Households in serious financial difficulty rise to 4.8 million

The number of UK households classed as being in serious financial difficulties rose from 2.8 million, or 10% of all households, in October 2021 to 4.8 million, or 17%, in October 2023, according to the ninth wave of the abrdn Financial Fairness Tracker, published in December 2023¹.

The report says the overall situation in October 2023 remains similar to October 2022, indicating that the effects of the cost of living crisis continue to be felt¹. It also records some improvement on individual measures: the proportion of households describing their energy bills as "very unaffordable" halved from 25% in June 2022 to 12% in October 2023, and the share agreeing that thinking about their finances made them feel anxious fell from 61% in October 2022 to 52% in October 2023¹.

The report notes that the October 2023 wave used a different fieldwork company from earlier waves, and that a smaller concurrent survey by the previous company put the share in serious difficulties at 15% rather than 17%¹. It says this suggests a small, perhaps negligible, rise compared with May 2023 but retains the same longer-term trend when compared with 2021¹.

Among households in serious financial difficulty, the report found that 65% had taken on new debt in the past six months, compared with 19% of financially secure households, and 35% had borrowed money for daily living expenses in the past four weeks¹. Nearly half, 46%, reported owing more than £5,000, and 20% were repaying money borrowed from family or friends, compared with 7% of all households¹.

Foodbank use rose across the sample. In October 2022, 6% of all households reported having used a foodbank in the past six months; by October 2023 this had risen to 9%¹. Among those receiving income-related benefits, 24% had turned to a foodbank, as had 20% of those receiving disability-related benefits¹.

The report also records wider pressures. It cites Consumer Price Index inflation of 4.6% in the 12 months to October 2023, down from 6.7% in September 2023 and a peak of 11.1% in October 2022, and projections of a two-year fall in real household income of 4% over 2022/23 and 2023/24¹. It says private rental prices rose by 6.1% in the 12 months to October 2023, the largest annual change since the data series began in January 2016¹.

Why it matters for households

The 4.8 million figure covers households scoring below 30 on the tracker's Index of Financial Wellbeing, a composite measure based on seven questions covering day-to-day finances, missed payments and arrears, and savings¹. For the households counted, the report describes hardship rather than strain: 85% of those in serious financial difficulty said financial worries caused them to sleep poorly, against 39% of all respondents, and 51% reported problems with damp, mould or condensation, against 32% of all households¹.

The report sets out several changes taking effect from 2024 that affect household budgets, including the uprating of working age benefits by the September inflation rate of 6.7% from April 2024, the uprating of the state pension by 8.5% from April 2024 in line with earnings, and the temporary unfreezing of Local Housing Allowance with an associated increase to the 30th percentile of rents¹. It also notes the age threshold for receiving the full National Living Wage reducing to 21, and the latest round of Cost of Living payments that many households started receiving from November 2023¹.

On energy, the report says the price cap is rising by £94 per year from January 2024, describing this as a 5% increase expected from January¹. It also records that the prepayment meter price premium was scrapped in July 2023, saving prepayment households around £21 a year on their bills¹.

What happens next

The report was published in December 2023 and covers fieldwork from October 2023¹. It sets out the benefit, pension, housing allowance, wage and energy changes listed above as taking effect between November 2023 and April 2024¹. No further tracker wave is described in the report.