Millions of people in the UK are struggling financially, with one in three living on a financial ‘knife edge,’ according to a warning from Citizens Advice. The charity’s findings show that more than 7.5 million people would be forced to skip meals if their bills increased by just £20.

Five years after the pandemic began, many households still feel its financial impact, with depleted savings and increased debt leaving them vulnerable to future crises. Citizens Advice warned that upcoming price rises in April, combined with proposed cuts to disability benefits, could push those with little to no financial buffer into even deeper hardship.

The report reveals that certain groups are particularly exposed. Half of single parents and half of disabled people say a £20 increase in bills would push them into crisis.

Additionally, over four in 10 people receiving disability benefits reported struggling to afford their essentials each month, with half relying on savings to get by. One in four said they avoid medical costs, while three in 10 skip meals to pay their bills.

Dame Clare Moriarty, chief executive of Citizens Advice, said: “Millions of households are on a financial knife edge, desperately exposed to even the smallest of bill increases. Rising prices and no respite from economic blows have chipped away at finances, leaving people without a safety net and even less able to cope with future crises than they were before the pandemic.”

She added: “Without action, this will become an intergenerational issue. We urgently need targeted support for disabled people and families facing hardship, alongside action on the biggest pressure points in household budgets – rent and energy costs.”

In one case study, Laura*, who worked as a key worker in an NHS hospital during the pandemic, experienced a significant change in her financial situation after health issues forced her to reduce her working hours.

She could not survive on Universal Credit and faced losing her home and job and accumulating debt. After staying in a hostel, she eventually found housing and, after an unsuccessful initial application, was awarded Personal Independence Payment (PIP), which provided financial support.

She said: “I was so grateful when I was awarded PIP. It was like a weight being lifted because I was really struggling to live.

“The cost of living is still an absolute nightmare. Every week that you go to the shops they’ve put an extra 10 or 15p on everything. It’s gone up, and there’s no reason for it. Your money is exactly the same every month, but the bills are going up. It’s not leaving any money for food.

“Getting PIP and a good council flat means I feel as though I can manage a lot better now, but I’m still not in a good place financially. I have £3,000 in debt, but I’m a lot better than I was. It’s going to take me probably another year and a half to pay it all off but at least I can see a way forward.”

Work and Pensions Secretary Liz Kendall is expected to announce a series of welfare reforms on Tuesday (today) to increase employment and reduce what ministers describe as an “unsustainable” benefits bill.

The Government hopes to save up to £6 billion from the bill as Chancellor Rachel Reeves works to balance the books amid weak economic growth and rising debt interest costs.

Ms Kendall is set to abolish the “work capability assessment” for Universal Credit, which determines eligibility for incapacity benefit payments for those with illnesses or disabilities that limit their ability to work.

She is also expected to cut the top rate of Universal Credit incapacity benefits. According to The Times, this will be partially offset by an increase to the basic rate and £1 billion allocated to support schemes aimed at helping claimants return to work.

However, the most controversial aspect of the reforms could be changes to the Personal Independence Payment (PIP), a benefit designed to help disabled individuals with the added cost of living related to their conditions.

PIP is not means-tested and is available even to employed people. While the Government appears to have moved away from previously rumoured plans to freeze PIP (which would have resulted in a real-term cut by not increasing payments with inflation), reports suggest that future eligibility could be more difficult to meet.

This may include more frequent reassessments for both PIP and incapacity benefits to determine continued eligibility.

Several Labour MPs have already criticised the plans, despite No 10’s efforts to persuade them of the need for reform. Nadia Whittome said she was “gravely concerned by the reforms” reportedly being considered and “frankly horrified” by comments from some ministers, while veteran MP Diane Abbott said there was a “chasm” between “a tiny number of people at the top” and the overwhelming majority of MPs and party members.

Labour Greater Manchester mayor Andy Burnham warned that changes to eligibility and support while leaving the system as it is would “trap too many people in poverty”.

Ms Kendall is expected to announce her reforms at 12.30pm on Tuesday, March 18.