UK HOUSEHOLDS are being driven further into debt by the rising cost of living, a recent, decade-long study has shown. An estimated a million people on low incomes at the moment are in arrears after paying for the fundamental essentials.
The findings are set out within the report Pushed Under, Pushed Out, published by Christians Against Poverty (CAP) on Tuesday. It is predicated on research carried out by the Centre for Research in Social Policy at Loughborough University, which analysed information on household funds from the Office for National Statistics — greater than 35,000 individuals in greater than 17,000 households. People were interviewed every two years from 2010 to 2020.
The study tracks levels of debt in this era, analysing how the usage of credit to pay for essentials had tipped people below the Minimum Income Standard. This is the widely used benchmark of an appropriate living standard, updated every year.
The researchers found that debt repayments of just £30 per week were enough to tip people below the minimum income threshold, increasing the chance of more acute deprivation. Lone parents were particularly vulnerable to slipping below the edge due to small debt repayments (defined as as much as £70 per week). People living with disabilities, or in unemployment, were also vulnerable.
The report also analyses an internet YouGov survey of 2089 adults, commissioned by CAP, and conducted from 12 to fifteen January 2024, weighed against general population figures. It found that 82 per cent of individuals with income below the minimum level were in arrears owing to household bills — representative of about a million people within the UK, CAP says.
The poll also found that, up to now six months, nine per cent of respondents had chiefly used credit to pay for monthly bills — the equivalent, if scaled up, of 4.7 million people. And 42 per cent of respondents (the equivalent of twenty-two.4 million people) had limited their use of electricity or gas once a month or more often, to offset the rising cost.
For the identical reason, 17 per cent of UK adults polled had skipped meals not less than once a month; nine per cent had done so on not less than once per week.
In a foreword to the report, the Archbishop of Canterbury writes that falling behind on utility and other bills, and counting on credit to pay for them month to month, traps people right into a “vicious cycle” of debt that’s “causing havoc” within the UK.
“We all hear about families sitting in cold, dark homes unable to afford to top-up their energy meters. I hear, within the reports from clergy and church people in hard-pressed communities, how illegal money lenders and loan sharks threaten people, including single moms and others with vulnerable dependents, who owe them money.”
The charity estimates that greater than 15 million people within the UK at the moment are fighting debt. CAP reported that their debt advisors, who used to give you the chance to assist 90 per cent of people that turned to them for help to turn into debt-free, now struggled to accomplish that for half their clients. Its advisers said that the situation was the worst that they’d seen.
The chief executive of CAP, Stewart McCulloch, said: “Around half of our clients don’t have enough income to cover their needs, even after skilled debt advice from us. They have reached a tipping point into poverty, and our research is showing tens of millions more are facing this.
“As an expert debt-help charity, and as people committed to seeing a fairer society, we would like to set our sights higher than simply accepting that tens of millions can barely get by. We consider that individuals, families, and communities all profit when people have a liveable income.”
Dr Juliet Stone, Research Fellow at Loughborough University’s Centre for Research in Social Policy, said: “Relatively little research has been done to have a look at the impact that debt and debt repayments can have on poverty and folks’s living standards. Our evaluation shows that, for households whose financial resources are already stretched, debts can lead to income being pushed well below what is required to live with dignity.”
The situation was “only prone to worsen”, she said. “Costs proceed to extend, wage growth stays slow, and advantages are falling well in need of providing a security net, let alone enabling people to live with dignity.”
The election yr was “pivotal” for the UK, she said. “We desperately must rethink how we support those that are most vulnerable, in order that they can meet their core needs — the types of things lots of us take without any consideration — and feel a part of the society they live in.”
Among the recommendations for the Government set out within the report is the usage of the research to tell anti-poverty policies and to extend the minimum living wage to satisfy the Minimum Income Standard.
CAP can also be calling on the Government and native authorities to make debt-reduction rates from advantages more cost-effective. This is when payments are deducted at source for debts owed to the Government, resembling council-tax arrears, but additionally for other debts, including energy or rent. Otherwise, persons are unable to pay for essentials without counting on credit. Up to 25 per cent of of somebody’s advantages may be deducted for debt.
The Chancellor’s Spring Budget, last week, announced the scrapping of the payment for Debt Relief Orders, which permit people to cancel debts if they can not afford to pay them back. This was welcomed by CAP (News, 8 March). The charity warned, nonetheless, that it expected that half its clients who had obtained the orders would find yourself back in debt due to insufficient income to pay for essentials.
