More than 4mn households remain in serious financial difficulties, despite a recent improvement in financial wellbeing in the UK.
Research from the Abrdn Financial Fairness Trust found 39 per cent of households were in serious financial difficulty or were struggling financially in May 2024.
Additionally, while middle-income households have seen a 9 percentage point fall in the proportion struggling or in serious difficulties, the lowest income households have seen just a 1 percentage point fall.
Despite the research showing that households were having to cut back less and rely less heavily on consumer credit, 13 per cent of households still faced some form of debt collection or enforcement action in the past six months.
Debt collection activities mostly related to providers of unsecured credit, local authorities, mortgage providers or landlords and energy providers.
Attitudes to taxation and govt spending
In anticipation of the General Election, the survey asked about a suite of policies related to financial wellbeing, including attitudes to public spending and taxation.
It found there was strong support for investment in public services, with 56 per cent of respondents agreeing that spending should be increased even if it meant tax rises for households like theirs.
However, 24 per cent of respondents said taxes should be reduced for households, even if it meant less spending on public services.
Older adults and 2019 Conservative voters favoured reducing taxes such as IHT, income tax and NI.
According to the survey, Lib Dem voters were slightly more likely to favour reductions in IHT while Labour voters were slightly more likely to argue for a reduction in income taxes and NI but still considerably less likely to choose this than 2019 Tory voters.
“Ultimately, the needs of the 4.1mn households in ‘serious financial difficulties’ and the additional 6.7mn who are ‘struggling’ should not be ignored by the next government.
“Around half of those on the lowest incomes reported that financial concerns impact their everyday mental (53 per cent) or physical (45 per cent) health.
"This means that failure to address money difficulties can therefore easily translate into increased pressures on the NHS and other public services. But more importantly, it means that for so many households making ends meet is a daily battle. Only with the right policies in place can the next government make this battle a little easier,” the survey said.
alina.khan@ft.com
