Finances for the UK’s lowest income households are continuing to buckle under the pressure of the cost of living crisis, with 7.2 million going without basic necessities and 4.7 million behind on their bills.

Amid soaring inflation, rising energy costs and a squeeze on household finances, it is those on the very lowest incomes that are struggling the most, according to the Joseph Rowntree Foundation (JRF).

Three-quarters (75%) of households earning less than £26,570 are going without food or other basic essentials such as toiletries.

People on Universal Credit, private renters and young adults are all seeing “rising and worrying levels of hardship”, the organisation added.

Meanwhile, nine in 10 on Universal Credit are experiencing food insecurity and going without basics.

More than seven million households are going hungry, cutting down meal sizes – or skipping them entirely – or going without showering or adequate clothing.

Some 4.7 million are in arrears with at least one household bill – almost triple the amount seen before the pandemic – and the average level of debt remains above £1,600.

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Over three million households have not been able to heat their home since June, because they cannot afford the bills.

With prices continuing to skyrocket, more than half of those on low incomes said they could not afford an unexpected expense of £200.

This has driven 2.9 million households to high-cost credit loans, including with loan sharks, a payday lender, doorstep lender, or pawn shop – and half of those are in arrears.

“Of particular concern is over a third of low-income families with children cutting back on food for their children – this is a last resort and something you’re forced into, not something you choose,” the foundation said.

Some have resorted to cutting pension contributions, cancelling insurance products and taking on debt to pay bills.

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‘A very different cost of living crisis’

There is a “grim financial outlook” for young adults in the UK, according to the JRF.

The report said: “18 to 34 year olds are facing a very different cost of living crisis to older adults.

“They have seen some of the largest rises in hardship over the last 12 months, and it shows no sign of slowing down.

“A lack of savings, living in the private rented sector, living in cities, and receiving lower levels of Government support all contribute to a grim financial outlook for the UK’s young adults.”

The JRF has been tracking the impact both the COVID pandemic and the cost of living crisis have had on the financial position of low-income households in the last 12 months.

“Basics have become luxuries for millions of households on low incomes,” it said in its report ‘Going Under and Without’.

“This is all taking place within the context of alarming increases in destitution and deep poverty in the UK in recent years.”

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Who is struggling the most?

Black households, those with disabled members and lone parents were among those seen struggling the most.

The report said: “The proportion of households going without who are from black households or households with mixed ethnicity also remain extremely high.

“The same holds true for families with disabled household members or members with mental health conditions.

“Lone parents and families with children are disproportionately struggling, as are households in cities across the country.

“For many, whether you have savings in the bank to get you through this crisis will be the key determinant of if you will manage.”

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Urgent support needed

The foundation said the government must fill the gaps left by the Autumn Statement, including with an additional £450 cost of living payment to those who need it most.

The government also needs to “make changes” to Universal Credit so that after deductions it does not drop so low people can’t afford essentials, it added.

It said the way “punishing rate” at which deductions are made from benefits is worsening hardship.

The JRF is also asking the government to unfreeze the local housing allowance and run a large campaign to encourage the take up of benefits.

It concluded that while support packages have “slowed the deterioration of financial positions” for those on the lowest incomes, they have “not been sufficient to stem the tide of rising hardship”.

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