“It is not living but just about existing”: Number of households missing essential payments is back to winter levels, Which? warns

The number of households missing essential payments has risen to 2.4 million –  in line with the high levels seen last winter – as the Bank of England looks poised to raise interest rates again tomorrow.

Which?’s July consumer insight tracker found that 2.4 million households missed or defaulted on an essential payment – such as a housing, bill, loan or credit card payment – in the month to July 13th.

This is significantly higher than the number who missed essential payments in May and in line with the high numbers missing payments last winter – showing that the cost of living crisis is continuing to bite into household finances, even in warmer weather when energy costs are lower.

Of these missed payments, 1.5 million households missed or defaulted on a household bill payment – such as an energy, water or council tax bill – in the month to July 13th. Worryingly, two-thirds (65%) of those who missed a household bill payment reported that they missed more than one household bill payment.

Water and energy were the most commonly missed household bills. Of those who missed a household bill payment, almost half (49%) missed a water bill, around half (48%) an energy bill, four in 10 (38%) a phone bill and around a third (34%) a council tax payment.

Which?’s consumer insight tracker also estimates that 770,000 households missed or defaulted on a housing payment in the month to July 13th – with one in 20 renters (5.7%) and 3.4 per cent of mortgage holders missing a housing payment.

Almost six in 10 (59%) of households reported making at least one adjustment – such as cutting back on essentials, dipping into savings, selling possessions or borrowing – to cover essential spending such as utility bills, housing costs, groceries, school supplies and medicines in the last month. This equates to an estimated 16.7 million households.

One woman from eastern England said: “It is not living but just about existing”.

A man from the South East said: “I am stretched to the limit financially at the moment and cannot stay afloat if the cost of living increases further. I am expecting my rent to increase to an unaffordable level very soon which will render me homeless.”

A drop in consumer confidence in both their own household’s situation and the UK economy was observed in the month to July 13th. This followed the release of May inflation figures in late June showing inflation being more persistent than expected, leading to a further jump in interest rates and the removal of some mortgage products from the market.

Consumers’ level of confidence in their current household situation fell 16 points in the last month to +9 in the month to July 13th – down from +25 in the month to June 9th. Less than a fifth of consumers (17%) said they think their household financial situation will get better over the next 12 months, whilst four in 10 (37%) said they think it will get worse, giving a net confidence of -20.

Confidence in the UK economy over the next 12 months dropped 16 points to -47 in the last month – with 14% of consumers thinking the UK economy will get better and 61% believing it will get worse.

With the Bank of England predicted to raise interest rates again tomorrow, pressures on household finances are only set to increase. At such a difficult financial time, businesses must do everything in their power to ease pressures on household budgets. Which? is calling on essential businesses – energy firms, broadband providers and supermarkets – to do more to help their customers and ensure they are providing value for money.

For example, supermarkets need to make budget line items widely available, particularly in convenience stores, energy firms need to ensure their customer service departments are fully staffed and able to support any customers who are struggling to make ends meet and telecoms firms need to properly advertise their social tariffs to eligible customers.

If people are missing or struggling to afford essential payments – such as energy, credit card or mortgage payments – then they should speak to their provider immediately for help.

Rocio Concha, Which? Director of Policy and Advocacy, said: 

“Our research has found that the number of households missing essential payments has risen to 2.4 million – in line with the high levels seen last winter – showing that though inflation might have peaked, the human cost of the cost of living crisis continues to rise.

“With interest rates predicted to rise again tomorrow, these pressures on household finances are only set to increase. We’d encourage anyone who’s struggling to seek free debt advice and reach out to their bill provider for help.

“As so many people face financial hardship, Which? is calling on businesses in essential sectors, like food, energy and telecoms, to do more to help customers get a good deal and avoid unnecessary or unfair costs and charges during this crisis.”

ENDS

Notes to editors 

Which? cost of living campaign

The consumer champion has launched 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. More information on the campaign is available here.

Which? advice if you’re struggling to pay your bills

Start by contacting your bill provider to see if you are missing out on any discounted tariffs or reductions and if they can help you find a payment plan you can afford. More information here.

Energy providers should not just disconnect people and can help customers find a payment plan they can afford, and may be able to refer you to additional hardship funds. If people have a traditional prepayment meter and cannot afford to top it up, they should contact their energy supplier for help to keep their supply going. They may be able to access emergency credit – though you will eventually need to repay this through a payment plan. More information here.

If households are struggling to afford their mortgage, they should speak to their lender as soon as possible. Lenders should be understanding if income levels have changed – for example, because someone has lost their job – and may offer a payment holiday, extending the term to lower the monthly payment or a temporary switch to interest-only repayments. Renters should speak to their landlords about their situation and ask if they are able to offer temporary help. More information here and here.

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.

Which? estimates that between 7.4 per cent and 9.8 per cent of households missed or defaulted on a housing, bill or credit payment in the last month to July, with an average estimate of 8.6 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 2.1 million and 2.8 million households missing a bill payment in the last month, with an average estimate of 2.4 million.

Which? estimates that between 4.3 per cent and 6.2 per cent of households missed or defaulted on a bill payment in the last month, with an average estimate of 5.3 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 1.2 million and 1.8 million households missing a bill payment in the last month, with an average estimate of 1.5 million.

Which? estimates that between 2.0 per cent and 3.4 per cent of households missed or defaulted on a housing (mortgage or rent) payment in the last month, with an average estimate of 2.7 per cent. Based on the survey and the ONS estimate for the number of households in 2022 of 28.2 million, this scales up to between 570,00 and 960,000 households missing a housing payment in the last month, with an average estimate of 770,000.

The survey indicates that between 57 per cent and 51 per cent of households made an adjustment to cover essential spending in the last month to July, with an average estimate of 59 per cent. Based on the survey and the ONS estimate for the number of households in 2020 of 28.1 million, Which? estimates that between 16.1 million and 17.3 million households made an adjustment to cover essential spending in the last month, with an average estimate of 16.7 million.

Figure 1: 8.6% of households said they had missed a payment in the last month in July 2023

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave. The chart shows the proportion of households who have missed a housing, bill, loan or credit card payment in the last month.

Figure 2: Almost six in ten 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 3: Future consumer confidence dropped in the month to July 13th

Source: Which? Consumer Insight Tracker, Online Poll weighted to be nationally representative, approx 2,000 respondents per wave.

About Which?

Which? is the UK’s consumer champion, here to make life simpler, fairer and safer for everyone. Our research gets to the heart of consumer issues, our advice is impartial, and our rigorous product tests lead to expert recommendations. We’re the independent consumer voice that influences politicians and lawmakers, investigates, holds businesses to account and makes change happen. As an organisation we’re not for profit and all for making consumers more powerful.

The information in this press release is for editorial use by journalists and media outlets only. Any business seeking to reproduce information in this release should contact the Which? Endorsement Scheme team at endorsementscheme@which.co.uk.

Press Release