Households on ‘collision course’ with cost of living crisis

Households are on a “collision course” with the cost of living crisis, a consumer charity has warned, with around 8 million people estimated to be behind on at least one bill.

The Money Advice Trust (MAT) commissioned a UK-wide survey of 2,000 adults conducted by Opinium in early March.

It found that one in seven (an estimated 7.9 million) is behind on at least one bill, while one in eight (more than 6 million) have gone without heating, water or electricity in the last three months as a result of soaring costs.

MAT said the proportion of callers to its National Debtline in energy arrears is significantly higher so far this year compared to 2021 (32% in 2022, up from 23% in 2021).

The survey found one in five (19%) 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%) say they worry about money every day and just 20% actually feel prepared to deal with rising costs.

MAT said ahead of the record increase to the price cap in April households are already feeling the strain of rising costs, with 11% saying they either cannot afford to or are struggling to pay their household bills.

Three in ten (30%) said they have already taken steps to mitigate the impact of rising costs, with some going to such lengths as selling personal or household items (12%) or turning to family and friends for financial support (10%).

Meanwhile an estimated 4.1 million (8%), have skipped meals or gone without food as a result of rising costs.

Ahead of the chancellor’s spring statement next week, MAT is calling for the government to provide more targeted support to help low-income households.

Specifically, it wants 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
• Provide a package of targeted support for people struggling with household bills, including providing non-repayable grants directly to low-income households

Joanna Elson, chief executive of the Money Advice Trust, 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.”