Which? is calling on businesses to do more to help consumers, as new research from the consumer champion shows an alarming number of households are struggling with the financial and emotional impact of the cost of living crisis.
According to Which?’s latest consumer insight tracker, two-thirds of households (65%) made at least one financial adjustment – such as cutting back on essentials, selling items or dipping into savings – in the last month to cover essential spending.
This is the highest level the consumer champion has recorded in the last decade and equates to an estimated 18.2 million households.
As millions of people report pawning their possessions or skipping meals to make ends meet, or tell of sleepless nights due to financial worries, Which? is launching a new campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis.
Which? research shows an estimated 12.4 million households have had to cut back on essentials – by taking actions such as buying fewer groceries, medicines and school supplies and reducing their energy, water and telecoms usage – just to make ends meet.
This proportion has doubled compared to a year ago – with around four in 10 (44%) now saying they have had to cut back on essentials this month, compared to one in five (21%) in September 2021.
One in ten (10%) households said they had to sell or pawn their possessions to cover essential payments in the last month, compared to just five per cent this time last year.
Worryingly, three in 10 households (31%) said they have had to take money out of a savings account.
An estimated 2.5 million households said they missed or defaulted on a vital payment – such as a mortgage, rent, credit card or bill payment – in the last month.
This is a significant jump from the estimated 1.7 million who missed payments in September 2021, demonstrating that many who were coping financially last year are now struggling to make ends meet.
The missed payment rate varied dramatically among groups of consumers, with a quarter (24%) of Universal Credit recipients reporting having missed a payment.
One respondent said: “I suffer with my lungs and have to keep warm – with prices rising, I am worried that I will not be able to have my heating on which will endanger my health.”
One person said: “It’s like a financial lockdown. Parts of my life, of my dreams and aspirations for the future are being put on pause, possibly indefinitely. There are parts of my life up until now that I can no longer afford to have.”
Which?’s research also lays bare the hidden mental and emotional impact of cost of living pressures, with a quarter of UK consumers (26%) saying they had trouble sleeping due to worries about paying the bills.
Just over half (52%) of people reported feeling anxious when thinking about the rising cost of living, whilst three in 10 (28%) reported feeling overwhelmed and two in five (38%) said they felt powerless.
One respondent said: “I worry and have trouble sleeping, especially about the energy prices, I worry that I won’t be able to afford to put the heating on.”
Businesses are also facing pressure due to soaring inflation. But there is a lot they can do to help make consumers’ lives better and more affordable. Which? is launching a campaign which identifies a range of specific actions essential businesses can take to support consumers.
The consumer champion’s calls to business aim to ensure that people have access to the best value products and services across the UK – for example, cheaper social tariffs for broadband and own-brand budget ranges in supermarkets, particularly in low income areas. Which? is also calling on companies to provide transparent pricing for essential services and asking telecoms and energy companies to make sure their customer service departments are properly resourced to cope with an expected surge in demand.
Rocio Concha, Which? Director of Policy and Advocacy, said:
“Our research has found that many households are struggling with the financial and emotional impact of the cost of living crisis – with record numbers having to cut back on essentials just to stay afloat.
“Which? is calling on businesses to do all they can to support their customers through this extraordinary cost of living crisis. While government intervention is necessary, we also believe businesses across essential services can and should do more to help.
“Which? has identified specific actions businesses can take to support consumers. For example, energy firms must make it easy for customers to understand how much they are paying and why and ensure their customer service departments are properly resourced to support customers.
“Telecoms firms should also allow customers to leave without exit fees if their costs change mid-contract and supermarkets should provide really clear and comparable pricing and ensure affordable budget ranges are available in areas where they are needed most.”
Notes to editors
Which? cost of living campaign
The consumer champion is launching a campaign calling on businesses in essential sectors – supermarkets, telecoms and energy – to do more to help their customers through the cost of living crisis.
The consumer champion’s nine calls to business include:
Ensure that their pricing is more transparent, making easily comparable “unit pricing” much more prominent, legible and consistent – and displaying it for promotional offers – so that people can easily work out what is the best deal.
Ensure that a range of budget lines for affordable essential items are available across their stores, and particularly in locations where people most need support.
Use their marketing budgets and promotions to tailor support to those who are struggling, including offers, vouchers and loyalty card benefits focused on the places and households where people are most in need.
Telecoms providers should:
Enable consumers to leave their contract without penalty when prices are increased mid-contract, regardless of whether or not these increases can be said to be ‘transparent’. Telecoms providers should also carefully consider what levels of mid-contract price increases are justified, given the current economic climate.
Ensure that social tariff customers do not incur additional charges when they are signing up; do not have to pay Early Termination Charges (ETCs) to move to a social tariff if they are currently in contract and are not subject to set-up costs.
Increase awareness of the availability of social tariffs, what they offer and how they differ to commercial tariffs.
Energy companies should:
Take action to make energy bills as clear and easy to understand as possible, empowering customers to understand what they are paying and why.
Ensure customers on prepayment meters, who are more likely to be vulnerable and on lower incomes, are able to access government support; and prioritise them in their smart meter roll-outs where appropriate.
Make it as easy as possible for customers to get in touch to seek support when they need it.
Consumer Insight Tracker
The Consumer Insight Tracker is an online poll conducted monthly by Yonder on behalf of Which?. It is weighted to be nationally representative with approximately 2,000 respondents per wave.
The survey indicates that between 63 per cent and 67 per cent of households made an adjustment to cover essential spending in the last month, with an average estimate of 65 per cent.
Based on the survey and the ONS estimate for the number of households in 2020 of 28.1m, Which? estimates that between 17.7 million and 18.8 million households cut back on essentials in the last month, with an average estimate of 18.2 million.
Which? estimates that between 42 per cent and 46 per cent of households cut back on essentials in the last month, with an average estimate of 44 per cent. This amounts to between 11.8 million and 13.0 million households, with an average estimate of 12.4 million.
Finally, Which? estimates that between 7.7 per cent and 10.2 per cent of households missed or defaulted on at least one mortgage, rent, bill or credit payment in the last month, with an average estimate of 8.9 per cent. This amounts to between 2.2 million and 2.9 million households, with an average estimate of 2.5 million.
Figure 1: Two-thirds of households made at least one adjustment to cover essential spending in the last month
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft.
Figure 2: The proportion who have been cutting back, using savings, using an overdraft or selling belongings had increased compared to last year
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. This chart shows the breakdown of the overall ‘adjustment’ level from figure 2 by type of adjustment. Households may have made more than one adjustment.
Figure 3: The missed payment rate increased in September
Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. Adjustments include: cutting back, dipping into savings, borrowing from friends and family, taking out credit cards or loans, selling items, using an overdraft. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.
Figure 4: A quarter of consumers say they have had trouble sleeping due to thoughts about the rising cost of living
Source: Which? Consumer Insight Tracker, Online Poll conducted from 9th-11th September 2022 with 2,075 consumers. The sample is weighted to be nationally representative.
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