Citizens Advice publishes “In the Red Index” 

In response, CA is publishing an In the Red Index – so-called because it will show the proportion of people in debt who cannot make ends meet.  

CA said the move was necessary because “more and more people” in “financial crisis” have contacted the organisation than at any point since the beginning of the Covid-19 pandemic in 2020. 

In early 2019, those CA was supporting in a negative budget was 36%, a rise of four percent from 32% in 2016.  

In Q1 2022, prior to the uplift of the energy price cap, the figure had reached 46%. 

CA said the spiralling number is not due to a “collapse in incomes”, but “the inexorable bite of the cost-of-living crisis”. The ever-rising “cost of essentials” is “taking more and more people into the red”. 

It continued to emphasise that “debt advice” is one of its “most powerful indicators” in analysing people’s financial situations. CA does “detailed budgeting exercises” with tens of thousands of people each year, in aiming to sustainably retrieve them from problem debt.  

Almost half of its clients “just can’t make the sums add up” due to the cost-of-living crisis.  

CA highlighted that temporary government support during the pandemic “was keeping them afloat”.  

Although the rising costs are affecting everyone “to some degree”, the crisis is discriminating against “groups who were already struggling”. 

Self-employed were most likely to be in a negative budget across all demographic groups, even more so than unemployed people, even though they typically report a higher income.