closer to the edge november 2011

1 RTE Frontline/Irish Daily Mail

An Amárach Briefing for RTE Frontline/Irish Daily Mail

November 2011

RTE Frontline and the Irish Daily Mail have commissioned Amárach Research to examine the mood of the nation ahead of Budget 2012. With economic uncertainly increasing rather than decreasing, we have examined the current financial circumstances of the nation’s households and families, and their preferences for tax and spending changes in the forthcoming budget. This report summarises the main findings, and are based a nationallly representative, online survey of 1,000 Irish people in November 2011.

RTE Frontline/

Irish Daily Mail

1. Under Pressure

consumer behaviour

2. Debt Problems

mortgages & loans

3. Balancing Act

Budget 2012

1. Under Pressure


Feeling the Pinch

The vast majority of Irish adults have seen their disposable incomes fall in the past year. Women and those aged 45-54 are more likely to have seen a fall in incomes.

Source: Amárach Research, November 2011

%

Decreased

%

Increased

All Adults 68 14

Males 65 14

Females 70 14

18-24s 37 31

25-34s 62 18

35-44s 78 11

45-54s 86 6

55+ 74 7

Q. Would you say your level of disposable income has

increased or decreased over the last year?

39%

29%

18%

11%

4%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

decreased significantly

decreased slightly

no change either way

increased slightly

increased significantly

Incomes Under Pressure


Deep Impact

Tax increases have been the predominant source of pressure on incomes. Women and 25-34s are more likely to miss a loan repayment.


Q. Have any of the following happened/occurred in your household in the

past 12 months?

31%

9%

15%

19%

54%

0% 20% 40% 60%

none of these

missing a mortgage repayment

buying groceries on credit due to insufficient funds

missing a loan repayment

a reduction in income due to tax increases

Past Experiences

%

None

%

Miss

Payment

All Adults 31 19

Males 28 16

Females 34 22

18-24s 44 17

25-34s 26 26

35-44s 23 18

45-54s 22 20

55+ 38 15


Making An Effort

Just over half of all adults have made a strong effort to cut spending. Once again, women and those aged 45-54 are more likely than others to have changed.


%

Strong

%

Slight

All Adults 56 38

Males 52 42

Females 60 34

18-24s 38 51

25-34s 58 36

35-44s 60 36

45-54s 75 22

55+ 51 43

Q. What effort, if any, have you made in the past 12 months

to reduce you household expenditure?

56%

38%

6%

0%

10%

20%

30%

40%

50%

60%

A strong effort

A slight effort

No effort at all

Cutting Expenditure


Cut Leaders


Q. In which of the following areas, if any, have you reduced household expenditure in the past 12 months?

86% 83% 80% 74%

58%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

leisure expenses

groceries & clothing

phone & energy

car & travel insurance childcare & schooling

Areas of Reduced Expenditure


Bridging the Gap

3 in 10 adults have borrowed from friends or family in past year. Women and young people are more likely to borrow from friends and family; 45-54s more likely to use their credit card to pay bills.


%

family

%

credit

All Adults 32 24

Males 31 23

Females 34 25

18-24s 42 19

25-34s 46 27

35-44s 39 22

45-54s 30 37

55+ 12 19

Q. Over the past year, have you done any of the following?

32%

24%

9% 5%

47%

0% 5%

10% 15% 20% 25% 30% 35% 40% 45% 50%

borrowed money from

friends or family

depended more on

credit card to pay bills

borrowed money from a money lender

not declared income to avoid tax

none of these

Making Ends Meet


Savings Habits


Q. Do you save regularly?

48% 52%

37%

29% 27% 25%

18% 15%

34%

0%

10%

20%

30%

40%

50%

60%

don't save regularly

save regularly

dipped into

savings to pay for:

groceries & clothing

phone & energy

bills

car & travel

expenses

insurance leisure expenses

childcare &

schooling

none of these

Rainy Days

Q. All who save regularly: Have you had to dip into savings over the last year to help pay for any of the following?


Future Concerns


Q. How concerned that the following might happen in the next 12 months?

66% 65%

45% 42%

39% 38% 33%

0%

10%

20%

30%

40%

50%

60%

70%

Income cut for self or partner

Income reduction due to

tax increases

Reduced hours for self or partner

Redundancy for self or partner

Missing a loan repayment

Buying groceries on credit due to lack of funds

Missing a mortgage repayment

Concerns for Next 12 Months


Difficulty Coping

The majority of adults would find it difficult to cope with a €50 reduction in after tax income. Women and 45-54s are the most vulnerable to even the lowest of the reduction scenarios.


€50

decrease

%

Easily

%

Difficulty

All Adults 24 57

Males 28 51

Females 20 64

18-24s 30 50

25-34s 26 55

35-44s 13 66

45-54s 16 65

55+ 31 53

Q. We would now like you to tell us the likely impact that the following

scenarios would have on your after tax income:

€50/100/150 monthly decrease in income

24% 12% 8%

19%

13% 9%

57% 75%

83%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

€50 monthly decrease



Cope Easily Neither/Nor With Difficulty

2. Debt Problems


Mortgage Matters

Roughly equal proportions of adults pay or don’t pay a mortgage. Men and those aged 45-54 are more likely to pay a mortage (solely or jointly).


%

Pay

Mortgage

%

Don’t Pay

Mortgage

All Adults 50 50

Males 58 42

Females 45 55

18-24s 14 86

25-34s 50 50

35-44s 61 29

45-54s 68 32

55+ 47 53

Q. Are you responsible - solely or jointly - for paying a

mortgage on your home?

