The latest social housing resident survey of the Resident Voice Index (RVI) has looked into debt and how it is impacting the lives of people living in social housing amid the cost of living crisis.
The resulting report reveals levels of worrying, all or most of the time, about being able to meet normal monthly living expenses had increased to 78% from 68% in the six months since the first Cost of Living survey (March-May 2022).
The RVI project collects data on the requirements, feelings and perceptions of social housing residents and communicates these to the broader audience who may be able to make a difference.
5,719 UK social housing residents responded to the latest survey, the findings of which have been put together in ‘Cost of Living: Crunch Time’ – the second RVI report to focus on the cost of living crisis and its impact on UK social housing residents. The first was in June 2022.
Debt, and the worry surrounding it, were main factors in the survey’s findings with eight in ten of all respondents having debt. Of those with debt, 28% had four or more sources of debt, while 10% had six or more sources.
The sources of debt identified in the report show credit card debt was by far the most prevalent, with 41% of respondents selecting it. 24% had debt in the form of energy bill arrears, 22% selected debt to friend or family member. Also in the top ten sources of debt were water bill arrears, goods on finance, buy-now-pay-later, council tax arrears, overdraft, rent arrears and bank or building society loan.
The report identifies the quarter (24%) of respondents who were already in energy bill arrears as particularly concerning, as almost all respondents (97%) took the survey before the introduction of the October 2022 energy price cap hikes.
Data from Ofgem gathered in late October 2022 estimated that more than 2 million households were already in debt on electricity bills, representing over 8% of the UK’s households. The much higher rate of social housing residents reporting energy arrears in the survey is flagged as deep cause for concern.
Debt management and worry
The survey also looked at how people believed they were managing debt. One third of respondents (33%) were having difficulty (20.7%) or reported being unable to manage (12.7%) their debt.
Almost half (47%) were labelled as ‘managing’ their debt. However, a majority (36%) of those chose the option: ‘I have debt that I can manage, but it’s getting harder’.
Almost all (95%) of those who weren’t managing their debt reported being worried all or most of the time about meeting monthly living expenses. This compares with a much lower 69% amongst those who were coping with their debt. Both numbers are very high and the overall score for this high-level worry was 78% across all respondents.
Responses to the survey among residents who mentioned disabilities highlighted a recurrent concern that disability benefits, such as Personal Independence Payment (PIP) are failing to cover the rising costs of fuel, food and other goods. When respondents were asked about any contributors to feelings of worry, 3.5% of answers made voluntary reference to disability.
The survey also asked respondents to rate their financial situation compared with six months ago, selecting either: ‘Better’, ‘The same’ or ‘Worse’. 69% indicated that their financial situation was worse and only 7% were able to commit to a better situation.
Gavin Smart, chief executive of Chartered Institute of Housing, said in the report: “This latest report from the Resident Voice Index comes at a critical time for the social housing sector.
“The cost of living crisis is affecting everyone but those on the lowest incomes, many of whom live in social housing, are impacted the most. These research findings shine a light on the devastating impact that cost pressures are having on residents every day across the country and are invaluable for organisations such as ours in raising awareness.
“The social housing sector is well placed to support people but we need to work together to highlight the support available and to call for policy change where it’s needed.”
The rising cost of living and uncertainty surrounding energy bills is already being felt by the charity sector with nearly five million people choosing not to make a one-off charity donation last month.
As household budgets feel the pinch, nearly one in ten (9%) people said they held back from donating, according to Charities Aid Foundation (CAF) UK Giving research.
Worryingly for many charities that rely on direct debits and standing orders, more than 3.2m people (6%) also said they had reduced or stopped a regular payment to charity because of increasing living costs.
The research also reveals nearly one in five individuals (19%) are considering cutting back on their donations, compared to 14% six months previously. In August, this number rose to 22% as household concerns around energy bills peaked.
CAF’s UK Giving tracks household donor behaviour every month. The tracker reveals how levels of donations continue to trend downwards. In September, only 26% of people said they had donated in the previous month. Prior to the pandemic, around 30% usually said they gave to charity during September.
The average monthly donation also declined in September, with a mean donation of £51, compared to £67 in August.
Summer has traditionally been a popular time for sponsored sporting events, and September saw the build-up to the London Marathon on 2nd October. However, only 8% of people sponsored someone for charity last month and 5% in August.
Neil Heslop OBE, chief executive of the Charities Aid Foundation, said: “Charities need donations now more than ever, as more families rely on the vital services they provide. Mass giving is crucial for many charities, so as people cut back, Government and private sector funding which supported charities through the pandemic is greatly needed to help them through this crisis.
