Negative budgets – Citizens Advice South Gloucestershire on BBC Points West
Our charity featured on BBC Points West on 5th March in a piece about growing numbers of clients who cannot afford the essentials.
The piece focused on the charity’s research into negative budgets. This is where clients’ income does not cover the cost of costs such as food and energy.
Nationally, Citizens Advice has seen a huge increase in clients in this situation. Recent figures show 5 million people across England, Scotland and Wales, including 1.5 million children, are now in a household with a negative budget.
Clients are likely to fall further into debt without policy interventions from the Government – which are covered in Citizens Advice’s National Red Index report. As the report states, the drivers for the rise are tied closely with the cost-of-living crisis.
The BBC piece featured figures from our local charity along with our neighbouring Citizens Advice offices. These are Bristol, North Somerset, South Gloucestershire, Bath & North East Somerset, North & West Gloucestershire and Somerset.
You can read more in our news piece here.
What is negative budget?
A negative budget is the term for when – even after expert advice – a client’s income is not enough to cover the cost of essentials such as housing, food and energy. This can include income from benefits or earnings from work. It means the client is likely to go further and further into debt just to get by.
What do I do now?
Come to see us at Citizens Advice South Gloucestershire. We can help with checking you are getting all the income you are entitled to and give expert debt advice. You can visit our open-doors sessions at certain times of the week in Yate, Bradley Stoke, Thornbury, Emersons Green, Stoke Gifford and Cadbury Heath. Or you can call our free local advice line instead on 0808 2787947 available every weekday Monday-Fridays from 9am-5pm excluding Bank Holidays.
What do our figures show?
- Three times as many clients in the South West cannot make ends meet now compared to prior to the pandemic. The number of clients our offices saw rose from 331 in 2019 to 1,061 in 2023. We suspect the actual number is a lot larger as many people struggling will not have been to see Citizens Advice yet.
- The average shortfall each month among clients is also growing – up from £125 per month in 2019 to £214 last year which is a 71 per cent rise.
- Almost half (49 per cent) of negative budget clients lived in social housing while 30 per cent were renting privately, and nine per cent were owner occupiers.
Budget 2024 – what impact will it have?
- Ahead of the Chancellor’s Spring Budget on March 6, Citizens Advice campaigned nationally to extend the Household Support Fund (HSF) – a lifeline for some of the most vulnerable in our community. It was good news to see it will be extended for six months – but this is a temporary fix and a longer term solution is needed.
- It was also a success to see the Chancellor scrap the £90 upfront Debt Relief Order fee following years of campaigning from Citizens Advice. The £90 fee has been unaffordable for many in debt so it is a relief to see it finally removed.
- Elsewhere, the Chancellor announced another cut in the rate of National Insurance (NI) for employees paid between £12,571 and £50,270. The NI rate for this cohort was previously cut from 12% on earnings to 10% in January – before being cut to 8% in the spring Budget. The BBC has said those earning £25,000 per year will make a saving of £249 per year as a result of the change.
- However due to the existing freezing of income tax thresholds, only those earning between £26,000 and £60,000 a year are better off in the next year as a result of the NI change, the BBC has said. This is because many will be be paying more income tax due to the cut in NI.
- Ahead of the Budget, we called for more cost-of-living payments – which have helped those on low incomes over the last year. But no plans were announced for the extension of these.
- As previously announced, many benefits such as Universal Credit will rise in line with September’s CPI inflation rate of 6.7%. The state pension will go up by 8.5% and the National Living Wage for over-23s will rise from £10.42 an hour to £11.44 an hour.
What does this mean for those on a negative budget?
National Citizens Advice has praised the Budget for giving “some relief” to struggling households – but has also said the scale of the crisis is “much bigger” than was suggested on Budget day.
Citizens Advice has said: “For 5 million people in Britain living with a negative budget, Citizens Advice will continue to push all political parties and the government to do more to tackle the root causes of hardship, and prevent people from falling into debt in the first place.”
Work will continue on Citizens Advice’s National Red Index project – which aims to investigate the scale, causes and potential solutions to the problem of negative budgets.
Find out more
Visit Citizens Advice’s page on how to get help with the cost of living for general advice on the support available if you are struggling.
- Citizens Advice South Gloucestershire is helping more and more clients in a negative budget – whose income is not enough to cover essential costs such as food, energy and housing. We are a local, independent charity and need your support to continue providing our vital service to the community.
- If you’d like to support our work, please donate here.