Four million people forced into debt to pay for heating and food, new report finds
“The other day I helped a nurse who was struggling to make ends meet despite working overtime,” says Yvonne Parks, Citizens Advice South Gloucestershire debt team manager. “His rent is more than half his take-home pay, and that’s not unusual.”
Yvonne’s client is just one of millions facing financial difficulties; new research shows that four million people lose money every month after basic necessities. This includes households with more than 860,000 children, according to figures from Citizens Advice.
“I’ve seen it time and time again – missed bills lead to debts, foreclosures, deductions or credit damage. Stress and poor mental health reduce a person’s ability to manage finances or look for work,” says Yvonne, who has worked as an expert debt counselor for 30 years.
“People fall into a cycle of crisis, constantly needing emergency assistance like food banks, fuel vouchers or housing payments.”
Citizens Advice says these households are stuck in a “negative budget,” meaning they don’t have enough money to pay for things like food, energy or housing.
The average deficit for those stuck in this cycle is £343 a month, which can quickly rise to over £4,000 a year. This figure will rise to £396 a month in 2025/26 as costs rise, Citizens Advice added.
This forces people to make impossible decisions about which basic needs to cut back or debts to avoid. More than half of the people Citizens Advice helps with debt are on a negative budget, with an average debt of £9,963 per household, the charity says.
Around 320,000 people are also at risk of falling into crisis, with only around £50 covering their essential costs; this figure is expected to rise to over half a million (580,000) in 2025/26. The researchers said it would be enough for an “unexpected shock” such as a rise in food prices, a bill increase or a rent increase to push these people into debt.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said: “Four million people have run out of options and many more are on the brink of crisis. They come to us unable to make ends meet, getting worse off every month and desperate to provide for their families.
“This is the result of years of consecutive government inaction on living standards and policy decisions that have made life even more difficult for struggling households.
“The Labor government came into office with big promises on living standards that it has yet to deliver on.”
The calculations were made using data from Citizens Advice customers and Office for National Statistics (ONS) data to help make the estimates for England and Wales.
Researchers also point out that private renters and single-parent households are disproportionately more likely to be trapped in a negative budget.
Citizens Advice says it would like to see Labor use the autumn budget to provide targeted utility bill support, increase local housing allowance rates, which determine housing benefit levels, and remove the two-child benefit cap.
Debt Justice policy and campaign manager Toby Murray said: “These are shocking findings that clearly show how negative budgets leave millions of people trapped in debt. People we spoke to across the country are struggling with an insurmountable cycle of financial insecurity and debt.”
“Without access to fair write-off mechanisms, they face sky-high interest payments and frightening bailiff visits pushing them further into debt. The government should use the autumn budget to tackle debt and the root causes of debt, including the two-child limit.”
A government spokesman said: “We are committed to breaking down barriers to lift people out of poverty and give every child the best start in life.
“To ease the pressure on households, we are tackling rising rents by building 1.5 million homes (including the biggest increase in affordable and social housing in a generation) and extending the £150 Warm Homes Discount to more than six million families.
“Our Child Poverty Task Force will publish an ambitious strategy to tackle the structural and root causes of child poverty, building on initiatives such as our £1bn crisis support package.
“We are also putting more money in people’s pockets by increasing benefits, making Universal Credit fairer and helping people get into good, secure jobs as part of our Plan for Change.”
