Recent findings from Citizens Advice reveal that approximately 4 million people in England and Wales find themselves trapped in households with negative budgets. This alarming statistic indicates that many individuals are struggling to make ends meet, with rising living costs exacerbating the situation.
Citizens Advice is the UK’s largest charity providing free, independent advice to people in debt. They report that over half of the people that come to them for help are in crisis level debt and have a red or black budget. The average debt for their client families is £9,963. This burden falls especially hard on those most often facing the present economic headwinds.
Yvonne Parks is a debt team manager at Citizens Advice South Gloucestershire. She comes with over 30 years experience as a senior specialist debt adviser. She highlighted a worrying trend in her industry.
“I have been a specialist debt adviser now for 30 years and, although there have always been clients with negative budgets, these were the exception. Now we are seeing around half of all debt clients stuck in the red.” – Yvonne Parks
The world of dollars and cents has changed in a profound way. Average energy bills have sky-rocketed to an average of £1,755 per year for dual fuel, whilst food inflation has reached 5.1% year-on-year as of August. Skyrocketing costs have left 580,000 people one emergency away from bankruptcy. Almost half say they have just £50 or less spare at the end of the month.
At a time when living costs are becoming increasingly burdensome, Citizens Advice is calling on the government to offer more specific assistance with utilities. They’re pushing for an increase in the local housing allowance. The organization further calls for an end to the government’s draconian two-child benefit cap, which punishes families who are going through tough times.
Dame Clare Moriarty, chief executive of Citizens Advice, said the Government must act quickly on these problems.
“Four million people have simply run out of options and many others are on the cusp of crisis … This is the result of years of successive government inaction on living standards and policy decisions which have made life even harder for struggling households.” – Dame Clare Moriarty
Indeed, Citizens Advice recently broke the shocking news that tenants in England are now spending an unsustainable 36% of their income on rent. This tremendous financial burden takes a toll on their cumulative financial equilibrium.
“The Labour government came into office with big promises on living standards that it’s yet to deliver on.” – Dame Clare Moriarty
Moreover, Citizens Advice highlighted that tenants in England are now spending an unsustainable 36% of their income on rent, which takes a significant toll on their overall financial stability.