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Changing household budgets – MoneyAdviceTrust Report with National Debtline #hhbudget
Changing household budgets – MoneyAdviceTrust Report with National Debtline #hhbudget
Category: Consumer, Latest News
Download the full report.
Since the onset of the financial crisis in September 2007, the nature of debt and personal finance problems facing UK households has been changing.
Despite a marked reduction in callers to National Debtline with problems managing traditional debts such as personal loans and credit cards, there has been a huge increase in people struggling to make payments on their every day essential household bills such as Water, TV licence, Gas, Electric, Housing costs and Food.
A double premium: poverty and inflation
The problems arising from an inflation premium are compounded for low income households by the ‘poverty premium’ they already face whereby they often;
Taken cumulatively, paying higher prices for utilities and credit can raise the costs of a minimum household budget by 10%, a situation exacerbated by not having access to enabling
products like full banking facilities or the internet.
(Source: Joseph Rowntree Foundation, 2013)
In 2013 the proportion of callers reporting debts owed on a bank loan/overdraft was just 52.2% and the proportion of callers reporting debts owed on a credit card was 49.1%.
By contrast the number of callers reporting debts owed on other items such as water rates, gas/electricity, rent, council tax, telephone bills, and catalogue purchases, has increased significantly both in real and proportionate terms. This shift in debt types reported to National Debtline is demonstrated in Figure 1.5, which reflects a new model of debt problem characterised by a person/ household suffering no major change in circumstances, but struggling to make their income stretch to meet their essential expenditure.
Over half of people in the poorest 5th of UK Households cannot afford to purchase Household Contents Insurance which leaves them financially very vulnerable if something goes wrong.
One in four National Debtline callers now has arrears on their council tax.
In 2013 National Debtline advisers answered 31,115 calls from people with arrears owed to their energy company.
As of 1999, water companies have been unable to restrict access to water supply for domestic properties in cases where a debt is owed. This means that water arrears repayments have become a non-priority debt alongside credit cards, bank loans, and other unsecured credit products. However Water companies do take non paying customers to court for unpaid bills which can seriously affect credit rating, which has a knock on affect on access to affordable credit.
More...
Category: Consumer, Latest News
Download the full report.Since the onset of the financial crisis in September 2007, the nature of debt and personal finance problems facing UK households has been changing.
Despite a marked reduction in callers to National Debtline with problems managing traditional debts such as personal loans and credit cards, there has been a huge increase in people struggling to make payments on their every day essential household bills such as Water, TV licence, Gas, Electric, Housing costs and Food.
A double premium: poverty and inflation
The problems arising from an inflation premium are compounded for low income households by the ‘poverty premium’ they already face whereby they often;
- • Pay higher than average utility tariffs for a given amount of consumption, because of the payment method used or what is described as sub-optimal deals
- • Paying more per unit because of being a lower user – especially an issue in telecommunication
- • Paying more because of limited choices of how to buy things, for example not being able to use direct debit or buy online
- • Paying high interest on consumer credit
Taken cumulatively, paying higher prices for utilities and credit can raise the costs of a minimum household budget by 10%, a situation exacerbated by not having access to enabling
products like full banking facilities or the internet.
(Source: Joseph Rowntree Foundation, 2013)
In 2013 the proportion of callers reporting debts owed on a bank loan/overdraft was just 52.2% and the proportion of callers reporting debts owed on a credit card was 49.1%.
By contrast the number of callers reporting debts owed on other items such as water rates, gas/electricity, rent, council tax, telephone bills, and catalogue purchases, has increased significantly both in real and proportionate terms. This shift in debt types reported to National Debtline is demonstrated in Figure 1.5, which reflects a new model of debt problem characterised by a person/ household suffering no major change in circumstances, but struggling to make their income stretch to meet their essential expenditure.
Over half of people in the poorest 5th of UK Households cannot afford to purchase Household Contents Insurance which leaves them financially very vulnerable if something goes wrong.
One in four National Debtline callers now has arrears on their council tax.
In 2013 National Debtline advisers answered 31,115 calls from people with arrears owed to their energy company.
As of 1999, water companies have been unable to restrict access to water supply for domestic properties in cases where a debt is owed. This means that water arrears repayments have become a non-priority debt alongside credit cards, bank loans, and other unsecured credit products. However Water companies do take non paying customers to court for unpaid bills which can seriously affect credit rating, which has a knock on affect on access to affordable credit.
More...
