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Outgoings To Exceed Incomings By Third

Millions of households in the UK are set to be hit hard by the cost-of-living crisis, with those on the lowest incomes having to spend a third more than they earn on their monthly outgoings.

Gas and electricity bills, rent and food costs are soaring at such an unprecedented rate that 1.7 million households will be spending 133 per cent of their earnings on these essentials, leaving them severely in the red every month.

Homeless charity Crisis revealed rising energy costs, in particular, will affect those earning an average of £12,650 the most, putting them at risk of homelessness, reported(1).

Chief executive of Crisis Matt Downie told the publication: “The situation could not be more desperate.”

While most people will try to reduce their outgoings to ensure they can still afford essentials, he noted: “You can’t cut back on the absolute basics required to survive.”

Mr Downie added: “Families will be left completely destitute if help is not forthcoming.”

If the government does not do more to help those who will not be able to afford their bills this winter, there will be a huge increase in homelessness numbers in the UK, the charity spokesperson stated.

The cost-of-living crisis will not just impact those on low wages, as everyone will be affected. Those with an average income of £22,615 will see nearly three-quarters of their earnings spent on rent, food, and energy over the next few months.

For those taking home between £31,728 and £37,773, more than half will have to go towards essential costs.

Households around the UK are currently trying to work out how they will afford rising energy costs after Ofgem(2) revealed the price cap will rise again in October, increasing from £1,971 to £3,549 per year for average homes.

This comes after the energy price cap(3) initially rose from £1,277 earlier this year, which saw annual bills soar by £693 in April.

Jonathan Brearley, chief executive officer of Ofgem, commented: “We know the massive impact this price cap increase will have on households across Britain.”

He asserted that the new Prime Minister would need to do more to help people cope with the rising costs over the winter.

So far, the government has introduced an Energy Bills Support Scheme, offering a £400 discount on their gas and electricity bills from October for millions of households.

Up to three million people on low incomes will also receive a £150 Warm Homes Discount; eight million households could be given a £650 Cost of Living Payment; those on disability benefits could be eligible for £150; and eight million pensioner households could receive a one-off £300 Pensioner Cost Of Living Payment.

The government also plans to increase its Household Support Fund by £500 million.

Despite this, Mr Downie urged the government to “act now to prevent soaring rates of homelessness becoming the tragic legacy of the turbulent economic times we are in”.

Households who are worried about how they will make ends meet over the few months should contact us today to find out more about our debt management plans, which can offer a solution to financial problems.

If you are struggling with debt as a result of the cost of living challenges you can contact the Fresh Start UK team today.





Money Helper has replaced the Money Advice Service and brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.