The phrase ‘cost of living crisis’ has been buzzing around the news, but what does the cost of living crisis mean?
In short, the cost of living crisis refers to the increasing costs that households are experiencing, which is leading to huge swathes of people across the UK being unable to afford essential living costs. In order to take a deeper look at what this means, Christians Against Poverty (CAP) commissioned a YouGov poll of a nationally representative sample of 2,270 people in August 2022.
The findings highlight the worrying outlook for this winter
The vast majority of the UK population — 44.4 million people — have been financially affected by the cost of living crisis. People across the UK, have been hit by rises across their household bills, with:
86% of UK adults (45.8 million people) seeing their food costs increase.
82% (46.5 million people) experiencing rising energy bills.
71% witnessing rising fuel costs (37.6 million people).
45% (23.8 million people) seeing an increase in council tax bills.
Unfortunately, these are not small changes. Only 2% of UK adults report seeing no increase in their household bills. More than half (56%) of UK adults (29.6 million people) have seen their monthly bills and costs rise by more than £100. Most report an increase of between £100 and £500 a month, but for some (2.6 million) the increases have been between £1,000 and £2,000 a month.
[Lower income adults are struggling in the greatest numbers. 35% of people with an income of less than £15,000 a year are struggling to keep up financially with rising costs, compared with 12% of those earning between £50,000 and £69,999 a year.]
What’s the impact been?
These price increases are already starting to have an impact on the financial stability of households across the country. 10 million people are struggling financially because of the rising cost of living, in spite of the Government’s existing support, their costs are set to rise further this winter.
This has led to 6.9 million people falling behind on household bills and 9 million using credit to cope with rising costs.
As is often the case, the crisis hits hardest for those who are on the lowest incomes and were already in financial difficulty. Nearly a third (30%) of low income households are behind with their bills, compared with 13% of all UK adults. 63% of people who are in the lowest income bracket (earning less than £15,000 a year) have been struggling since 2021 or before so these additional price increases are making an already hard situation even more difficult.
Nearly a fifth (17%) of UK adults have used credit cards, overdrafts or loans to cope with rising costs, with 4.2 million people also turning to friends and family to borrow money. This is a shockingly high amount of people being forced to take out debt to survive.
The wider picture of credit use in the UK is that four in ten (42%) UK adults have borrowed money this year. In fact 40% of this group have borrowed more than £1,000 (including 8% who had borrowed between £2,000 and £3,000 and 15% who had borrowed more than £3,000). The knock-on effect has seen one in ten households taking on debt, not even knowing how they will repay this amount.
But borrowing money isn’t the only sacrifice people are having to make during this crisis.
7.9 million people are going without any heating or electricity
8.5 million people are skipping meals
19.6 million people have cut out socialising and leisure altogether to cope with the rising bills
These are not small numbers, and reflect millions of individuals and families who are facing real hardship and destitution.
As the likes of the Food Foundation, Age UK and Money and Mental Health have highlighted, there are serious and long-term physical and mental health implications of missing meals, not having sufficient heating, and reducing social contact. The dark truth of the matter is this: not only is the crisis having an immediate impact on people’s financial wellbeing, but it also brings future physical and mental health implications for the adults and children that are being pushed to make heartbreaking sacrifices.
So where do we go from here?
An estimated 44 million people have been affected so far and, with winter looming, this is a very worrying time for people across the UK. People are struggling to stay afloat and, although there have been some welcome buoyancy aids provided by the government, they won’t be enough if the storm continues to rage on. People can only keep their heads above water for so long when the chilling waves of rising prices and increasing debts keep hitting.
We need to find a way to personally process this crisis, but to also find hope for a future with calmer waters.
All of these statistics highlight a tragic reality and, no matter how we paint them, they do not create a bright picture. So it is good to start off by recognising the crisis that people across the country are going through. And it is right to express the grief and sorrow of this reality. But we have to do more than this; we must move to a place of hope.
We maintain hope that politicians and those in positions of power will act to turn the tide for people who cannot navigate this storm alone. The support given already, such as the recent Energy Price Guarantee, is significant but has not brought costs back into affordable realms for people living in poverty. There is hope that through using the levers that decision makers have at their disposal, households can be better supported.
This help is needed through three policy alterations:
- Provide targeted support for low income households: further targeted financial support for low income households which takes into account the actual energy bills owed according to family size and need, including for those not in receipt of means-tested benefits.
- Increase in Local Housing Allowance and other benefits: increase Local Housing Allowance and uprate benefits ahead of Winter 2022/23 to counteract the inflation rate on essentials that low income households face.
- A ban on energy companies forcibly switching customers to prepayment meters over winter: Prevent energy companies forcibly transferring customers to prepayment meters (including smart prepay) and a moratorium on court action to collect debts.
And what can we all do to help?
Firstly, if you feel consumed by the waves, please do reach out for help. Organisations such as Christians Against Poverty (CAP) provide free debt support if you or someone you know is being pulled into debt. It really is free, non-judgmental, and open to all regardless of age, disability, race, gender or religion.
But if you, like us, also want everyone to be able to access the support that they need, you can urge the Government to reduce the impact of the cost of living crisis by sending an email to the Prime Minister directly. Click here to use our draft email.