Cut in income of £100 per month would be troublesome for many UK households

November 19, 2015

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By Lucy Palmer-Richeson

New figures released by national charity Citizens Advice have shown that more than 30% of people would need to stop paying necessary bills, borrow from family or fall into debt if their income dropped by £100 per month.

Attempting to find new income to cover the drop would also be a problem, as many people questioned stated they had caring commitments that prevented them from working more hours, or that their employer would be unable to offer more hours or more pay.

Over 80% of people who receive an annual income of between £15,999 and £29,999 said it would be difficult or very difficult to cope with the cut, as did nearly 50% of those on an annual income of over £30,000.

The Citizens Advice survey, which was conducted online and completed by 500 people, found that the majority of people (77%) would cut back in other areas to absorb the change in their finances. Of the 1 in 3 that said they would struggle the most, half said they would borrow from a friend, 45% would skip paying essential bills, 41% would resort to an overdraft and 31% would use a credit or store card.

Next week, the Government is to consider changes to tax credits, and if all goes according to plan, many households will face a cut in income of £100 per month.

Chief Executive of Citizens Advice, Gillian Guy, warned: “Being £100 a month worse off can significantly affect people’s financial security.

“For too many people the only option to cope with a drop in income is to borrow money or go into debt on their essential bills.  Childcare responsibilities can mean people are unable to take on any more work to fill the gaps, and where people are able to increase their income it can take up to a year to do so.

“People on tax credits are facing the prospect of a £100 drop in income.  Ministers need to look carefully at their plans to change tax credits to ensure people aren’t driven into debt, have plenty of time to plan their finances and are given help to achieve a financially secure position,” she said.