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The number of UK households seeking help with cost-of-living issues is heading for a record going into winter as the voluntary sector warned that it would struggle to cope as it is squeezed by rising costs and dwindling donations.
Data collected by Citizens Advice, the charity that offers independent counselling to those struggling to pay their bills, shows demand for consultations well ahead of last year as the poorest families struggle with rising housing costs and the removal of state support for energy bills.
The number of people requesting help from Citizens Advice for cost-of-living issues last month was a fifth higher than in October 2022 and more than 40 per cent higher than a decade ago when records first began, according to its latest figures.
Sarah Vibert, chief executive of the National Council for Voluntary Organisations (NCVO), the largest membership body for charities in England, warned that this winter was shaping up to be the “toughest yet” for charities, which have become an increasingly important part of the social safety net in recent years.
Almost a third of the income of the voluntary sector comes from contracts delivering government services, which were being hit by inflation and continuing high energy costs, she said, while donations were dwindling.
She urged chancellor Jeremy Hunt to use the Autumn Statement to intervene and boost the value of the contracts to prevent voluntary organisations from going under.
“The value of these contracts isn’t rising in line with inflation and we’re calling on the chancellor to correct this in the Autumn Statement by ensuring these contracts are uplifted to meet the true cost of delivery. If this goes unheard, many charities could cease to exist,” she said.
Morgan Wild, the head of policy for Citizens Advice, said that rapidly rising housing costs were the biggest driver of demand for requests for help at the charity’s UK network of 3,300 advice bureaus.
The ending of the universal £400 grant to help households with energy bills in March, combined with the freezing of housing benefit rates since 2020, was leaving more people unable to make ends meet.
Housing benefit payments covered the full cost of just 5 per cent of new private rentals in the first quarter of 2023, compared with one in four in April 2020, according to the Institute for Fiscal Studies.
Half of the people who reach out to Citizens Advice for debt counselling, including growing numbers of mortgage holders, are in so-called “negative budget” where necessary spending exceeds their income, up from 37 per cent before the pandemic, Wild added.
“Energy prices have come down to some extent, but are still higher than three years ago, but the real shift is in housing-related demand. We’re seeing record numbers of evictions and record numbers of people seeking advice on housing issues,” he said.
Nicole Sykes, the head of policy at Pro Bono Economics, a consultancy for the charity sector, said that real-term incomes for the charitable sector were projected to fall by £800mn this year, based on analysis of forecasts from the Office for Budget Responsibility.
“We have a population and a sector which are both receiving much less support from the government than last winter, but a year of high prices and almost four years of ever-increasing demand have taken a toll,” she added.