More than half of households not confident budget will help with living costs

Over half (56%) of UK households are not confident that measures outlined in the Government’s ‘mini-budget’  will help them cope better with rising living costs, according to Comparethemarket’s latest Household Financial Confidence Tracker.

The findings come at a time when two in five (42%) households say they already struggled to pay bills in the last week. Among those who don’t believe the government’s measures will help them, over half (55%) say the budget prioritises higher-income earners more than middle- and low-income households; 47% believe the measures do not go far enough to tackle the rising cost of living, and a third (33%) feel the plans are more targeted to help businesses than households.

The Government’s emergency budget includes plans to reverse the previously confirmed 1.25% National Insurance hike and cut the basic rate of income tax by 1%. However, 40% don’t believe these changes will have any effect on improving their day-to-day finances, and only 36% say these changes will make a small difference.

In addition, nearly a third (32%) of households think the recently introduced energy price guarantee, which caps energy bills at £2,500 per year for a typical household for the next two years, won’t make any difference to their ability to afford bills. Four in five (82%) UK households are worried about managing at least one household bill this winter, with gas and electricity bills remaining the number 1 concern.

Last week, the Bank of England raised interest rates to 2.25% to help tackle inflation, which has a knock-on impact on mortgage rates. Following the hike, 55% of homeowners on a variable rate mortgage say they will struggle to afford higher mortgage payments, and one in ten will not be able to meet the additional cost.

Among those on fixed rate mortgages, nearly one in five (19%) do not think they can afford the hike in costs once their fixed rate comes to an end.

Hélène Barnes, cost of living expert at Comparethemarket said: As the cost-of-living crisis deepens, any steps which the Government takes to help people manage their finances is welcome. Unfortunately, financial anxiety is still rising across UK households, with many people worried they will not be able to afford their bills in the coming months, despite the recently announced government measures. During this difficult time, one of the most important things to do is to look for savings and deals, wherever possible. By doing a quick comparison online, you can see what savings you could achieve on various bills, such as insurance, mortgages, broadband or phone deals.”

Percentage of households who are worried about affording bills this winter
1	Gas and electric bills	57%
2	Food bills	42%
3	Petrol / diesel bills	30%
4	Council tax bills	24%
5	Water bills	22%
6	Broadband and landline bills	14%
7	Rental bills, including service charges	13%
8	Mobile phone bills	12%
9	Insurance bills	11%
10	Mortgage bills	11%