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“One day I helped a nurse who was struggling to make ends meet, even though she was working overtime,” says Yvonne Parks, debt team manager at Citizens Advice South Gloucestershire. “Her rent is more than half her take-home pay – and that’s not unusual.”
Yvonne’s client is one of millions of people who are running into financial difficulties, as new research shows four million people are losing money every month after the cost of essential goods. This also includes homes with more than 860,000 childrenThe data from Citizens Advice shows.
“I’ve seen it again and again – missing bills leads to arrears, enforcement, write-offs or credit damage. Stress and poor mental health impair one’s ability to manage finances or find work,” says Yvonne, who has been a specialist debt advisor for 30 years.
“People fall into a cycle of crisisFrequently there is a need for emergency assistance such as food banks, fuel vouchers or assistance with housing payments.
These families are stuck in “negative budget” citizens advice Says it means they don’t have enough money to pay for things EatEnergy or housing.
The average shortfall for people caught in this cycle is £343 per month, which can quickly rise to more than £4,000 per year. Citizens Advice says this will rise to £396 a month in 2025/26 due to rising costs.
The situation is forcing people to make impossible decisions about which essentials to cut back, or face going into arrears. More than half of people get help from Citizens Advice loan The charity says they are budget negative and have an average debt of £9,963 per household.
Around 320,000 people are also at risk of falling into crisis mode, with their essential costs falling to just £50, a figure rising to more than half a million (580,000) in 2025/26. It would only take one “unexpected shock” such as an increase in food prices, an increase in bills or Rent Researchers said the increase has been done to push these people into debt.
Dame Claire 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, leaving losses every month and desperate to feed their families.
“This is the result of continued years of government inaction on living standards and policy decisions that have made life even more difficult for struggling families.
“The Labor “The government came to power with big promises on living standards which have not been fulfilled yet.”
The calculations were done using data from Citizens Advice subscribers, using Office for National Statistics (ONS) data to help make estimates for England and Wales.
The researchers also point out that private renters and single-parent families are more likely to be stuck in a negative budget.
Citizens Advice says it wants to see Labor use its autumn budget to provide targeted utility bill support, increase local housing allowance rates that set housing benefit levels and scrap the two-child benefit cap.
Toby Murray, policy and campaigns manager at Debt Justice, said: “These are shocking findings which clearly demonstrate how negative budgets trap millions of people in debt. Across the country, most people we speak to are struggling in an insurmountable cycle of financial insecurity and debt.”
“They face exorbitant interest payments and intimidating bailiff visits, leaving them further trapped in debt, without access to fair write-off mechanisms. The Government should use the Autumn Budget to address debt and its root causes, including the two-child limit.”
A government spokesperson 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 pressure on households, we are tackling rising rents by building 1.5 million homes – including the biggest boost to affordable and social housing in a generation – and extending the £150 Warm Homes Discount to more than six million households.
“Our Child Poverty Taskforce will publish an ambitious strategy to tackle the structural and root causes of child poverty, building on initiatives such as our £1 billion crisis support package.
“We are putting more money in people’s pockets by boosting benefits, making Universal Credit fairer and helping people into good, secure jobs as part of our transformation plan.”