The cost of living crisis

As we face the worst financial crisis in a generation, a UDAN member gives the view from the frontline of debt advice.

There has been a lot in the news recently about the cost of living crisis that is impacting on many thousands of people currently in the UK. Against the backdrop of Brexit, the Coronavirus Pandemic, wage stagnation, the war in Ukraine and increasing inflation. Consumer prices, as measured by the Consumer Prices Index (CPI), were 5.5% higher in January 2022 than a year before. A particularly important driver of inflation is energy prices, with household energy tariffs increasing and petrol costs going up. Things are going to get worse for a significant number of people in the country in the coming weeks. Particularly with increased energy costs and incomes being squeezed further from next month.

A recent report by the Resolution Foundation[1] estimates an increase of inflation to 8% across 2022/23. And part of the impact on living standards can be directly attributed to the policy of increasing benefits with a lagged measure of inflation: in 2022-23, this will cut the real value of the income provided by the benefits system by £10 billion.

For advisers and caseworkers employed at the frontline in the Money Advice sector we expect to see a massive increase in demand for our already stretched services. A cornerstone of how we deliver advice to clients is in face-to-face (F2F) community-based settings. And having a presence in locations across the country is vital for sections of the community who cannot access digital platforms to help resolve their issues. Whether it be due to mental health, language, literacy problems or the fact, the client just feels more comfortable talking to another person who can assuage their fears and provide appropriate options in person. Advisers on the ground know their client base, they also have invaluable contacts to local organisations, such as enforcement team within local council tax offices, what foodbanks operate locally and when. This wealth of local provision helps protect some of the most vulnerable in society on a daily basis. And in many cases mitigates situations escalating for clients, and causing further anguish and stress.

The reality for many will be to ‘eat or heat’ as their incomes become ever more stretched, caught between the anvil of the cost of living crisis and the hammer of austerity. And let’s be clear, austerity was never an economic inevitability, it was a political choice. The proliferation of foodbanks across the country has become normalised, and people accessing them to be able to feed themselves and their families is now an accepted everyday occurrence. All this, in a G7 country – an advanced economy, where some in society are advancing financially while significant proportions of the population have been treading water, and will now be sinking at faster rate than ever before. Billionaires use space travel as their latest vanity projects, while vulnerable people skip meals and impinge on their thermal comfort in an attempt to make ends meets.

The Chancellor’s spring statement this week, has done nothing more than offer a sticking plaster to a battlefield wound. It will still be everyday people who bear the biggest burden of the current cost of living crisis. The wealth inequality within our country grows further with every passing year, UDAN members witness this on a daily basis as they help people to navigate their debt problems. Real incomes are going to be squeezed more and more, and the Government should have taken the necessary steps to alleviate the financial pressures people are faced with to ameliorate the impending catastrophe while there was the opportunity to do so.


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