New YouGov polling by StepChange Debt Charity for Debt Awareness Week (March 20-26) suggests that the dire state of households finances is worsening, with people imminently facing increased Council Tax, less support with energy bills and higher rent or mortgage payments.
The GB-wide representative survey examines the toll that the cost of living crisis has had on household incomes. It reveals that among the 190 Scottish adults included in the poll, one in seven (14%), equivalent to over 600,000 people, has £20 or less left over each month after paying for essentials, with seven per cent having no disposable income at all. This chimes with StepChange Scotland’s own client data which shows over a quarter (27%) of clients are in a negative budget, meaning that, after a debt advice session and budget counselling, their expenses exceed their income.
The polling also reveals the impact of nine consecutive interest rate rises on mortgage holders and renters alike, almost two-thirds (60%) of whom expect their housing payments to rise within the next 12 months.
Last week, Chancellor Jeremy Hunt confirmed in the Spring Budget that the £2,500 Energy Price Guarantee (EPG) has been extended for another three months, but the Energy Bill Support Scheme (EBSS), which has seen households receive a £400 discount on their energy bills has not been given an extension and will end on March 31.
Effectively, this means all households will need to find an extra £67 next month for their energy bills on top of any other rises such as mobile phone, broadband and streaming services.
Almost two in five (38%) Scottish adults said they will have to borrow to cope, while almost one-fifth (18%) think they will be driven into problem debt due to the discount ending.
In order to pay for the continually increasing cost of essentials, over a quarter (27%) of survey respondents said they will be using savings or other assets.
The survey comes as the charity marks its annual Debt Awareness Week, which this year seeks to increase understanding of how debt advice works and how it can help people struggling with their finances.
The polling shows that almost one in six (15%) Scottish adults do not know debt advice services even exist, and a further one in five (22%) wrongly believe that contacting a debt advice organisation would have a negative impact on their credit score.
The charity is calling for the Scottish and UK Governments to take action which will prevent households from falling into problem debt and then remaining trapped in a long-term debt spiral.
This would involve welfare payments keeping up with inflation and making sure there is targeted support for households who face higher financial barriers. This must include ensuring a fairer approach to enforcement action, especially with energy debt, with the write off of arrears where an individual cannot afford to pay.
Commenting on the survey results, Sharon Bell, Head of StepChange Debt Charity Scotland, said: “We welcomed the UK Government taking action in last week’s Budget to extend the Energy Price Guarantee for a further three months, but with the Energy Bill Support Scheme coming to an end, households are still very worried about how they’re going to cope come April.
“These figures also reveal that it’s not just energy bills that are decimating household budgets, with most renters and mortgage holders now facing a rise in housing payments over the next 12 months. More than a year on from the start of the cost of living crisis, financial resilience is clearly very low - too many people are left with little to nothing each month after covering their basic living costs.”
Ms Bell continued: “The Scottish and UK governments must commit to longer term solutions which will protect financially vulnerable households from worsening debt and destitution due to circumstances outside of their control.
“This week marks Debt Awareness Week, and as this crisis continues to burden household finances, it’s vital that people know free and impartial debt advice exists, and aren’t put off by any misunderstandings around what happens when you seek help with problem debt.”
How to get help with debt
To get started on your journey out of debt, visit the StepChange website here to find out how the charity can best help you, and download the free guide to dealing with debt in Scotland.
From budgeting tips, to information on benefits and StepChange’s online debt advice tool, there’s a wealth of information on how to start on the path to becoming debt free.
To keep up to date with the latest benefits news, join our Money Saving Scotland Facebook page here, follow us on Twitter @Record_Money, or subscribe to our newsletter which goes out Monday to Friday - sign up here.
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