Millions struggling to pay council tax and other essential bills, says new Financial Inclusion Study

Poverty is rising for all groups - even those in work - according to a new financial inclusion monitor report.

Research from the University of Birmingham and the University of Lincoln shows nearly 1.6 million people falling behind with council tax payments, with six in ten people in the poorest fifth of the population reporting they are in problem debt - mainly council tax payments, rent or utility bills.

Nearly 1 million people are behind with their rent, while over a 1 million people are behind on water bills.

The 2019 Briefing, found that nearly 2.2 million people report having been contacted by bailiffs and nearly one million experiencing bailiffs breaking the rules. A growing number of personal insolvencies were also highlighted, with over 70,000 Individual Voluntary Arrangements (formal alternative to bankruptcy) made in 2018, up from 40,000 in 2015.

Karen Rowlingson, Professor of Social Policy and Deputy Director of the Centre on Household Assets and Savings Management (CHASM) at the University of Birmingham and co-author of the report said:

"The government is saying that austerity is over but our research shows that millions of people are still struggling to pay essential bills. Much more needs to be done to increase income levels to help people make ends meet."

The report also finds that the number of people without a bank account has reached an all-time low of just over one million people. And some financial institutions are making particularly strong efforts to provide basic bank accounts, including the Co-operative Bank. But others are doing relatively little. And, overall, banks are making an estimated 2.4bn in revenue from unarranged overdrafts with people in deprived areas are more likely than others to pay these fees.

Other key findings:

  • The rapid growth in zero hour contracts, witnessed since 2012, has now stabilised at nearly one million people in 2018,
  • While the growth in employment is very welcome, average weekly real earnings have still not quite recovered to their pre-financial crash levels.
  • Workers in four types of industry have particularly high rates of poverty: accommodation and food services; agriculture, forestry and fishing; administrative and support services; and wholesale and retail.
  • The UK’s household savings rate is lower than the EU average and far lower than many of our largest and closest Western European neighbours.
  • The last four years have seen a dramatic rise in the number of people with an active private sector pension, from 2.8 million in 2013 to 8.8 million in 2017.
  • From April 2019, the minimum contributions to workplace pensions increased from 5% to 8% (2% to 3% for employers and 3% to 5% for employees).
  • Only 6 in 10 working-age adults had home contents insurance in 2017/18.

Steve McKay , Distinguished Professor in Social Research from the University of Lincoln and a co-author of the report says:

“The record on jobs remains very positive, but despite growing numbers in paid work many families remain poor. This is our last report before a likely Brexit. Any return to harsher economic conditions risks worsening such trends”.

has been authored by Karen Rowlingson, Professor of Social Policy and Deputy Director of the Centre on Household Assets and Savings Management (CHASM) at the University of Birmingham, Steve McKay, Distinguished Professor in Social Research from the University of Lincoln and Dr Louise Overton , lecturer in social policy at the University of Birmingham. It was funded by the Friends Provident Foundation and the Barrow Cadbury Trust.

  • The briefing has built on six previous annual reports which were commissioned to measure changing levels of financial inclusion in Britain. The paper presents data from a number of different datasets and where possible, the report shows data from previous years to highlight trends in these indicators.
  • Financial inclusion had been broadly defined as the ability to: manage day-to-day financial transactions; meet expenses (both predictable and unpredictable); manage a loss of earned income and; avoid or reduce problem debt. In order to achieve financial inclusion, people need both a sufficient level of income and access to appropriate financial services. This briefing paper therefore begins with a snapshot of the broad economic picture in terms of growth, employment and incomes before focusing on access to financial services.
  • An Individual Voluntary Arrangement (IVA) is a form of insolvency which involves a formal and legally binding agreement between debtors and creditors to pay all or part of any debts. The debtor agrees to make regular payments to an insolvency practitioner, who divides this money between the creditors. An IVA usually involves two sets of fees: a set-up fee; and a handling fee each time a payment is made
  • is ranked among the world’s top 100 academic institutions. Its work brings people from across the world to Birmingham, including researchers and teachers and more than 5,000 international students from over 150 countries.

  • CHASM is a research centre based jointly in the School of Social Policy and the Birmingham Business School within the College of Social Sciences. The Centre undertakes research with academic rigour and with relevance to current issues.
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