“With more than £500m of Gift Aid unclaimed which should rightly be with charities delivering frontline services, the process needs to be simplified to deliver desperately needed funds. The Government also needs to address the current complexity of the VAT system since it’s estimated that the sector loses billions paying tax that they cannot recover later.
“Despite falling donations, charities are working hard to help the growing number of families at the sharp end of the cost-of-living squeeze. But ultimately, charities are having to do much more, with much less money.”
Consumer spending grew by close to a fifth (19%) in February compared to the same month in 2021, according to a new report. However, the data also reveals people spent four per cent less on non-essentials in February compared to January – traditionally the quietest month of the year for spending – indicating the impact of the rising cost of living is already being felt and considered.
The Spending Report from Nationwide is a monthly breakdown of around 190 million debit and credit card and direct debit transactions. During February, transactions accounted for more than £6.9 billion of spending, which is down nine per cent on the total amount spent in January.
Whilst spending on non-essentials dipped last month, it was still significantly higher (+44%) than February last year, mainly due to the lockdown restrictions at the start of last year.
By contrast, essential spend rose by 16 per cent in February compared with the year before. With energy costs continuing to rise, it’s no surprise that spending on utilities and bills rose by 15 per cent compared to February 2021. Spending on fuel and electric vehicle charging rose by 70 per cent due to the increasing cost of fuel, more Nationwide members switching to electric and more commuting to work once again – irrespective of how their vehicles are powered.
Despite a slight dip in the amount of discretionary spend, holidays continued to be a major area where people are putting their spare money. With the world opening back up, airline travel, cruises and holidays all saw month-on-month spending growth.
Both eating and drinking, and leisure and recreation also saw a jump of four per cent month-on-month, likely as a result of more people returning to offices and socialising with colleagues and friends.
In terms of how the nation pays, the number of transactions made by mobile phone to tap and go increased by five per cent month-on-month as people continue to enjoy the convenience of paying by contactless.
Mark Nalder, head of payments at Nationwide Building Society, said: “Non-essential spending continues to be significantly higher than it was in 2021, given the lockdown situation the country was facing at the start of last year. However, the fall in spending in February compared to last month suggests that people are continuing to try and rein in spending where they can, given the rising cost of living.
“The removal of the Plan B restrictions has led to an increase in spending on travel during February as more people returned to offices, while a natural by-product of more people getting back out is greater spending on eating, drinking and leisure. And as the weather begins to improve, it is perhaps no wonder that holiday spend continues to be a major destination for our money.
“As inflation impacts how much money we can spend and where we are spending it, we expect overall spend to outstrip last year, particularly in areas where the rising cost of living is likely to be having a big impact, such as utilities, bills and fuel. We do, however, anticipate the need for many households to curb non-essential spending as they do their best to balance family finances.”
The energy price cap will rise to £1,971 in April – an increase of £693 for the average household
Below is Chancellor Rishi Sunak’s statement to the House of Commons in response to the energy price cap rise:
The UK’s economic recovery has been quicker and stronger than forecast.
In the depths of the pandemic, our economy was expected to return to its pre-crisis level at the end of 2022.
Instead, it got there in November 2021 – a full year earlier.
Unemployment was expected to peak at nearly 12%.
Instead, it peaked at 5.2% and has now fallen to just over 4% – saving more than 2 million jobs.
And with the fastest growing economy in the G7 this year…
Over 400,000 more people on payrolls than before the pandemic…
And business investment rising…it’s no wonder Mr Speaker, that borrowing is set to fall from £320bn last year…
…the highest ever peacetime level…
…to £46bn by the end of this Parliament.
As we emerge from the depths of the worst recession in 300 years, we should be proud of our economic record.
The economy is stronger because of the plan we put in place; because of the actions we took to protect families and businesses.
And that plan is working.
But for all the progress we are making – the job is not yet done.
Right now, I know the number one issue on people’s minds is the rising cost of living.
It is the independent Bank of England’s role to deliver low and stable inflation – and the Governor will set out their latest judgements at midday today.
And just as the government stood behind the British people through the pandemic…
…so we will help people deal with one of the biggest costs they now face – energy.
The energy regulator, OFGEM, announced this morning that the energy price cap will rise in April to £1,971 – an increase of £693 for the average household.
Without government action, this would be incredibly tough for millions of hardworking families.
So the government is going to step in to directly help people manage those extra costs.
Before I set out the steps we are taking, let me explain what’s happening to energy prices, and why.
People’s energy bills are rising because it is more expensive for the companies who supply our energy to buy oil, coal, and gas.
Of the £693 increase in the April price cap, around 80% comes from wholesale energy prices.
