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Low-income households in the UK are experiencing ‘the year of financial fear’, says charity | UK News

By on June 29, 2022 0

Around 7million struggling families in the UK are living through a ‘scary year of financial scare’, with no food, no heating, no toiletries and even no showers as they try to cope with the cost of home crisis. life, said a leading charity.

According to the Joseph Rowntree Foundation (JRF), an anti-poverty charity organization.

The scale of the crisis facing low-income households was so severe that more than 2 million households no longer had to choose between “heating or eating” because they had already gone without both, the association said. .

Although he welcomed the government’s cost-of-living support package announced last month, JRF said the Chancellor’s £15billion intervention ‘didn’t even hit the sides’ when he It is about resolving the financial difficulties encountered by the poorest households.

The charity also criticized the government for “making an already bad situation worse” by using the benefit system to collect debts. Almost half of all Universal Credit claimants had an average of £61 deducted from their benefits each month.

Some households were receiving up to £130 a month, a quarter of their entitlement, deducted from their benefits – often for overpayments of historic tax credits or advance loans issued to help them get through the waiting period five weeks for new applications.

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“Our research illustrates the frightening year of financial fear that low-income families are experiencing. Families across the country have been faced with simple but stark options: fall behind on bills, go without essentials like enough food or go into debt at high interest rates. In some cases, they had to do all three,” said Katie Schmuecker, JRF’s senior policy adviser.

“No one should be placed in this precarious position. The hardships families are currently facing build on the foundation of a decade of Social Security cuts and freezes. The Chancellor’s cost-of-living support program will offer temporary relief, but rather than jumping from one emergency to another, the government must anticipate this problem.

She added: “The way the government is collecting debts is making an already bad situation even worse, by driving down an already low basic social security rate even further. That leaves too little to cover the essentials at the best of times, let alone during the biggest cost-of-living crisis in a generation – a crisis that shows no signs of abating.

The JRF estimates were based on a survey of over 4,000 people in the bottom 40% of UK household incomes, which equates to a joint income of less than £25,000 for a childless couple or £37,900 for a couple with two children. The survey was conducted in May and June.

Its findings include:

  • Debt is increasingly weighing on low-income households, which borrowed £12.5bn of new debt in 2022, including £3.5bn from doorstep moneylenders and illegal loan sharks.

  • Arrears on all personal debts have more than doubled from £1.8bn to £3.8bn since October last year. As interest rates continue to rise, JRF expects this figure to skyrocket.

  • The average household arrears for all bills was £1,600. An estimated 2 million low-income families currently have arrears on energy bills, an increase of more than a quarter since October.

The government support package unveiled in May included a £400 cut on energy bills for all households and a £650 cost of living payment for households on means-tested benefits. Pensioners are entitled to a payment of £300 and those receiving disability benefits can receive £150.

A government spokesman said: “We are providing targeted support of at least £1,200 to 8 million low-income families – hosted by the JRF – while helping people earn more, including a tax cut of £300 a year in July and allowing Universal Credit claimants to keep £1,000 more of what they earn.