cut to people’s income,
  • temporarily pause deductions from benefits to repay government debt, such as benefit overpayments, and
  • provide a package of targeted support for people struggling with household bills, including providing non-repayable grants directly to low-income households.

Joanna Elson CBE, chief executive of the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“Millions of households in the UK are already struggling to meet rising costs.  With energy prices soaring, inflation rising and tax increases imminent, millions of households are on a collision course with the cost of living crisis.

“The emergency support announced by Government last month to reduce the impact of rising bills will provide some limited help to some households – but it does not get close to matching the scale of the problem.

“At the Spring Statement, the Chancellor has the opportunity to change course and help ease some of this pressure.  As a minimum, this should include significantly uprating benefits and introducing further targeted support to help people struggling with the steep increase in their energy bills.

“Without further support, more peoples’ budgets will be pushed to breaking point. At National Debtline and Business Debtline we will do everything we can to help people and small businesses in financial difficulty.  This alone will not be enough.

“Anyone worried about their finances should seek free, independent debt advice from a service like National Debtline.”

National Debtline provides free, independent debt advice at www.nationaldebtline.org.