Study reveals scale of debt crisis among low-income households

The number of low-income households in arrears has tripled since the start of the pandemic, finds large-scale analysis by the Joseph Rowntree Foundation (JRF).

The study found that 4 in 10 working age low-income households have fallen behind on bills during the pandemic, with millions behind on rent and bills and having to take on new borrowing.

The JRF is calling for urgent action to support low-income families through the cost-of-living crisis and prevent worsening wealth inequality.

The analysis looks at households in the bottom 40% of incomes in the UK – those with a household income of £24,752 or less – which represents around 11.6 million households.

It estimates that 3.8 million of these households are in arrears with household bills, totalling £5.2bn.

The study highlights groups that have been hit particularly hard by the impact of the pandemic, with over half of households containing children, in London, with a person under 45 answering the survey, or Black, Asian and minority ethnic households having been pulled into arrears.

JRF is urging the government to put in place a package of support at the Budget to ease pressure on low-income households and prevent further debt, including reinstating the £20 in Universal Credit and providing at least £500m additional grant funding through the Household Support Fund for targeted debt relief.

person holding brown leather bifold wallet

Katie Schmuecker, deputy director for policy and partnerships at JRF, said: ‘There is a debt crisis hanging over millions of families on low incomes. Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction. 

‘While many households on higher incomes have enjoyed increased savings and rising house prices during the pandemic, people on low incomes are under serious financial pressure that shows no sign of abating. As a society, we believe in protecting one another from harm. As costs pile up and incomes have been cut, we urgently need to rethink the support in place for people at the sharp end of the cost-of-living crisis. 

‘The Budget is about priorities. We know the Chancellor is capable of taking bold action to protect people from harm when it is required. Reinstating the £20 per week increase to Universal Credit and boosting funding for councils to tackle debt must be priorities in next week’s Budget. We must give families the firm foundations they need to flourish and take part in our economic recovery.’

In related news, an increase in social housing stock could save councils nearly £600m a year on housing support, finds a new report from the Chartered Institute of Housing (CIH) and the Centre for Homelessness Impact.

Photo by Towfiqu barbhuiya


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