abrdn Financial Fairness Trust – Personal Finance Research Centre

2023 round-up

Posted on 15 December 202315 December 2023 by david.collings

A message from our Research Co-Directors

This year the Personal Finance Research Centre published 12 new research reports and 5 policy briefings. At the same time, our team have found time to respond to consultations and calls for evidence, write peer-reviewed journal articles, speak at conferences and on radio shows, and lead some of the projects that we’ll be reporting on in 2024.

All of this activity has the common goal of sharing our research as widely as possible and promoting our recommendations for changes to policy and practice that can improve situations for individuals and households.

In 2023, the cost-of-living crisis remained at the top of the policy agenda, and we spent the year researching its impact. Our Financial Fairness Tracker (in partnership with abrdn Financial Fairness Trust) has documented how UK households are coping. The 8th and 9th waves of the Tracker in May and October found ‘a new normal’ where some households are beginning to adjust to higher costs, but their overall financial wellbeing remains significantly worse than in 2020 and 2021. We also investigated the financial wellbeing of disabled people; considered the role that housing tenure plays in household finances; and collected first-hand testimonies from people who struggled with high energy costs last winter. In all our reports, we highlight the real-world implications of our findings and make evidence-based recommendations about how best to support those who need it.

As ever, collaboration has been a fundamental part of our research in 2023 – with other academics and research organisations, policymakers and practitioners, charities and civil society organisations, and – crucially – the lived experience experts and research participants whose views and experiences we seek to accurately represent through our work. Our thanks to everyone we’ve worked with this year.

If you haven’t already done so, we hope you find the time to engage with at least some of our research. And please do get in touch if you have any questions or reflections to share.

Wishing you all the best for the new year.

Sharon Collard and Sara Davies, Research Co-Directors

Research and policy

In 2023 we explored:

The financial wellbeing of UK households (in ‘The new normal’ and ‘Turning a corner?’). In addition we explored the financial wellbeing of different groups including: Scottish households; different tenure groups; and a major study designed with the help of disabled people people, which explores what ‘financial wellbeing’ means to them and the difficulties they face in trying to improve their financial wellbeing. From this we published four policy briefings on the benefits system; barriers to employment; access to essential services; and the extra costs of disability
The intersecting impacts of mental ill-health and money problems on the financial wellbeing of people from minoritised ethnic communities.
The scale and nature of the poverty premium in 2022, building on our 2016 and 2019 research in this area.
An evaluation of the Nationwide Incubator to tackle the poverty premium that low-income households in the UK face.
The substantial extra costs and loss of income that can occur as a result of living with Cystic Fibrosis.
The family dynamics of gambling harms, which highlights the need for strategic efforts to support those affected by someone else’s problem gambling.
Testimonies from the energy crisis, which foregrounds the lived experiences and behaviour changes made in homes as people sought to reduce their energy bills in the winter of 2022/23. Using interviews and financial diary methods, we sought to understand experiences during the energy crisis, and how current and future policies can provide support.
Supporting debt advice clients through strong referral partnerships

All of these outputs are available on our website.

🎉PFRC at 25🎉: UK Household Finance and Poverty Conference

Photo collage of peakers and delegates at the UK Household Finance and Poverty Conference in November 2023. — Speakers and delegates at the UK Household Finance and Poverty Conference in November 2023.

In November we hosted a one-day in-person conference to celebrate 25 years of PFRC, which was founded in 1998 by Professor Elaine Kempson. The conference agenda centred around three themes:

Reflections on the past, present and future of household finances through the lens of 25 years of impactful research.
The seen and unseen dimensions of poverty, with a focus on housing and energy.
Research into policy and practice.

Attended by over 80 delegates, it was a day of excellent keynote speeches, lively panel discussions and stimulating conversations. It was also a fantastic opportunity to catch up with old friends and colleagues and make new connections. Our thanks to everyone who joined us and helped make it such a great day.

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The financial wellbeing of disabled households in October 2023

Posted on 6 December 20236 December 2023 by david.collings

By Jamie Evans, Katie Cross and Sharon Collard

Foodbanks and benefit inadequacy

The October 2023 edition of the abrdn Financial Financial Fairness Tracker shows an increase in the number of UK households that are facing real hardship, with 9% of all households having used a foodbank in the past six months (compared with 6% in October 2022). Worryingly, this rises to 20% among those receiving disability-related benefits (up from 12% in October 2022), suggesting that the level of benefit support for disabled people has become increasingly insufficient against a backdrop of rising costs. Even more concerningly, recent Trussell Trust research shows that 62% of people in disabled households referred to foodbanks were not receiving any benefits specifically related to their disability.

Figure – Proportion of those receiving disability benefits who have used a foodbank in the past six months

Notes: We define ‘disability-related benefits’ as those receiving any of: Personal Independence Payment (PIP), Disability Living Allowance (DLA), Adult Disability Payment, Employment and Support Allowance, and Carer’s Allowance. October 2023 sample sizes:; disability-related benefits = 912.

Cost of Living payments

During the cost of living crisis the UK Government has provided certain groups of people with Cost of Living (CoL) payments. These do alleviate some of the most severe forms of hardship faced by households. Citizens Advice, for example, reports decreases in foodbank referrals in the weeks following CoL payments being made; but impacts tend to be short-lived, with referrals ticking upwards in the following months.

