‘One in three living on a financial knife edge’, warns Citizens Advice
New report from the charity finds millions of households just £20 away from crisis even before expected bills rise this April
Half of people in UK have already used their savings to pay bills in past year
Majority think their finances won’t improve or will be worse in a year’s time
One in three people in the UK are living on a financial knife edge, Citizens Advice warns.
Half a decade after the pandemic began, its financial impact continues to be felt. Far from recovering, many households have depleted savings or have taken on debt. The charity is concerned that price rises this spring will push households with virtually no financial buffer into the red.
And it warns that the government's current approach risks making a bad situation worse, with proposed cuts to disability benefits further undermining the financial resilience of those least able to weather any financial storm.
It has found that more than 7.5 million people say they’d have to skip meals if bills rise by just £20. Some groups are particularly exposed - with half of single parents and half of disabled people saying a £20 bill increase would push them into crisis.
With the Chancellor expected to make cuts to meet her fiscal rules, Citizens Advice is concerned it will hurt those already on the brink.
The proportion of people the charity helped with debt who are facing a negative budget (where their essential costs exceed their income) has increased from just over a third in 2019 to half in 2024
Last year, Citizens Advice helped over 400,000 people across England and Wales with debt - nearly 15% higher compared to 2019
New research from the charity suggests that of people receiving disability benefits, over four in ten said they were struggling to afford their essentials each month, with half of them using savings, one in four avoiding medical costs, and three in ten skipping meals to pay their bills
“The cost of living is still an absolute nightmare. Your money is exactly the same every month but the bills just keep going up.”
When Covid hit the UK, Laura* was a key worker in an NHS hospital. When ill health forced her to go part-time, she was unable to survive on Universal Credit and lost her home, her job and found herself in debt struggling to pay the bills. After moving from a hostel to an unsuitable flat, she eventually found somewhere to live and after an initial unsuccessful application was awarded Personal Independent Payment giving her a desperately needed lifeline and glimmer of hope.
“I was so grateful when I was awarded PIP. It was like a weight being lifted, because I was really struggling to live.
“The cost of living is still an absolute nightmare. Every week that you go to the shops and they’ve put an extra ten or 15 pence on everything. It’s gone up and there’s no reason for it. Your money is exactly the same every month but the bills are going up. It’s not leaving any money for food.
“Getting PIP and a good council flat means I feel as though I can manage a lot better now but I’m still not in a good place financially. I have £3,000 of debts but I’m a lot better than I was. It’s going to take me probably another year and a half to pay it all off but at least I can see a way forward.”
Help urgently needed
The research shows this financial strain isn't limited to those whose finances worsened as a result of the economic fallout since the pandemic. Nearly a third of people report being in a more difficult financial position compared to just 12 months ago.
With housing and energy costs continuing to be the biggest and most unpredictable expenses for struggling households, Citizens Advice wants to see immediate action to ease these pressures.
And the charity is calling for a renewed focus on a child poverty strategy, including reform of the two-child limit and benefit cap which currently trap families in financial insecurity.
Dame Clare Moriarty, Chief Executive of Citizens Advice, said:
"Millions of households are on a financial knife edge, desperately exposed to even the smallest of bill increases.
"Rising prices and no respite from economic blows have chipped away at finances, leaving people without a safety net and even less able to cope with future crises than they were before the pandemic.
"Without action this will become an intergenerational issue. We urgently need targeted support for disabled people and families facing hardship, alongside action on the biggest pressure points in household budgets – rent and energy costs."
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Notes to editors:
All polling figures quoted in this press release are drawn from a nationally representative survey of UK adults conducted for Citizens Advice by Yonder Data Solutions. Total sample size 2,354. Fieldwork took place between 28th February and 2nd March 2025. People on disability benefits - defined as people on Personal Independence Payment, Universal Credit - Limited Capability for Work Related Activity element and Income based Employment and Support Allowance - were boosted to 511.
We have defined “living on a knife edge” as people who will find it difficult to afford scheduled bill increases in April. In the above polling, we asked people how difficult they would find it to afford a £20 per month uplift in bills - calculated from a low estimate of how much energy, water and council tax bills are scheduled to rise in April. 34% told us they would find this difficult. We also asked people how they were going to pay for this £20 increase - 14% told us they would skip meals. We scaled these figures up using an estimated UK adult population, based on Census 2021 figures from ONS.
Debt clients are people who come to Citizens Advice for help managing their debts. Our advisers carry out a budget assessment with the client to help them make a sustainable repayment plan for their debts, and this assessment will include recording income and expenditure information. In 2019 and 2024, 44,877 and 84,398 clients completed this process respectively. Whether or not an individual is in a negative budget or not is determined using the formula Surplus = Income.Total — Essential.Expenditure.Total. If the individual has a monthly surplus of less than zero they are classified as being in a negative budget. In 2019, 36.7% of the clients who had a budget assessment were in a negative budget - in 2024 this rose to 48.6%.
Citizens Advice is made up of the national charity Citizens Advice; the network of independent local Citizens Advice charities across England and Wales; the Citizens Advice consumer service; and the Witness Service.
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