Key findings

In the past two years, an extra two million UK households have fallen into serious financial difficulties.
9% of all households having used a foodbank in the past six months, rising to 24% among those receiving income-related benefits and 20% among those receiving disability-related benefits.
Two-in-five (39%) of respondents told us that financial worries cause them to sleep poorly at night.
A third (32%) of all households had problems with damp, mould or condensation.
Two-thirds (65%) of those in serious financial difficulty had taken on new debt in the past six months.

Introduction

Since our last Tracker report in May 2023, we have seen political manoeuvring get underway as parties prepare for a general election that could be held anytime between now and 28 January 2025. For the UK public, the cost of living continues to top the list of their concerns, although while prices are still rising, they are doing so less rapidly. The Consumer Price Index was 4.6% in the 12 months to October 2023, down from 6.7% in September 2023, and from a peak of 11.1% in October 2022. Technically this should provide some financial relief for the average UK household, although lowerincome households will benefit less because they experience higher-than-average inflation. 

These more positive inflation figures are tempered by a poor outlook for household incomes (despite real pay growth), with projections showing a two-year fall in real household income of 4% over 2022/23 and 2023/24; and the expectation that by 2028 real household disposable income per person will still be below pre-pandemic levels. In addition, households continue to face rising housing costs. Private rental prices paid by tenants in the UK increased by 6.1% in the 12 months to October 2023 - the largest annual change since the data series began in January 2016. At the same time, the interest rate for a two-year fixed mortgage ranged from 5.54% (for 60% loan-to-value) to 6.6% (95% loan-to-value) – up from 1.35% and 2.91% respectively in November 2021. 

The government’s energy support and cost of living support schemes in 2022/23 and 2023/24 have undoubtedly boosted the finances of low-income households - at a total net cost likely to be over £50 billion, or more than 2.0% of GDP. But there are serious concerns that these short-term measures offer a temporary reprieve at best, to those who receive help; and have not reached all the low-income households that need help. Approximately 3.8 million people in the UK experienced destitution – the most severe form of material hardship – in 2022, including around one million children. And compared to 2019, destitution is experienced by more people living in a larger number of locations in the UK.  In a visit to the UK in November 2023, the UN’s special rapporteur on extreme poverty and human rights said that the UK is “in violation of international law” over poverty levels.  

This report begins by describing changes in the financial wellbeing of UK households as a whole, before examining the real hardship faced by those in difficulty. We then explore the various ways that households are attempting to make ends meet, including by turning to credit or relying on Cost of Living support. Following this, we consider how energy and housing costs are affecting different households, and end by considering households’ financial concerns for the coming months.  

Overview

In the past two years, an extra two million UK households have fallen into serious financial difficulties. The number of households in difficulties has risen from 2.8 million (or 10% of all households) to 4.8 million (17% of households). The overall situation in October 2023 remains similar to that of October 2022, indicating that the effects of the cost of living crisis continue to be felt by UK households.

There is evidence, however, that the typical household may have begun to come to terms with the higher costs they face. The proportion of households describing their energy bills as ‘very unaffordable’ in June 2022 was 25% but by October 2023 this had halved to 12%. 

Anxiety around finances has also improved a little. In October 2022, 61% agreed that thinking about their finances made them feel anxious. This has now dropped to 52%, which may be an improvement but still indicates high levels of financial worry overall. 

Those in difficulty face real hardship, however, with 9% of all households having used a foodbank in the past six months. This rises to 24% among those receiving income-related benefits and 20% among those receiving disability-related benefits, suggesting that the level of benefits has become increasingly insufficient against a backdrop of rising costs.

Two-in-five (39%) of respondents told us that financial worries cause them to sleep poorly at night, but this rises to nearly seven-in-eight (85%) of those in serious financial difficulty.

A third (32%) of all households had problems with damp, mould or condensation, rising to half (51%) of those in serious financial difficulty.

Two-thirds (65%) of those in serious financial difficulty had taken on new debt in the past six months (compared with just 19% of financially secure households) – and a third (35%) had borrowed money for daily living expenses in the past four weeks. Nearly half (46%) of households in difficulty reported owing more than £5,000. 

One-in-five (20%) households in serious financial difficulty were repaying money borrowed from family or friends (compared to 7% of all households). Looked at another way, nearly half (46%) of those paying back family or friends were in serious financial difficulty. 

About the research

abrdn Financial Fairness Trust has commissioned a periodic cross-sectional survey to track the financial situation of UK households since the start of the coronavirus pandemic in early 2020. The latest wave of this survey – conducted in October 2023 – gives insight into the nation’s finances during the ongoing cost of living crisis. The findings are based on responses from 5,594 households about their income, payment of bills, borrowing, debt, savings and ability to pay for other essentials such as food. A team from the Personal Finance Research Centre at the University of Bristol analysed data collected by Opinium and produced these findings. 

The Dec 2023 edition of the Tracker asked 5,594 households about their income, payment of bills, borrowing, debt, savings and ability to pay for other essentials such as food.