A third (32%) of Tracker households told us that they had received a CoL Payment in the past 12 months, with 27% of these being ‘in serious financial difficulty’. Households receiving the low-income CoL payment were most likely to be experiencing serious financial difficulties (35%), compared with 31% of those receiving the disability payment and just 15% of those receiving the pensioner payment.

Extra energy costs

Disabled households in the Tracker – many of whom are likely to have comparatively high energy needs – were among those struggling most with energy costs and anxious about future costs. Indeed, the most common extra cost faced by disabled people in our recent study with disabled people was energy or other utility bills (incurred by 78% of respondents), as one participant described:

“On any given day, it’s mandatory that I have power for: an electric bed (all night), an electric toilet (several times a day), an electric bath (once a day), an electric wheelchair (charged daily at nights), an electric hoist (used several times a day and permanently on charge), a lift (used frequently daily)… and that’s not including any ‘normal’ devices that folks use like kettle, internet, TV, heating and oven!” (Evans et al, 2023).

According to the Tracker, 6% of all households were behind with electricity bills and 5% with gas/other energy bills in October 2023. These rates were, however, double for disabled households (13% for electricity; 11% gas/other energy). Disabled households were also more likely to be paying for energy using a pre-payment meter (28% compared with 18% of all households).

Finally, Tracker data shows signs of increasing credit stress for disabled households, who were much more likely to have fallen behind on consumer credit than others (25% compared with 16% of all households).

Conclusion

Given the latest Tracker figures, it is unsurprising that three-in-five disabled households (59%) are worried about their financial situation in the next three months. Many disabled people will be further concerned by the rhetoric rising from the Chancellor’s Autumn Statement. The disability charity Scope said that the Chancellor had “doubled down on a plan that will ramp up sanctions and demonises disabled people”. This tallies with our earlier research, which found that seven-in-ten (71%) disabled benefit recipients had been made to feel guilty about applying for benefits, predominantly caused by societal stigma about doing so.

Our findings show that to help disabled people improve their financial situations requires four main things:

Better access to employment for those who can work
A benefits system that provides a proper safety net
Targeted support to reduce the costs of disability
Access to essential services and advice.

Debt advice can be life-changing, but advisers can’t work miracles

Posted on 4 April 2022 by david.collings

By Sharon Collard and Jamie Evans

Two years on from the start of the Coronavirus pandemic, at least 8.5 million people in the UK need debt advice from a regulated provider, fuelled by a cost of living crisis that is stretching the finances of millions of UK households to breaking point. Even so, our research suggests that only a minority of people who would benefit from debt advice will actually seek it – a conundrum that has exercised the debt advice sector, creditors, regulators and governments for decades. Where people do seek debt advice, the evidence shows that only a minority get all the information or help they feel they need.

The Coronavirus Financial Impact Tracker was commissioned by abrdn Financial Fairness Trust in March 2020 to capture the financial impact of pandemic on UK households through a series of periodic cross-sectional online surveys conducted by YouGov and analysed by the University of Bristol’s Personal Finance Research Centre. Five surveys were conducted over the course of the pandemic, the last one in October 2021.

One of the things the surveys ask about is whether people sought debt advice from any free-to-use debt advice providers (such as Citizens Advice, National Debtline, StepChange Debt Charity) or fee-charging companies. Looking at the survey findings from October 2021, we see that only 5% of UK households said they had received any spoken advice about their financial situation since the start of the pandemic; 7% had received online advice (e.g. via by WhatsApp or webchat); and 4% had received both spoken and online advice (Table 1).

Not surprisingly, households in worse financial situations were more likely to have received advice over that period – 17% of households classed as ‘in serious financial difficulty’ had received spoken advice; 26% had received online advice and 13% had received both spoken and online advice (Table 1). That still means most households ‘in serious financial difficulty’ did not get any information or help about their financial situation from a debt advice provider, even though 93% of them said thinking about their financial situation made them anxious, 85% were struggling to pay for food and/or bills, and 55% were in arrears on at least one bill/credit commitment.

It could be that government financial support and payment deferrals from lenders helped many of these households weather the financial impact of the pandemic, but such assistance is unlikely to have resolved underlying debt problems. They may also have relied on self-help and obtained the information they needed from other sources that we did not ask about in the survey.

Table 1

We also asked advice-seekers whether they received all the information or help they needed from the debt advice provider they contacted. Almost half (46%) of all advice-seekers said they only received some of the information or help they needed; and a further 14% said they received none. This picture was amplified among advice-seekers who were ‘in serious financial difficulty’, where only a quarter (25%) said they received all the information or help they needed (Table 2).

Table 2

These findings raise some fundamental questions about why people aren’t seeking help who seem to need it; but also why most advice seekers are not getting all the information or help they feel they need – particularly those ‘in serious financial difficulty’.

Despite all the positive help that debt advice agencies provide, there are limits to what can be achieved for people in serious difficulties who have little or no spare income to pay back what they owe and for whom bankruptcy or debt relief fees may be prohibitive. In some cases, debt advisers may be able to do no more than confirm there is no real tangible help available or any recourse to additional financial support. This points to the need for wider reforms outside the debt advice sector such as adequate state safety nets, real living wages and better access to debt relief.

In addition, advice-seekers may need other services such as welfare benefits advice or legal help with their debts that debt advice services can’t offer. It could also be the case that people have expectations of debt advice services that exceed the reality of what these services can offer. Addressing these questions is important to ensure that debt advice reaches more people who need it and delivers good outcomes for the people who use it.

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