Making Ends Meet: The impact of the benefits freeze on people in debt
Since the benefits freeze began, we’ve seen an increase in the proportion of people we help with debt who have no money left at the end of the month once they’ve covered their living costs. These households are deemed to have a negative budget.
Our new report, Making Ends Meet: The impact of the benefits freeze on people in debt, shows that from April to August 2019, 40% of people we helped with debt who claim income-related benefits had a negative budget.
We have developed a model that explores what the impact would be on people we help with debt through different benefit uprating scenarios over the next four years. We found that:
- Ending the benefits freeze and uprating income-related benefits by the Consumer Prices Index (CPI) would still leave 38% of households with a negative budget by 2024.
- Ending the benefits freeze and uprating income-related benefits by CPI +2%, as well as recalculating the Local Housing Allowance to the 30th percentile of local rents, would mean the proportion of households with a negative budget would fall to 28% by 2024.
That's why Citizens Advice is calling for the Government to:
- Uprate the value of frozen benefits by the Consumer Prices Index (CPI) plus 2% for four years.
- Recalculate the Local Housing Allowance to at least the 30th percentile of local rents to re-establish the link with rental prices.
- Ensure Universal Credit provides people with enough to live on, by reviewing areas such as the amount of money retained by working claimants and deductions for those faced with debts
Our report Negative Budgets - A new perspective on poverty and household finances contains further information about the experiences of people we help with debt who have a negative budget.