Citizens Advice briefing - the challenges facing families who are just about managing

In a new study Citizens Advice reveals the challenges faced by just about managing families and says many of the problems are ‘fixable’.   

The report is based on new analysis of the problems faced by the 700,000 working people helped by Citizens Advice between October 2015 and September 2016.  It identifies the most common challenges as:

• Council tax debt

• Credit cards, unsecured loans and overdrafts

• Pay and work entitlements

• Benefits paid to working people

• Private rented sector

• Energy bills

The analysis also finds that families are experiencing more than one issue, on average people have 2 to 3 problems each.  For instance, 4 in 5 people advised about an in-work benefit issue also received help on another matter, with 1 in 3 having a debt problem.  This can lead to a domino effect - when one issue becomes a significant problem so do the rest.

At least 3 in 4 - and possibly as many as 90% - of working people seeking face to face and phone advice from Citizens Advice are in the bottom half of the income distribution nationwide.  Meaning they have a family income of less than £24,600.

Details and statistics on the common issues just managing families seek help for, along with a quote from Chief Executive Gillian Guy are below.  The charity has also published 10 ways the government could help just managing families in the Autumn Statement (see end).

Council tax and credit cards, unsecured loans and overdraft debt

The analysis finds aggressive or inflexible debt collection practices, in both the public and private sector, can turn ‘just managing’ into ‘not managing’ overnight.  Particularly when people fall behind on council tax, or when spirals of borrowing on credit cards or unsecured loans get out of hand.

Citizens Advice helped over 40,000 working people with council tax debt problems - with the majority struggling with debt repayments (41%) or the methods being used by local authorities to enforce council tax debt collection, particularly the use of bailiffs (39%).

It also helped over 50,000 people with credit card, unsecured loan and overdraft issues.  In 2 out of 3 cases (68%) people were struggling to keep up with repayments, again debt collection practices are an issue (7%) so too are dealing with court claims for debt (5%).

Pay and work entitlements

50,000 people experienced problems with pay and entitlements.  Wages and queries about their payslips make up almost a quarter of cases (23%) and difficulties getting sick pay or sick leave over half of the cases (55%).  

Unlawful deductions - where money is taken from employees’ wage packets for no good reason were a problem for 16% of the working people we helped.  

Benefits paid to working families

Some working families rely on the welfare system to top up their income in order to help cover day to day costs like housing.  For many they are trying to understand what they are entitled to or how a change in circumstance, like a drop in working hours, could affect their claims.

Citizens Advice helped with 125,000 issues around in-work benefits in the year to March 2016 - including housing benefits, working tax credits and Universal Credit.  Around 40% of working people we support with benefit problems aren’t sure what they are entitled to and 1 in 10 have problems with their changing circumstances, and understanding what this does to their claim.

Private rented sector

The study also highlights how not all just managing families will own their own home. Increasing numbers of working families are living in the private rented sector, reliant on insecure, poor quality accommodation with high costs and letting agent fees which make home ownership an increasingly remote aspiration.

There are 1.5 million families with children living in private rented accommodation.  We helped over 50,000 working people on issues relating to private rented housing.

These working households experience a variety of issues with renting, 18% have problems with the quality of the home they live in, a further 18% face eviction or repossession, 17% have concerns around rent and other charges and 13% have issues with deposit protection.

Energy bills

Energy accounts for over a quarter of the consumer advice we give to working people through our face-to-face network.  It is a market where the best deals are reserved for customers with the time and wherewithal to research and switch to the best deals, while a loyalty penalty means that others are exploited with unjustifiably high bills.  

Only 15% of energy customers switch suppliers. Yet our evidence suggests that those with the most to gain from switching, either because they are on an expensive tariff or paying via an expensive method (i.e. not by direct debit), are the most likely to face barriers to switching.  

Gillian Guy, Chief Executive of Citizens Advice, said:

“There is a fine line between just about managing and not.

“As our evidence shows, it is often things beyond people’s control - like aggressive or inflexible debt collection practices, landlords providing poor quality homes and bosses not giving workers the pay and leave they are entitled to - that can make life precarious for these families.

“The government has rightly identified that there are thousands of families who are just about managing - where one small change could push them over the edge. The problems faced by these families are fixable, simple steps could be taken now that would make a big difference

“This Autumn Statement is an opportunity to deliver the security and stability that these families need.  Steps such as reversing the planned cuts to work allowances in Universal Credit, getting a better deal for loyal energy customers and encouraging councils to improve their debt collection practices would be a good place to start.”   

Citizens Advice has identified 10 ways the government could help just managing families in this week’s Autumn Statement.

1. Make energy companies switch loyal low income customers to a cheaper deal. [Just 12% of energy customers who are on a low income are on the best deal]
2. Ban letting agents fees being charged to tenants. Private renters can pay as much as £700 when taking out a new contract with a landlord
3. Make big companies be more transparent by publishing the contractual makeup of their workforce
4. Cut energy bills for renters by making landlords upgrade the coldest, most drafty homes, funding costlier improvements by raising buy-to-let stamp duty to 4%
5. Make sure people on a low wage get the most from their income by reversing the planned cuts to work allowances in Universal Credit
6. Give self-employed parents the same support as employed parents by bringing Maternity Allowance into line with Statutory Maternity Pay and extending Statutory Paternity Pay and Statutory Adoption Pay to the self-employed
7. Make it easier for workers to challenge exploitative employers, creating a Fair Work Authority to enforce the law and cutting employment tribunal fees to £50
8. Encourage councils to pursue debts fairly so that bailiffs are only ever a last resort and council tax can always be paid in installments
9. Give people who are self-employed the chance to opt-in to a pensions system
10. Pause the planned cut to the Work Related Activity Group of Employment and Support Allowance until improved job support is in place

Notes to editors

1. The Citizens Advice service comprises a network of local Citizens Advice, all of which are independent charities, the Citizens Advice consumer service and national charity Citizens Advice. Together we help people resolve their money, legal and other problems by providing information and advice and by influencing policymakers. For more see the Citizens Advice website.
2. The advice provided by the Citizens Advice service is free, independent, confidential and impartial, and available to everyone regardless of race, gender, disability, sexual orientation, religion, age or nationality.
3. To get advice online or find your local Citizens Advice in England and Wales, visit citizensadvice.org.uk
4. You can get consumer advice from the Citizens Advice consumer service on 03454 04 05 06 or 03454 04 05 05 for Welsh language speakers.
5. Local Citizens Advice in England and Wales advised 2.5 million clients on 6.2 million problems in 2014/15. For full service statistics see our publication Advice trends.
6. Citizens Advice service staff are supported by more than 21,000 trained volunteers, working at over 2,500 service outlets across England and Wales.