Missed payments 'alarmingly high' says report
Which? says a high proportion of people are struggling to get their finances on track
Last updated 28th Mar 2023
The proportion of people struggling to get their finances on track remains concerningly high.
Consumer group, Which? says January tends to be a month when people are particularly grappling with their debts, as bills from Christmas pile up.
But this year the numbers struggling have remained high in February and March, according to the Which? consumer insight tracker.
A survey by Yonder of more than 2,000 people for Which? in March indicated that 8.8% of households missed or defaulted on a payment in March, as did 8.2% and 8.1% in January and February.
The research was released ahead of hikes to some household bills, including those for broadband and mobile phones, water and council tax.
Which? said its findings underline the need for the Government and companies in essential sectors to support the most financially vulnerable.
A range of cost-of-living support is available. People can visit the helpforhouseholds.campaign.gov.uk for more information.
As part of the support being given, millions of households across the UK will automatically receive a £301 payment from the Department for Work and Pensions (DWP) between April 25 and May 17.
The payment reference for bank accounts will be "DWP COLP", along with the claimant's national insurance number.
It is the first of three payments, totalling up to £900, for those eligible and on means-tested benefits, such as universal credit or pension credit, in 2023/24.
Which? said six in 10 (60%) households surveyed in March had reported making at least one adjustment to cover their essential spending, such as utility bills, housing costs, groceries, school supplies and medicines in the previous month.
Adjustments included cutting back on essentials, dipping into savings, selling possessions or borrowing. This is consistent with the level seen for the past few months, Which? said.
Case study: 'No money for anything but the essentials'
A 51-year-old man from the south-east of England told Which?'s survey: "It is a struggle to pay bills and afford food. There is no money for anything but the essentials and sometimes not even enough for those. This is making me miserable all the time and making my mental health even worse."
A 40-year-old woman from Scotland said: "I am anxious about the future and struggling to pay upcoming bills."
A 73-year-old woman from Northern Ireland said she was: "Finding it difficult to heat the home, buy food and pay bills."
And a 49-year-old man from the south-west of England said: "I'm finding that I am spending more than I have incoming. I've had to put some bills on hold and have had to cut my spending on groceries. I'm also borrowing from family from time-to-time."
More positively, the research indicated that consumer confidence appears to be recovering slightly.
A fifth (21%) of those surveyed believe the UK economy will improve over the next 12 months, while 54% think it will get worse, while the remainder were neutral or said they did not know.
This gave a net confidence reading in the future economy of minus 33.
While this is a negative reading, it is an improvement compared with a net reading of minus 68 recorded six months ago, Which? said.
The consumer group said measures including extending the energy price guarantee at its current level are important steps.
The Government recently confirmed that the energy price guarantee limiting typical bills at £2,500 a year, will be extended for households for another three months, from April to June.
Which? wants businesses providing essentials to ensure that they help people as much as possible during the cost-of-living crisis.
For consumers struggling to make payments, there is support available, Which? said. Lenders or landlords may be able to help with a plan to make the costs more manageable for homeowners or renters.
'Millions of households are struggling'
Which? director of policy and advocacy, Rocio Concha, said: "Our research suggests millions of households are struggling to get their finances on track amid huge pressure on the cost of living.
"This should set off alarm bells, particularly as painful increases to many essential bills are due to take effect in a matter of days.
"Our findings underline the need for the Government and companies in essential sectors - such as supermarkets, energy and telecoms providers - to do everything in their power to support consumers, particularly those struggling financially, through this incredibly difficult time."
The cost of living crisis is affecting many:
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.