Cost of living crisis: Over 10 million households to struggle with paying bills

·Finance Reporter, Yahoo Finance UK
·2 min read
cost of living crisis A food bank outside the stadium before the Premier League match at the King Power Stadium, Leicester.
Many have started resorting to food banks amid the worst cost of living crisis in decades. Photo: PA

Over 10 million UK households will struggle to afford the cost of living next April, a think tank has warned.

Analysis from the New Economics Foundation estimates that at least 10.5 million households will not be able to afford life’s essentials on their incomes in April 2023.

In April 2021, before the rise in the cost of living, 8.9 million households had difficulty paying bills, meaning 1.6 million more households or 4.3 million more people will struggle to afford the cost of living in the coming months.

Read more: UK retail sales fall as price rises force people to cut food shopping

The think tank fears that even with the one-off government support this year, 9.9 million households will struggle to afford the cost of living in October, when the energy price cap is due to soar by an estimated £1,000.

The figures show that by spring 2023 the incomes of the worst-off quarter of households will be £770 per month below the cost of living.

“The combined impact of all of the government’s one-off cost of living support is not enough to avoid a drop in living standards for the poorest quarter of households: they need 1.5 times more support than what they have been offered,” the report said.

Across all households under the minimum income standard measure, the shortfall will increase by £130 a month from £480 to £610.

“We shouldn’t be surprised that families are so badly equipped to weather the cost of living crisis. Low-income households have been experiencing an income crisis for years,” the report said.

Read more: UK inflation hits fresh 40-year high of 9.1%

“From the introduction of furlough and the £20 universal credit uplift during the pandemic, to the one-off support for energy bills announced this year, it is clear that there is no long-term plan to link social security to the cost of household essentials, or move to the long-promised high-wage economy.

"It’s time to end the piecemeal approach to social security and build an adequate and responsive system of support for households,” it added.

Watch: How to save money on a low income

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