We’re in the middle of a cost-of-living crisis

When the fuel dropped below £1 during the pandemic, the valid concern voiced by many was, what will happen when the pandemic is over? And they were right to worry. Fuel in some areas is over £2 per litre now and even from my own personal experience, my household utilities have increased from £52 a month (May 2020 Octopus Energy) for a 2 bedroom semi-detached property, to £140 (June 2020 Octopus Energy). Nearly 3 times the cost.

I’m very fortunate that I’m able to cover the cost of this increase. My friends, family and loved ones in hospitality or other low-wage jobs have all, very suddenly, been plunged into unexpected and unmanageable debt. Many of them who are fortunate enough to have the opportunity to, have moved back in with parents or other family. Those who require vehicles for work, particularly commutes, even with mid-range salaries are struggling and the cost of public transport is steadily increasing too. According to ONS, over 43% of people found the cost of paying their bills alone “very difficult” or “difficult” in March 2020.

As the primary writer of Money Talks, I want to explain what and why this is currently happening and offer some help, wherever possible. I am going to preface that with the fact that the situation is not a good one, and a lot of my advice is not going to solve the problem. Pretending that everyone can administrate or budget their way out of a cost of living crisis and potential recession is not only naive but perpetuates the shame and blame around debt toward people in need of help and not the people who are actually largely to blame or responsibility for the current lack of infrastructure and support available. People in debt are often not the ill-educated, frivolous gamblers that society might lead you to believe they are. More often than not, people in serious debt, end up in debt through little-to-no fault of their own. 

Pretending that everyone can administrate or budget their way out of a cost of living crisis and potential recession is not only naive but perpetuates the shame and blame around debt toward people in need of help

Many single mothers for example, often end up stuck between eye-watering childcare costs and other childcare needs, and inflexible, low-pay working options with little-to-no government support. With a lack of infrastructure to support them, debts very rapidly pile up for non-negotiable living costs.

Firstly, why are costs so high? 

The COVID19 pandemic

Naturally, the pandemic had a huge impact on the economy, but it is far from the only reason that costs are so high in the UK right now. A variety of aspects of the pandemic including the furlough scheme, factory shut-downs in Asia and disruptions to supply chains have had an enormous impact on not just the cost, but the availability of many essential goods.

The Ukraine war

The war with Russia has had an expected impact on fuel prices, whilst the UK only imports around 613% of its fuel from Russia, the sanctions imposed have increased global fuel prices and the sanctions have had an impact on the cost of other goods and transport supplies in the process.

Infrastructure

Not everything, but certain things are within government policy control, from regulating price caps, minimum wage and access to funding for those who need it. There is no right or easy answer, but government policy including the sudden hike in council tax and other taxes massively impacts our cost of living. The well-meaning but wildly inappropriate response to the obesity epidemic to “ban multi-buy offers” on “junk food”, only serves to make all food less accessible for lower impact households if not coupled with an additional policy insisting on similar bulk-buy offers to be offered for healthy alternatives.

Most households are now facing a decline in living standards, with average wages failing to keep up with inflation. 

Big Issue

There are, of course, a multitude of other complex reasons that prices are on the rise, but those are a few.

What support is available?

In terms of access to support, anyone with unmanageable debt can, and should, contact a debt charity or government support such as:

Step Change https://startupchange.co.uk/

Debt Advice Line https://www.debtadviceline.uk/

Citizen’s Advice Bureau https://www.citizensadvice.org.uk/debt-and-money/help-with-debt/

In terms of money management, before even thinking of how to increase your income, your priority should be to ensure you are not spending more than you need to. Check if you are eligible for reductions and discounts:

Council Tax reduction  https://www.gov.uk/apply-council-tax-reduction

Comparison websites for cheapest tariffs on broadband, energy and mobile bills https://www.uswitch.com/

Pre-payment for medical prescriptions https://services.nhsbsa.nhs.uk/buy-prescription-prepayment-certificate/start

Help with childcare Costs https://www.citizensadvice.org.uk/family/education/help-with-school-costs/

Foodbanks

Foodbanks are available for those who need them, but if you just want to budget better or try reducing your food costs, Jack Monroe is the gold standard for budget meals. She’s also an anti-poverty campaigner and a breath of fresh air in her blog, which covers not just financial hardship but also the impact bad mental health, often aggravated by financial stress, can have on the ability to “batch cook” or otherwise bootstrap it to get out of poverty once you’re there.

Martin Lewis has also put together a “cost of living survival guide” with dozens of tips on how to save money and survive this difficult time. 

Check the basics

Is your tax code correct and up to date? Can you ask for a salary increase? Do you have things you can pop on Vinted or DePop for some extra cash? If you’re low income, or even if you aren’t, are you sure you’re receiving all the benefits and grants you may be eligible for? Personal Independence Payments for those with disabilities, for example, are not means-tested, meaning the payments are not dependent on how much you earn. And as always, if you need mental health support, remember that there are charities and support systems available if you are struggling and need to talk about financial hardships or anything else.

Crisis and Mental Health Support

Samaritans https://www.samaritans.org/

Mind https://www.mind.org.uk/

Steps to Wellbeing https://wellbeing.foryoubyyou.org.uk/

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