Half of families struggle to pay bills as budget cuts bite

FAMILIES are digging deep to try to keep up with household bills and nearly half look like dropping health insurance and other vital expenses as a range of budget cuts take effect.

Any hopes of meaningful economic growth this year look under threat as more than half of those surveyed for the Irish League of Credit Unions (ILCU) are falling behind on bills, up from 42% to 55% in just three months, and have less disposable income to spend. This may be explained by rising energy and fuel costs, which 86% of consumers said has impacted negatively on their spending ability.

Although the 18% who say they are finding it hard to make ends meet is slightly better than in September, it compares to just 13% last April.

However, the impact of Budget 2012 could worsen the situation, with last week’s 2% rise in the higher VAT rate cited by more than two-thirds of consumers as the measure likely to hit them hardest. It comes as one in seven of the 1,000 people surveyed in mid-December were already indicating they could not pay for all their essential costs or had no disposable income left after doing so.

The figures also suggest impending pressure on the public health service, as 9% of those who have health insurance said they will give it up this year because they cannot afford it.

Almost one in three said they would have to give up their insurance if charges rise again. Aviva announced a price increase days after the survey was carried out, although other providers have since said they would absorb the 40% health insurance levy hike that emerged last week.

A comparison of previous ILCU “What’s Left” tracker surveys carried out each quarter last year shows that people’s likelihood of saving money has been falling, with almost half unlikely to do so each month.

Although personal debt such as credit cards, along with gas charges and mortgages, are the bills people are least likely to put off paying on time, more people are delaying payments than six months ago. Only 5% are likely to be late on electricity bills and 8% on TV, phone or broadband subscriptions, but 20% say they are likely to put off their TV licence payment and 12% may delay paying bin charges.

After the VAT increase, the budget change likely to have the widest effect is the increase in third-level student contributions. The €250 hike to €2,250 will affect almost 60% of undergraduates and although it affects a relatively small proportion of the population, 9% of those surveyed said it was the budget measure likely to have most impact on them and their families.