Nearly 3 in 10 find essentials difficult to afford, despite most shopping around

Nearly 30% of people find it difficult to afford essentials – like groceries, broadband and insurance – despite most people shopping around for better prices, a think-tank reveals today.

The Social Market Foundation (SMF) said the research showed the limits of the “Martin Lewis effect”, where shoppers use better consumer information to get better deals. This interim report explores the case for policy interventions, chiefly ‘social tariffs’ – discounted rates for eligible groups of consumers, typically those receiving benefits – to support households with the cost of living.

Around 80% of people are shopping around for essentials like groceries, broadband and insurance, but 21% said that they find affording their essentials quite difficult and another 7% said affording essentials was very difficult. Vulnerable groups such as the financially ‘struggling’, those on benefits, or with a disability were less likely to find affordable offers whilst shopping around.

Between 1 in 7 and 1 in 5 people find the process of shopping around difficult to navigate, SMF finds. In our focus groups, several participants expressed scepticism about whether businesses were passing on wholesale cost reductions to consumers – thus, according to them, shopping around on its own is not sufficient to find affordable prices.

Results of SMF polling further highlight the depths of the affordability crisis for essentials among those on the lowest incomes and/or claiming benefits. Over half of people on Universal Credit say that affording essentials is difficult. About 29% of ‘financially struggling’ households are spending over 80% of their household income on essentials – compared to just 12% of the general population.

The report comes amidst ongoing pressure on household finances, with food inflation at about 15% and ‘likely to remain high’ for the rest of year, according to the Bank of England. As politicians across the political spectrum make promises on easing the burden on households, they should be considering the role of social tariffs for the most vulnerable, the SMF said.

A majority of people think that there isn’t enough support to help struggling households afford essentials overall, which rises to four-fifths of ‘financially struggling’ people. And 59% support the idea that certain households should be given discounted rates for essential goods and services, whilst 12% oppose.

That said, the report also found an ongoing lack of awareness and barriers to uptake of current support, including social tariffs. Two-fifths of those not claiming social tariffs, despite being eligible, said they did not claim because they did not know how to do so. There is also a perception, uncovered in our focus groups, that social tariffs deliver a lower level of service than normal tariffs.

Further SMF analysis finds that ineffective targeting means that people are “falling through the cracks”. There are around 1.1 million households in the bottom income quintile who do not receive any income from benefits. Many social tariffs use receipt of benefits as the key eligibility criterion, meaning these households miss out on support.

These interim findings will be followed by a policy report later in the year, describing a new social tariff framework that should be in place to deliver better access to essentials to those least able to afford them. The project is commissioned by Citizens Advice. The SMF retains full editorial independence.

Sam Robinson, Senior Researcher at SMF, said: “Whilst Martin Lewis and other consumer champions have done enormous good by empowering shoppers to get better deals, this research shows that there are limits to that – millions of people are doing the right thing and looking around for better prices, but they still can’t afford the basics.

Inflation may be somewhat easing, but we are not out of the woods yet. With another difficult winter approaching, this is not the time to get complacent. There is still a long way to go to strengthen the cost of living support available to households and help those for whom the market clearly isn’t working.”

David Mendes da Costa, Principal Policy Manager at Citizens Advice added: “Everyday our advisers support an increasing number of people who don’t have enough money to cover their essential bills. This is despite already switching to the cheapest tariffs available or cancelling some important services altogether.

“Struggling households cannot simply switch themselves out of the red, those on the lowest incomes urgently need more support so they can afford to cover their essentials.

“As we head into another winter where families will no doubt face more impossible choices, the Government must find a way to move past short-term solutions. It must consider bold ideas, like social tariffs, which address affordability at the root, to make sure no one is left behind.”

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Nearly 3 in 10 find essentials difficult to afford, despite most shopping around