One in four households finding it difficult to pay bills

The Office for National Statistics (ONS) has published its latest cost of living statistics finding that one in four (23%) adults find it difficult to pay household bills in the last month, compared with a year ago.

The research also found that nine in ten (87%) adults reported an increase in their cost of living over the previous month in March 2022, an increase of 25 percentage points compared with around six in ten (62%) adults in November 2021.

Focusing on the latest period, among those who pay energy bills, around four in ten (43%) reported that it was very or somewhat difficult to afford their energy bills.

Households currently paying off a mortgage and/or loan, or rent, or shared ownership, 30% reported that it was very or somewhat difficult to afford housing costs, and 3% claimed to be behind on rent or mortgage payments.

Whilst 17% reported borrowing more money or using more credit than they did a year ago.

Responding to the figures, Jack Leslie, Senior Economist at the Resolution Foundation, said “Today’s ONS release shows that the cost of living crisis is already hitting UK families hard, with over four out of five adults already reporting an increase in their living costs between February and March 2022, and over two in five reporting that they were struggling with rising energy costs in March – before the lifting of the price cap in April.”

“The combination of shrinking pay packets and rising costs means that the pressure on households is building, with lower-income families set to feel the squeeze the most, and over a third of the most deprived fifth of households in England already saying it has been difficult or very difficult to pay their usual bills. This is set to get worse, with the estimated number of households experiencing fuel stress hitting five million this month.”

“Going forwards, the Government must do it all it can to protect those who will be hardest hit – with support for low-income households a priority.”

Sarah Pennells, Consumer Finance Specialist at Royal London said “The cost of living figures from the ONS put the spotlight on people who are on a low income struggling to afford everyday bills. With inflation rising tenfold in just a year from 0.7% to 7%, more adults are finding it difficult or even impossible to pay their bills. It’s likely we’ll see this problem affect people in different income bands, and unless inflation stabilises or wage growth follows in line with the cost of living, the situation is only going to get worse. To add to the mix, the recent energy price cap increase and rise in national insurance will leave those already struggling even more squeezed.”

“As more people find it difficult to pay their bills, there is a concern that an increasing number could turn to borrowing and credit. Our latest research on the cost of living found that a fifth of people plan to borrow their way out of trouble, with 7% admitting they simply don’t know how they’ll cover higher costs and 5% saying they’re considering a payday loan. While it’s understandable that some people will feel that borrowing is their only option, it could make their financial problem worse, not better.”

“If you are going to take out a loan or other credit, it’s important to check the interest rate and what you’ll pay back. And it’s worth remembering that billions of pounds of state benefits goes unclaimed every year, so you may be able to get some state help. Charities such as Turn2us have free-to-use benefits calculators that can tell you what you’re entitled to.”

Helen Morrissey, Senior Pensions and Retirement Analyst at Hargreaves Lansdown said “The cost-of-living crisis is escalating quickly with almost a quarter of people having trouble in paying their household bills. Pretty much everyone is feeling the pinch but those on lower incomes are particularly badly affected with prices rising fastest on life’s essentials such as food and heating bills. People report trying to use less fuel as a means of keeping costs down and there are also signs people are cutting back on their food shops. However, people can only cut back so far on these things so there is precious little room for manoeuvre.”