Five Million People Can't Afford Basic Outgoings In "Living Standards Catastrophe"

Exclusive: New research by Citizens Advice has found that five million people are living in a negative budget, meaning the amount of money they have coming in does not meet the cost of basic outgoings such as accommodation, food and fuel.

The charity has accused politicians of "burying their heads in the sand" over the scale of the crisis. 

The new research seen by PoliticsHome found the number of people living in negative budgets is up by more than 50 per cent compared to 2020, increasing from 3.25m at the start of 2020 to 5m currently. A further two million people are also cutting back on spending to "unsafe levels" to avoid falling into a negative budget - with the average household in that situation around £4,200 short of the cost for their essentials every year.

Researchers believe soaring housing costs and energy bills are key factors which are driving people into debt, with private renters in a negative budget spending 73 per cent of their income on housing and energy alone. Mortgage holders in a negative budget spend considerably less on the housing and energy bills, with 43 per cent of their income spent on energy and mortgage repayments. 

The charity say without government intervention, 250 people each day will fall into a negative budget between now and the next election. 

Ministers have hinted that there could be tax cuts in the next budget on 6 March, which Chancellor Jeremy Hunt and Prime Minister Rishi Sunak insist would prioritise working people. But Interim director of policy at Citizens Advice, Morgan Wild, felt that if these focussed around income tax or inheritance tax as is expected, it "won't have much of an impact at all for the people in these situations".

"Income tax, could in principle, reach some of