Evie’s story
The numbers behind the stories
[Content warning: contains mentions of domestic abuse]
Like many of the people who come to us for help, Evie* has been having a really tough time over the past few years.
She experienced domestic abuse during the pandemic, and as a result her mental health really suffered. With the help of a domestic abuse charity, she was able to leave the relationship and move out into a new home with her young child. But she found herself struggling to cope financially as a single parent. She immediately started building up debt and felt afraid to open any letters.
Evie went back to work after the birth of her child, but her physical and mental health soon deteriorated to the point that she had to stop work. She began claiming Employment and Support Allowance (ESA) and Universal Credit (UC), but it wasn’t enough. Although Evie receives the Limited Capacity for Work Related Activity element, which entitles her to additional support, it still isn’t enough to enable her to make ends meet.
When Evie came to Citizens Advice, our debt advisers realised that she’s in a negative budget: her essential costs are higher than her income. Every month she’s £85 in the red.
The problems
One of the main problems Evie faces is that her housing costs are not fully covered by Universal Credit. She pays £550 in rent each month, but the limits of the Local Housing Allowance rate means that she’s nearly £120 short each month. She applied for a Discretionary Housing Payment to try and cover the shortfall, but this might not be successful and would only be a temporary solution. Every month she has to try and find the extra money for rent from other parts of her budget, which isn’t easy to do.
Another issue is that she has £55 deducted from her Universal Credit each month for an advance payment and an overpayment. Because there’s a 5 week wait for receiving Universal Credit, many people apply for advance payments to help tide them over. But these payments are loans which have to be repaid — something which can take up to 2 years. Because these payments are automatically deducted from the monthly Universal Credit payment, Evie is forced to prioritise repaying this loan over any of her other debts.
This order of debt prioritisation can have serious consequences. If Evie can’t pay back her priority debts, such as Council Tax and Dual Fuel debts, she may face increased costs, bailiffs, and even the threat of prison. This puts her in a really difficult position.
A further challenge Evie faces is high transport costs. Evie’s disabilities mean she has limited mobility, and this makes having a car a lifeline for her. For many people who don’t live in cities, public transport options can be limited and even when available, are very difficult to use when you have a young child and a disability.
Being on such a low income meant Evie didn’t have enough money to buy a car outright. Instead she used Hire Purchase — a type of car finance that allows you to spread the cost of purchasing a vehicle across a contracted period. While this has made it possible for her to afford a car, it’s a huge drag on her monthly finances. Evie didn’t have another option, but it’s a further debt which she has to pay off.
What could make things better?
Evie’s situation could be improved if she received all the income our advisers think she could be entitled to.
One important source is child maintenance payments. Evie should be receiving £80 a month from her ex-partner, but he’s only paid this a couple of times. This money would almost take Evie out of a negative budget, but because of the history of domestic abuse it’s difficult, and potentially unsafe, for her to pursue this.
Another important source of income Evie is missing out on is Personal Independence Payment (PIP). Until last year she had been receiving PIP, but when she told the DWP about an additional medical diagnosis she had received, she found that her payments were suddenly stopped and her award removed. Our advisers helped Evie to appeal this a year ago, but she’s still waiting for the result. That means she’s had to go a whole year without the money she needs to help her and had previously relied upon.
Neither of these 2 options are guaranteed.
Hope on the horizon?
Unfortunately, the Chancellor’s Spring Budget on the 6th March hasn’t helped her much either.
While the 6-month extension of the Household Support Fund was welcome, the 2p cut to National Insurance and the increased Child Benefit threshold won’t help people like Evie who aren’t and can’t be in work. While the Chancellor may hope that tax incentives will lead some people into work, for people like Evie this just isn’t an option. Her disabilities, coupled with her role as a full time carer for her young child, mean that she can’t take up work at the moment.
So what could make a difference for her? In our recent report, we suggest 5 policy options which could have a big impact for the roughly 5 million people in a negative budget across Britain. These are:
- Legislate to uprate working-age benefits using inflation data from the Household Costs Indices, so they better reflect the true cost of living for low-income households
- Keep increasing the national minimum wage so more people in work can be lifted out of a negative budget
- Improve energy bill support by expanding eligibility for the Warm Home Discount and increasing support for those with the greatest energy needs
- Ensure affordable access to essential markets through social tariffs for water, broadband and motor insurance
- Reform the Local Housing Allowance so it better supports people with high private rent costs
Evie would benefit from 4 of these solutions. We’ve applied them to her budget in the graph below, to show the difference each of them would make to her situation.
By raising her benefits in line with the Households Costs Indices and reforming Local Housing Allowance, Evie would see her income increase by £113. By making her eligible for social tariffs for her broadband and car insurance, as well as entitling her to an expanded Warm Home Discount, Evie would see her essential costs drop by £77 a month.
Taken together, these changes would be worth a total of £190 each month to Evie. From being £85 in the red every month, our policy proposals would instead leave her with a £105 surplus.
After years of struggling to stay afloat, these policies offer a life raft to Evie and her child. She could afford to stop cutting back on food and start paying off her debts.
She’s not the only one who would benefit. We estimate that these policy proposals could lift 1.1 million people out of a negative budget — allowing them to make ends meet, stop needing to borrow to cover their essentials, and even make repayments towards a debt-free future.
To make a bigger positive impact on the budgets of people like Evie, and the 5 million others in a negative budget, the Government should prioritise targeted support like this over the kinds of tax cuts announced in the Spring Budget.
