Families on low income suffering 'year of financial fear' says report
Another report says four out of five adults are also concerned about making ends meet
A report from the Joseph Rowntree Foundation (JRF) has found that families on low incomes are enduring a "year of financial fear" and having to make choices between either falling behind on bills, going without essentials or taking on expensive debt.
The foundation said that this is down to the cost-of-living crisis as well as a decade of social security cuts and underfunding.
It used a survey of about 4,000 people on low household incomes in May and June (the bottom 40%, which equates to an income of under £25,000 for a couple with no children), for the report.
Breaking down the report's results, JRF have revealed that rather than being forced to choose between heating or eating, one in five (21%) low income households were unable to do either.
In these cases, families were going without enough food as well as being unable to keep their homes warm.
Further to this, six in 10 had gone without essentials since the start of 2022, or, had cut down on or skipped meals, or gone hungry in the previous 30 days.
Two-fifths were behind on at least one bill, with the average amount of arrears across all bills held by all low-income households is £1,600.
This is across all types of bills including rent and being behind on borrowing repayments, and is largely driven by high amounts of arrears on personal loans and credit cards, the report said.
One in nine (11%) low income households have used credit to cover essentials such as rent or council tax so far this year, in response to the cost of living rising. A further 8% said they planned to do this in coming months.
Further to this report, according to Scottish Widows, four out of five adults in general (81%) are concerned about making ends meet as living costs surge and three-quarters (76%) need to take action to cope with the financial pressures.
A representative from JRF said that their report "paints an extremely worrying picture" where households cannot afford to cover basic bills and have to take on interest-accruing debt to stay afloat.
The Foundation said that while a package of support measures previously announced by Chancellor Rishi Sunak to tackle rising energy costs is welcome, the cost-of-living payments will "barely touch the sides, let alone help prepare for the winter that is coming".
As such, the organisation is calling on ministers to consider letting people pay back their debt more slowly.
They are also calling for an increase in basic Universal Credit (UC) entitlements.
This comes after it was found that 94% of UC recipients with a deduction from their payments were going without essentials, as were just over three-quarters (76%) of UC recipients without a deduction.
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Katie Schmuecker, principal policy adviser at the JRF said: "Our research illustrates the frightening year of financial fear low income families are living through.
"Families up and down the country have been faced with options that are simple but grim - fall behind on bills, go without essentials like enough food, or take on expensive debt at high interest. In some cases they had to do all three.
"No one should be put in this precarious position. The hardship families are facing now builds on the foundations of a decade of cuts and freezes to social security.
"The Chancellor's cost of living support package will offer some temporary relief, but rather than lurching from emergency to emergency, Government must get ahead of this problem.
"A simple thing they can do immediately to make a difference is to stop deducting debt repayments from benefits at unaffordable rates."
Cost of living crisis timeline:
Interest rates and inflation go up
Inflation rose by 8.8% in the 12 months to January 2023, down from 9.2% in December 2022. With interest rates also rising to 4%, those saving money will earn more interest on their finances, whilst those paying mortgages would pay more interest to the bank.
Energy bills
The price of energy went up incredibly as the cost of living crisis hit, with the gas price spike caused largely by the war in Ukraine. The price cap - which is set by an independent regulator to help offset costs onto customers - was set to rise to £3,549 for an average home in October but a price freeze from the government restricted the typical bill to £2,500. That's still an increase of 27% from the previous energy cap and as it's a cap on unit cost, the more energy you use the higher your bill will be.
Food prices
The cost of a weekly shop also has gone up as a result of the cost of living crisis. As a result of the war in Ukraine, a number of products including cooking oils and wheat have been disrupted. This means that several products are now considerably more expensive, driving bills up for customers.
Prices at the pumps
The average cost of petrol has also rose to unprecedented levels. Supply lines for petrol have been thrown into doubt as a result of the war in Ukraine, as Russia is a large export partner for gas, oil and fuel. In April 2022, the average price for a litre of petrol on the forecourt was 160.2p, whilst a litre of diesel would cost 170.5p. By late June 2022 the price had risen to an average of 190.9p for a litre of unleaded and 198.9p for a litre of diesel. In March 2023 the price wass on average of 147.03 in petrol and 167.04 in diesel.
Average cost of filling up a car with petrol hits £100
On 9th June 2022, the average cost of filling up a car with petrol hit £100 for the first time ever. Diesel had already hit that milestone. It comes as the cost of fuel hit a record high of one pound eighty a litre. The 2p rise was the biggest daily jump in 17 years. Prices have dropped by at least 20p per litre since the high point.