Over the last year, the price of gas alone has quadrupled.
And because over 85% of homes in Britain are heated with a gas boiler, and around 40% of our electricity comes from gas, this is hitting households hard.
The reasons gas prices are soaring are global.
Across Europe and Asia, a long, cold winter last year depleted gas stores.
Disruption to other energy sources like nuclear and wind left us relying more than usual on gas during the summer months.
Surging demand in the world’s manufacturing centres in Asia…
…at the same time as countries like China are moving away from coal…
…is further increasing demand for gas.
And concerns about a possible Russian incursion into Ukraine are putting further pressure on wholesale gas markets.
And so prices are rising.
The price cap has meant that the impact of soaring gas prices has so far fallen mainly on energy companies.
So much so, that some suppliers who couldn’t afford to meet those extra costs have gone out of business as a result.
It is not sustainable to keep holding the price of energy artificially low.
For me to stand here and pretend we don’t have to adjust to paying higher prices would be wrong and dishonest.
But what we can do is take the sting out of a significant price shock for millions of families…
…by making sure the increase in prices is smaller initially and spread over a longer period.
Without government intervention, the increase in the price cap would leave the average household having to find an extra £693.
The actions I’m announcing today will provide, to the vast majority of households, just over half that amount – £350.
In total, the government is going to help around 28 million households this year.
Taken together, this is a plan to help with the cost of living worth around £9bn.
We’re delivering that support in three different ways.
First, we will spread the worst of the extra costs of this year’s energy price shock over time.
This year, all domestic electricity customers will receive an upfront discount on their bills worth £200.
Energy suppliers will apply the discount on people’s bills from October.
With the government meeting the cost in full.
That discount will be automatically repaid from people’s bills in equal £40 instalments over the next five years.
This is the right way to support people while staying on track with our plans to repair the public finances.
And because we are taking a fiscally responsible approach, we can also provide more help, faster, to those who need it most – the second part of our plan.
We’re going to give people a £150 Council Tax rebate to help with the cost of energy, in April – and this discount won’t need to be repaid.
And I do want to be clear with the House that we are deliberately not just giving support to people on benefits.
Lots of people on middle incomes are struggling right now, too – so I’ve decided to provide the council tax rebate to households in Bands A to D.
This means around 80% of all homes in England will benefit.
And the third part of our plan will provide local authorities with a discretionary fund of nearly £150m…
…to help those lower income households who happen to live in higher Council Tax properties…
…and households in bands A-D who are exempt from Council Tax.
We’re also confirming today that we’ll go ahead with existing plans to expand eligibility for the Warm Home Discount by almost a third…
…so that 3m vulnerable households will now benefit from that scheme.
And that’s not all we’re doing to help vulnerable households.
We’re providing £3bn over this Parliament to help more than half a million lower income homes become more energy efficient, saving them on average £290 per year.
Increasing the National Living Wage to £9.50 an hour in April, a pay rise of over £1,000 for 2 million low paid workers.
And providing an effective tax cut for those on Universal Credit, allowing almost 2 million households to keep an average of £1,000 per year.
The payment through energy suppliers will apply across England, Wales and Scotland.
Energy policy is devolved in Northern Ireland, with a different regulator, and the government does not have the legal powers to intervene.
So we will make sure the Executive is funded to do something similar, with around £150m for Northern Ireland through the Barnett formula next year.
And because the Council Tax system is England only, total Barnett consequentials of around £565m will be provided to the devolved administrations in the usual way.
I know that some in this House have argued for a VAT cut on energy.
However, that policy would disproportionately benefit wealthier households.
There would also be no guarantee that suppliers would pass on the discounts to all customers.
And we should be honest with ourselves: this would become a permanent Government subsidy on everyone’s bills.
A permanent subsidy worth £2.5 billion every year – at a time when we are trying to rebuild the public finances.
Instead, our plan allows us to provide more generous support, faster, to those who need it most, providing 28m households with at least £200, and the vast majority receiving £350.
It is fair, it is targeted, it is proportionate – it is the right way to help people with the spike in energy costs.
Today’s announcements are just one part of the government’s plan to tackle this country’s most pressing economic challenges.
A plan for growth – with record investments in infrastructure, innovation and skills.
A plan to restore the public finances – with debt falling by the end of this Parliament.
A plan to cut waiting lists and back the NHS with £29bn over three years and a permanent new source of funding.
And, with the measures I’ve announced today – a plan to help with the rising cost of energy with £350 more in the pockets of tens of millions of hard working families.
That’s our plan to build a stronger economy – not just today but for the long term.
And I commend it to this House.