18th February 2014
One in eight households or 12.6% are struggling to make ends meet up from one in ten last year according to Legal & General’s latest Money Moods survey. The number of households who say they are “struggling” (meaning not having income not enough to pay bills) has risen by 756,000 to 2.6 million in January 2014 and up from 1.9 million in January 2013.
The research also indicates that, for those households whose earnings do not cover bills and debts, their monthly shortfall is worse than a year ago.
The firm says the average monthly shortfall has doubled compared to last year. The latest figures show the average monthly shortfall (for those households who say they can’t afford to pay bills and debts) is £85 across the UK, double the figure recorded in January 2013 (£42).
Regionally the figures tell a similar story with nearly all regions showing a worsening monthly shortfall for homes struggling to pay bills and debts.
John Pollock, Chief Executive Officer, Legal & General Assurance Society said: “Despite January inflation falling below 2% for the first time in 10 years, our MoneyMood survey shows we are not yet seeing any strong signs of recovery in household finances.
“Gas and electricity costs are not yet showing signs of coming down and this may be a key factor in holding back improvement of household finances. The ONS reported that the cost of gas and electricity has been one of the largest contributors to inflation over the last 27 months.
“Two key measures in our latest MoneyMood indicate more homes are worse off compared to January 2013. Firstly the number of homes who are struggling to make ends meet has risen significantly year on year. In January 2014 three quarters of a million more homes are struggling to avoid sinking into debt than at the start of 2013.
“The second measure is that, for those families whose earnings do not cover paying bills and debts, the average shortfall has doubled to £85. In some regions it’s even higher. It’s likely the cost of gas and electricity will continue to be a key factor in determining the strength of household finances for some time to come.”
Compared to January 2013 the number of homes saying they are struggling is much higher in every region except in the North East, Wales and Scotland.
The biggest changes in household finances appear to be East Midlands where the average monthly shortfall is £124, up £99 per month compared to last year, London at £128 is an increase in average monthly shortfall of £95 each month and the North West at £100 is showing a rise of £55 per month compared to last year.
Yorkshire and Humberside at £60 per month and West Midlands at £86 per month both show monthly shortfall increasing but by less than the national average (£43 per month).
Three regions have reduced their monthly shortfall compared to January last year, The South West – £73 (down from £88 per month), Wales – £24 (£1 lower than last year – £25) and the North East – £13 (down from £41 monthly).
Money Mood survey methodology
TNS Omnibus carrie out research for the Legal & General MoneyMood Survey. Telephone interviews were conducted among a nationally representative sample of around 1,000 adults (age 18+) between 18-20 January 2013 and 24-26 January 2014.