Nearly eight million people are struggling to pay their bills as the cost of living rises, a watchdog has warned.
The Financial Conduct Authority (FCA) estimates that 7.8 million people in the UK currently find bills a “heavy burden”, up from 5.3 million in 2020.
Energy, food and fuel prices have risen sharply over the past six months, partly because of the Ukraine war.
Inflation — the rate at which prices are rising — rose to 10.1% last month, back to a 40-year high.
Nicole, from Gainsborough, works for a university but worries about energy bills mean she often carries a blanket around her shoulders when working from home.
“I consider my salary to be pretty good and I work full-time but I worry about turning on the heat, using the tumble dryer or using the oven to cook,” she told BBC News.
She’s taken steps at home to keep costs down, like installing a smart meter.
But another concern is that the fixed-rate mortgage she has with her husband expires in 12 months and interest rates have risen sharply.
“I have no idea how we’re going to afford that,” Nicole said. “I fully understand that there are people who are in a much worse position than we are … but we find ourselves in a totally unexpected situation as two normal people with normal incomes working hard.”
The FCA, which regulates UK companies, surveyed 19,000 people between February and June and found:
- One in four adults described themselves as financially vulnerable, meaning that if faced with a financial shock, they would quickly find themselves in trouble
- About 4.2 million people had missed bills or loan repayments in at least three of the six months prior to the survey
- 27% of Black respondents said they found keeping up with bills a major burden, compared to around 15% of UK adults in general.
Sheldon Mills, FCA’s executive director of consumer and competition, said the watchdog has urged companies to work with customers who are struggling to make payments.
It also reminds people to contact their utility company if they can’t afford their bills, shop around to find the best deal, and look online for free, expert debt advice.
Energy bills rose sharply in October as the energy price cap – which limits what suppliers can charge for a unit of energy – was raised.
The government has since capped unit prices for at least six months to protect consumers, but millions are likely to still struggle this winter.
Food prices are also rising due to disruptions from the war in Ukraine and the weak pound pushing up import costs.
Grocery prices in the UK rose 14.6% in the year to September – the biggest annual increase since 1980 – and the cost of essential commodities such as fruit, milk, cereal and sugar rose.
This is just the first taste of what will come out of this survey when the full report is released next year, but it is significant for a number of reasons.
First, because it’s a big one. More than 19,000 randomly selected households received the survey to complete, which is a much larger sample size than most organizations have.
Second, because this survey was conducted in the spring of this year, before the recent energy price hikes and the recent spikes in food and fuel prices kicked in. If so many households were already struggling at that point, you can imagine that the picture has deteriorated significantly since then. In particular, the regulator notes concerns for northern England and Wales compared to the south east of England, and among black respondents compared to the general population.
The FCA is keen to stress that it is taking action by starting to engage with ‘buy now, pay later’ firms and reminding other lenders of their duty to protect customers. But those moves look small when compared to the scale and depth of the financial hardship they say they’re now facing.
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