One-third of homes financially worse off this year

One third of households have found their financial situation worsen in the past 12 months (34 per cent) and a quarter (24 per cent) expect a tougher year ahead.

That is according to Ofwat’s Listen Care Share survey, which showed increased mental health worries during the pandemic made people less likely to seek help with bills.

It suggested households with young children are twice as likely to struggle to pay bills as those without.

Only four per cent of people with a household income under £20,000 received help with their water bill in the past year, however six per cent had help on both gas and electricity bills. Over all 88 per cent of low-income homes said they were not receiving support from any utilities.

More customers aged 18-34 reported finding it hard to pay bills (47 per cent), compared to 39 per cent of 35–54 year-olds and 17 per cent of over 55’s. Younger groups were also more likely to have received support (6 per cent), compared to just one per cent of over 55’s.

Overall, 26 per cent of consumers expect their financial situation to improve this year and 18 per cent reported being better off in the past 12 months than before. Younger people are optimistic about their situation with 41 per cent anticipating improvement and 19 per cent saying it would get worse.

Ofwat’s interim chief executive David Black said: “There have been some great examples of the industry stepping up to help customers, particularly those who are vulnerable. But we know that some customers are not getting the right help at times when they need it the most.”

Short-term measures were taken by 35 per cent of people experiencing hardship, with 12 per cent using credit cards to pay bills, 10 per cent relying on an overdraft and four per cent seeking a short-term loan. Only four per cent said they spoke to utility companies despite six per cent falling behind on bills.

Increasing visibility to ensure customers know what support is available emerged as a key suggestion. Despite increased efforts across the sector to support billpayers in more ways, those in need were often unaware. Ofwat advised using plain, jargon-free language to deliver simple and consistent messages.

Some participants said accessing help was daunting, therefore Ofwat said advice should be practically and emotionally simple. Different needs, such as language options and awareness of customers with dementia, were highlighted as important to make it easy to access support.

Alongside an increase in money concerns, 48 per cent of respondents said their mental health had been worse in the past year than previous years. Of those women were more inclined to report a decline – 53 per cent, compared to 43 per cent of men. In the group of people struggling to pay bills, 58 per cent said their mental health had worsened during the pandemic.

A link between declining mental health and asking for help with bills meant those with financial worries were more likely to avoid or delay opening bills (41 per cent) compared to seven per cent not in hardship.

Black said: “We’d like to see companies providing effective support, compassionate treatment and clear advice to customers at this time. There is an opportunity for the sector to learn lessons from each other and take steps to drive up the standard of support to those unable to pay their bills and ease the financial burden on households.”