Millions in the red even before April’s huge bill hikes
Millions of Brits are already struggling to pay their bills or are already in arrears ahead of April’s huge price hikes across energy, broadband and council tax.
As of this week, telecoms firms will be raising prices by up to 11.7%, hitting millions of broadband, mobile and pay TV customers with higher bills.
But charity Citizens Advice reports that one in six – an estimated 8.8 million people – have already contacted their provider for help with their bills during the pandemic.
The majority were hoping to cut their bills (42%), while 29% were hoping to get an extension on their payment deadline.
In January alone, three million people were already behind on paying their broadband bill, and of those, 95% were also behind on at least one other essential bill.
In fact, StepChange Debt Charity’s February data report showed a rise in the proportion of people seeking advice, citing the cost of living pressure as a reason for their debt (one in nine).
It revealed that 28% of electricity billpayers were behind in payments, while 23% were behind on their gas bills.
With energy price hikes coming into effect on 1 April, StepChange said this situation is likely to worsen.
The charity also found that debts owed to government, such as council tax, is an issue on the rise.
Four in 10 were in council tax arrears when they approached StepChange for advice in February.
It said that with the lack of any further measures targeted at the most financially vulnerable households as part of last week’s Spring Statement, it expects to see an increase in the proportion of clients with a negative budget (where income is insufficient to meet even essential expenditure), already at nearly a third (32%) in February.
Meanwhile statistics from the Bank of England’s latest money and credit data published today revealed that consumers borrowed an additional net £1.9bn, of which £1.5bn was new lending “which will in part be driven by people borrowing to meet essential spending”.
‘Unable to absorb the cost of living increases’
StepChange head of policy, research and public affairs, Peter Tutton, said: “While watching what is going on in the consumer credit market is important, to fully understand the current household debt landscape requires a wider perspective. More and more, what we are seeing is that people experiencing problem debt have problems meeting not just their credit repayments, but also their priority bills.
“We’re convinced that as the year goes on the Chancellor is likely to need to find a way to provide more, and more targeted, support for those who are simply unable to absorb the cost of living increases into their household budgets. In the meantime, we urge anyone struggling to make ends meet to seek help from a reputable debt advice organisation at an early stage, rather than turning to potentially more harmful coping strategies such as high-cost credit.”