By Victoria Weldon

Families are increasingly struggling to make ends meet as the covid-19 crisis continues, with research suggesting a worrying increase in household debt.

A study by the Institute for Fiscal Studies (IFS) today reports that non-payment of household bills worsened again between April and May, following the sharp increase in arrears already seen after lockdown.

The research also reveals that median household income has fallen by 8 per cent, equivalent to roughly £160 per month.

The poorest households have been the hardest hit, with lower-income families most likely to have fallen behind with council tax or utility bill payments.

Their earnings have also been harder hit, but a temporary increase in benefits has meant their overall income has not been affected any more than average.

Isaac Delestre, a research economist at IFS, said: “Earnings have been hit very hard for those who came into the crisis with the fewest resources.

“The picture has been much more even so far when we consider total income, rather than just earnings, which highlights the crucial reliance we now have on our benefits system to contain poverty and inequality.”

However, he added: “This still provides plenty to worry about for the lowest-income households in the longer term: not least given the career disruption they are experiencing and the fact that temporary increases to benefits made during the crisis are set to expire next spring.

“In addition, we see rises in non-payment of bills – especially among poorer households – and this worsened further in May. These represent substantial additional debts being carried forward.”

The Poverty Alliance warned more effort will be needed to support those struggling to pay.

Charity director Peter Kelly said: “Paying utility bills, covering the rent and council tax will become an increasing source of stress and worry for people as this crisis continues.

“This research highlights that it is those on the lowest incomes that are being hardest hit. It also shows the importance of social security, which can act as a lifeline to prevent more people being pulled into poverty. Over the months we will need further investment in social security by the UK Government to help those who most need it. And as debts start to mount, energy and phone companies will have to step up efforts to support those who are struggling to pay their bills.”

The IFS research, which was funded by the Standard Life Foundation, found that the number of mortgage payments was 14% lower than the body would have predicted before the crisis hit.

For rent, payments fell 11%, while council tax payments dropped 9%.

These figures show that the situation has worsened since April, suggesting that some households are increasingly struggling to make ends meet.

For the poorest households, earnings fell by around 15% between January and May, compared to around 4 to 5% for higher income households.

However, looking at income overall, they have not fallen further behind on average due to the “crucial role”of benefits.

Mubin Haq, chief executive of Standard Life Foundation, said: “The Government’s economic response to the pandemic shows bold action can make a big difference to many of those struggling to make ends meet. As debts build up and a jobs crisis looms, we need to see further swift and decisive action.”