50% 50%

pay mortgage don't pay mortgage


Negative Equity

The majority of those with mortgages report ‘positive equity’ in their home. Men and those aged 25-34 are more likely than other mortgage payers to experience negative equity.


%

Negative Equity

All Mortgagees: 22

Males 26

Females 17

18-24s 11

25-34s 33

35-44s 30

45-54s 14

55+ 15

Q. Base – all who pay mortgage: Now thinking about the value of

your home today, do you think it is worth more than you currently

owe on your mortgage, about the same as you currently owe on

your mortgage, or less than you currently owe on your mortgage?

50%

19%

22%

9%

Positive & Negative Equity

value of home greater than mortgage

value of home same as mortgage

value of home less than mortgage

don't know


Mortgage Type


Q. What type of mortgage do you have?

46% 30% 24%

8%

86%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Variable Fixed Other Contacted to switch

Not contacted

Q. Has your mortgage provider contacted you within the last year and suggested you switch type?

Base: All responsible for paying mortgage on the home


Missed Payments


Q. Have you missed any mortgage repayments in the past 12 months?

81%

19%

73%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Have not missed any mortgage repayments

Have missed one or more mortgage

repayments

Have not missed any other loan

repayments

Have missed at least one loan

repayment

Q. In the past 12 months have you missed a repayment on any other debt (e.g.: car loan, utility bill, phone bill etc)?

Base: All responsible for paying mortgage on the home

Average

number of

monthly

repayments

missed = 3.3


Missed Payments


Q. If you have missed a mortgage repayment, have you been contacted by your mortgage provider?

Q. If so, how were you contacted?

19%

77% 79% 72%

8% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Not contacted by mortgage

provider

Contacted by mortgage provider

If contacted, how?

Post Phone Email

Mortgage Provider Contact

Base: All mortgage payees who have missed a repayment in past 12 months


Health Insurance


Q. Do you have health insurance? E.g. with VHI, Aviva, Quinn, etc. Q. Will you renew your Health Insurance policy the next time it is due for renewal?

Base: All Adults

53% 47%

77%

5% 18%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Don't have health

insurance

Have health insurance

Renewal plans:

Will renew Won't renew Don't know

Plans for Renewal

83%

13%

4%

Will maintain present level of cover

Will reduce level of cover

Will increase level of cover

Q. When renewing your Health Insurance policy; which of the following do you intend on doing?

3. Balancing Act


Budget Balance

There is a clear consensus in favour of spending cuts over tax increases. There are no gender differences, though 35-44s favour cuts more.


%

Tax

Increases

%

Spending

Cuts

All Adults 33 67

Males 32 68

Females 33 67

18-24s 38 62

25-34s 33 67

35-44s 31 69

45-54s 32 68

55+ 31 69

Q. What do you think should be the share of tax increases

and spending cuts in meeting its requirements?

33%

67%

tax increases spending cuts


Closing the Budget Gap


Q. For each tax or cut please say whether think the government should go ahead or not with each measure

76%

41% 39% 39% 39% 38% 35% 33% 33%

23% 20% 16%

24%

59% 61% 61% 61% 62% 65% 67% 67%

77% 80% 84%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Increase top income tax

rate

Cut social welfare rates

to unemployed

Cut single parents

allowance

Introduce a septic tank

charge

Reintroduce university

fees

Introduce water rates

for households

Cut childrens benefit

Introduce property tax

for households

Increase rate of VAT

Cut in state pension

level

Increase bottom

income tax rate

Increase charges for

doctor visits/A&E

go ahead don't go ahead


Child Benefit


Q. Do you receive child benefit?

Q. For how many children do you receive child benefit?

67%

33% 35% 40% 25%

0%

10%

20%

30%

40%

50%

60%

70%

80%

don't receive receive benefit

if receive, no. of children:

1 2 3 or more

Child Benefit Recipients


Main Use of Child Benefit


Q. What do you do with your child benefit payments?

Base: all who receive child benefit

53% 50%

42%

20%

0%

10%

20%

30%

40%

50%

60%

spend on groceries

etc

spend on the children

use to pay bills

put in savings account

%

Save Benefit

All Recipients 20

Males 25

Females 16

18-24s 28

25-34s 22

35-44s 17

45-54s 18

55+ 30


The Budget & Child Benefit


Q. If cuts were to be made to child benefit payments in the

upcoming budget how would you prefer it was done?

Base: all who receive child benefit

63%

20%

13%

4% Introduce means testing

decrease average amount

tax just like other income

other

%

Means Test

All Recipients 63

Males 61

Females 64

18-24s 61

25-34s 70

35-44s 69

45-54s 50

55+ 43

RTE Frontline/

Irish Daily Mail

Things are tough for Irish families, and they are about to get tougher. The RTE Frontline/Irish Daily Mail survey shows that a growing minority of Irish adults are ‘running out of road’ in terms of their financial wellbeing. The impact of Budget 2012 on citizens, taxpayers and consumers will play a significant part in our economic prospects next year.

RTE Frontline/

Irish Daily Mail

About Amárach Research

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agency, providing a full range of research

services to our Irish and international

clients. We have worked with two thirds of

Ireland’s top 200 companies. Every year

we survey over 100,000 people at home

and abroad, as well as running hundreds

of focus groups.

Our experienced team of directors and

executives manage online, face-to-face

and cati surveys; as well as qualitative

research including focus groups, in-depths

and ethnographic studies. We also offer a

unique field-only service to universities and

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Amárach Research is proud to be:

RTE Frontline/

Irish Daily Mail

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closer to the edge november 2011

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