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‘Alarm bells for politicians’ in latest Data Insights

family yellow

“Alarm bells should be ringing with politicians”. That was the stark message from this month’s Citizens Advice Data Insights briefing*.

Citizens Advice national CEO Dame Clare Moriarty was summarising the impact on individuals, families and communities of the debt crisis revealed in charity’s February data insights report.

Describing the national picture as ‘stark’ is justified. Half of all clients with debt problems spend more on essentials (including utilities, food, council tax) than they receive in earnings or benefits. They are managing sinking with negative budgets (see note) and since 2021 their number has grown by over 50%.

In election year we’re sure parliamentary candidates of all parties will want to understand and respond to current concerns in their messages to voters and visions for government.

At the briefing on 15 February the CA team introduced the new National Red Index. The Index combines unique data collected by CA local teams with national surveys of household incomes and fixed costs. For the first time this tells us how many people across the country are trapped in negative budgets.

‘Irrefutable evidence’

The NRI authors call their findings ‘a damning measure of living standards‘. Polly Toynbee, Guardian columnist, guest speaker, said the work added to ‘stark and irrefutable evidence’ on a worsening situation. The problem was ‘people still don’t believe it‘. We really need a campaign to raise understanding of relative incomes across society. ‘Set ideas of how the world is are very hard to shift’.

But Polly Toynbee could see grounds for optimism. 1) Election guru Professor Sir John Curtis (Data Briefing guest speaker in January) pointing to shifts in public attitudes. 2) More of us seeing growth of food bank use and appreciating the breadth and depth of poverty. 3) Many young people taking a different attitude to individuals and families in need.

How to lift people out of negative budgets

Throughout 2024 Citizens Advice local and national will monitor and contribute to policy debate affecting our clients and those in similar situations. Based on the February NRI the national policy team recommends government immediately take 5 steps to lift people out of negative budgets:

1 – Legislate to uprate working-age benefits using Household Costs Indices to reflect the true cost of living for low-income households.**
2 – Keep increasing the national minimum wage so fewer people in work are in deficit at the end of the month.
3 – Improve energy bills support by expanding eligibility for Warm Home Discount (and support those most in need).
4 – Ensure affordable access to essential markets through social tariffs for water, broadband and motor insurance.  
5 – Reform Local Housing Allowance to better support people paying high private rents.

* Watch back February data Insights Briefing
** Every family is different but essentials inflation hits worst-off hardest CAEE, 30/01/23
Note: Negative budget
The ultimate red line between making ends meet and being pushed deeper and deeper into trouble. Like quicksand, it’s hard to get out of once you’re in. And while negative budgets are the worst of this problem, so many more people come to us feeling like they’re just living on empty, running to stand still, worrying about what the future holds. 
This is a stark warning that while our advice can be life changing, it’s not always enough to pull people out of the red and into the black. It’s not for lack of trying – negative budgets are a failure of policy, not advice. Successive governments haven’t addressed fundamental policy issues – especially the supply of affordable housing – leaving millions of households struggling to make ends meet on stagnant incomes. 

(National Red Index, Cost of living, Citizens Advice, 07/02/24)

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