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The writer is chief executive of the Citizens Advice charity
Everyone hopes that this will be the year we emerge from the storm. But at Citizens Advice all our indicators suggest the UK’s cost of living crisis will rage on. This will be the central issue for many voters as we look to a general election only months away. But while politicians claim to be addressing the nation’s problems, what our advisers see everyday is how stop-gap politics is failing to fix the big issues.
The impact of short-sighted policies is often best told with a single story, of which we hear thousands. Muhammad from east London lost his job last autumn and has struggled to top up his pre-payment meter ever since. He’s immunocompromised and needs to stay warm to help avoid respiratory infections and manage his arthritis. So he’s faced with an impossible choice: get ill from the cold or fall into debt. Previously always able to manage, he now has £1,500 on credit cards.
Muhammad’s story isn’t extreme or, sadly, unusual. Officially, consumer energy debt stands at a record £2.9bn. But this only includes money owed for more than three months. We know the real figure is far higher because people are getting into personal debt to pay their bills and keep the lights on.
This is a major trend. People who scraped by in previous years now find their incomes and their essential outgoings simply don’t add up. This issue will dominate in 2024 — unless we act, it could leave people fighting to get back in the black for many years to come.
Energy bills are the most obvious indicator. Our latest analysis, published tomorrow, suggests that over 5mn people live in households that are behind on their energy bills. This spring, the typical monthly energy bill is expected to drop by about £20, but they remain worryingly high.
Energy debt is now the most common debt we support people with at Citizens Advice — this winter we are helping record numbers who are struggling to keep the heating on. The average amount of energy debt we see is about £1,835, a third higher than it was at this point in 2019.
In this election year, living standards could slip even further for families already facing desperate choices. Some will see an improvement as the warmer weather arrives, but the crisis will be far from over given how much the cost of essentials and housing have spun out of control. The people we see balance on a precipice — if one more thing goes against them, it could be the final nudge towards the poverty line.
Tackling the drivers that are sending household budgets into the red will be essential for any government, for the foreseeable future. Yet policies that would have helped to reduce people’s monthly shortfalls this year are missing. This government promised a new approach to support by April, but nothing is yet on the table — and they’ve run out of time to consult before their own deadline. The remaining support schemes brought in to help households in the crisis are to end in April. The Budget on March 6 is an opportunity to let those struggling know they will not be left in the lurch.
Getting people out of the red is the key to unlocking the fixes we need for the big issues. Making tangible progress on net zero targets is an obvious one. That will be so much easier if the households currently struggling the most, but which stand to benefit the most from lower bills, are supported through the green energy transition.
Sometimes that means financial help to get a heat pump or insulate a home; sometimes it’s informing people about using electricity at cheaper times of day. The problem is that these policies are hard to introduce, take planning and foresight and will pay dividends only in the future — something decision makers often shy away from.
With the issues the UK currently faces, this time papering over the cracks won’t be enough. Politicians facing an election must get this right.
