Millions of older people borrowing money and unable to pay bills

One in five (3.4 million) people aged 50-69 and one in twelve of over 70s (670,000) in the UK have had to borrow more money or use more credit than usual in the last month compared to a year ago, new research by Age UK has found.

The analysis showed that 1.3 million over 50s have a Direct Debit, standing order, or bill they have not been able to pay in the past month..

The research showed that 70% (10,388) of the Charity’s older campaigners are very worried because their finances or those of a loved one had been seriously affected by energy bills.  This snapshot survey is supported by national ONS statistics showing, 45% (11.3 million) of people aged 50+ are currently finding it difficult to afford their energy bills and a quarter of those over 50 could not afford an unexpected but necessary expense of £850.

High energy bills have depleted older people’s savings and left many less resilient to high inflation, which is impacting everything they buy with 9 million people aged 50 and over seen their cost of living go up compared to just one month ago. Over 2 in 5 of over 50s are spending less on food and other essentials.

42% of those over 50 don’t think they’ll be able to save any money in the next 12 months and 68% (5.8 million) of people aged 70 and over have experienced an increase in their cost of living compared to one month ago.

Whilst 19% of over 70s and 49% of 50–69-year-olds who rent or have a mortgage are struggling to pay it.

The report also highlights other research which suggests that 1.7 million over 55s expect to have to keep working indefinitely

Unsurprisingly, the Charity’s new report reveals that older people on very low fixed incomes are among the worst affected, but so too are the estimated 450,000 pensioners with an income up to 10% higher than the Pension Credit threshold. This takes them just above the income line to qualify for Pension Credit and the additional support that goes hand in hand with it, so that they often can end up with even less to spend – a situation they often feel to be extremely unfair.  Another group Age UK is especially worried about are those whose incomes aren’t quite as low, but whose costs are especially high, usually due to disability or chronic ill health.

With the Government expected to consult on an energy social tariff before the end of the summer, the Charity says that now is the time to ensure that they fully commit to this targeted discount energy deal and ensure it works for all who are struggling. This will mean ensuring the tariff is available for unpaid carers (who claim Carer’s Allowance), disabled people, means tested benefit recipients and those in poverty or just above the poverty line, shielding all these vulnerable groups from the threat of unaffordable energy bills.

To achieve this, the Government must improve the effectiveness of the systems used to deliver support to people both on and off the benefits system. Age UK analysis shows that if the Government base the social tariff eligibility criteria solely on access to the benefits system, then around 2.7 million households on the lowest fifth of incomes will miss out. To make matters worse, if the Government opts to place the full cost of a social energy tariff onto consumer bills, then these same households would be missing out on much needed support as well as being faced with paying hundreds of pounds extra on their bills.

Age UK is calling on the Government to act now and reduce energy costs by:

• Urgently introducing a discounted energy deal (social tariff) for disabled people, unpaid carers and those on lower incomes by April 2024 at the latest. This must be Government funded and provide support to those in or at risk of fuel poverty, not just those on means tested benefits.
• Announcing a prepayment meter (PPM) amnesty to give all households with a PPM the opportunity to have it uninstalled and to receive adequate compensation. In addition, the discredited energy company practices of switching customers to a prepayment meter under warrant, and of switching smart meters to PPM mode, should be banned for good.
• Improving funding for energy efficiency improvements to housing stock, targeted at lower income households.
• Expanding the eligibility criteria for the next income-related Cost of Living Payments to those on Housing Benefit and receiving Council Tax Reduction qualify too, to help more people in need.
• Delivering wider support payments such as through an improved Energy Bills Support Scheme and a more generous Energy Price Guarantee, to ensure those struggling financially but still missing out on welfare benefits are adequately supported.

Caroline Abrahams, Charity Director at Age UK, said “The energy bill crisis is far from over.  It’s true that we’re not hearing as much about it at the moment because far less energy is used through the summer, but the fact is that some older people are still struggling to pay their energy bills from last winter and many more don’t know how they will cope in a few months’ time, when the temperatures fall once again.”

“Millions of older people whose careful budgeting has been overwhelmed by soaring energy bills desperately need the certainty of a discounted energy deal to help them through the coming winter.  A Government funded energy social tariff available to everyone in or at risk of fuel poverty would make a huge difference to their ability to make ends meet, and to their peace of mind. We also think it’s crucial that the scheme is open to a bigger group than just those entitled to means-tested benefits, because we hear from so many older people in financial difficulty whose meagre private pensions disqualify them from Pension Credit, or whose energy costs are unusually high – for example, because they have serious health problems that mean their heating has to be turned up high. ”

“It’s crystal clear is that we need a permanent solution to the energy bill crisis – one that provides older people with the reassurance that they will never face that terrible ‘heat or eat’ dilemma again.  If the Government does not provide urgent financial support to help those most in need, we have no doubt that many older people will face unacceptable levels of hardship again this winter. And worryingly, we know they are often less well placed to withstand it than they were last year, having run down their savings in the meantime.”