One in six people has £20 or less to live on after paying for essentials each month

New YouGov polling by StepChange Debt Charity for Debt Awareness Week reveals the dire state of household finances over a year into the cost of living crisis, with people imminently facing higher council tax, less support with energy bills and increased rent or mortgage payments.

The representative survey examines the toll that the cost of living crisis has had on household incomes. Almost one in six UK adults (15%), equivalent to seven and half million people, has £20 or less left over each month after paying for essentials, with one in twelve (8%) people having no disposable income at all. This chimes with StepChange’s own client data which shows one third (33%) of new clients are in a negative budget, meaning that, after a debt advice session and budget counselling, their expenses exceed their income.

The polling also reveals the impact of nine consecutive interest rate rises on mortgage holders and renters alike. Half (50%) of renters and 38% of mortgage holders expect their housing payments to rise within the next 12 months. Of those facing a rise, one in four (26%) expects to be driven into problem debt because of it. Among renters whose rent is rising, four in five (81%) say it’s because their landlord is increasing their rent.

While the Chancellor confirmed in the Spring Budget that the Energy Price Guarantee (EPG) has been extended for another three months, the Energy Bill Support Scheme (EBSS), which has seen households receive a £400 discount on their energy bills is coming to an end on 31 March. More than one in three (37%) people say they will have to borrow to cope, a figure that rises to more than two in three among Universal Credit claimants (67%) and one in two (56%) among renters.

The survey comes as the charity marks its annual Debt Awareness Week, which this year seeks to increase understanding of how debt advice works and how it can help people struggling with their finances. The polling shows that one in six (16%) people do not know debt advice services even exist, and a further one in five (21%) wrongly believe that contacting a debt advice organisation would have a negative impact on their credit score.

StepChange is calling for reform that will have a long-term impact and ultimately protect people from remaining trapped in a spiral of problem debt. The charity has been campaigning for an end to unaffordable deductions from benefits to repay debts, and would like to see the introduction of a social tariff on energy bills to support low income households.

Richard Lane, Director of External Affairs at StepChange Debt Charity, said:

“We welcomed the government taking action in last week’s Budget to extend the Energy Price Guarantee for a further three months, however, these figures make clear it’s not just energy bills that are decimating household budgets. Millions of renters and mortgage holders are worried that simply meeting their rising housing payments is going to drive them into unmanageable debt. Inflation has skyrocketed and wages have not. More than a year on from the start of the cost of living crisis, financial resilience is clearly very low – too many people are left with little to nothing each month after covering their basic living costs.

“Government must look at the whole picture and recognise the scale of this issue which is rapidly turning into a debt crisis. Those on low incomes are going to receive extended support with energy bills and childcare, however, they still face punitive deductions from benefits to repay debts. Then there are those households who fall through the gaps, not eligible for government help, but still struggling to cover their living costs. Many people will have built up substantial energy arrears over the past 12 months, which ought to be written off if they cannot afford to pay.

“This week marks Debt Awareness Week, and as this crisis continues to burden household finances, it’s vital that people know free and impartial debt advice exists, and aren’t put off by any misunderstandings around what happens when you seek help with problem debt.”

To get started on your journey out of debt, visit www.stepchange.org to find out how the charity can best help you. From budgeting tips, to information on benefits and StepChange’s online debt advice tool, there’s a wealth of information on how to start on the path to becoming debt free.