Don’t be fooled: the cost-of-living crisis is getting worse

Despite the falling headline inflation rate, many of the worst off will struggle this winter

September 21, 2023
Today, food inflation is running at 14.9 per cent. Image: Jeff Gilbert / Alamy
Today, food inflation is running at 14.9 per cent. Image: Jeff Gilbert / Alamy

The start of the new term at Westminster has been dominated by an eclectic mix of crises—bubbly concrete, spying accusations and a prison break that might have been planned by Paddington Bear. By contrast, plunging living standards and the cost-of-living crisis seem to have slipped out of the spotlight. For those at the sharp end, however, these issues have only intensified in recent months.  

The headline inflation rate may have finally started to fall, but the cost of many essentials is still eye-wateringly high. Energy bills this autumn will remain 50 per cent higher than was the case in winter 2021/22. Food prices are still rising, with food inflation running at 14.9 per cent. Last year, food banks in the Trussell Trust network provided nearly three million food parcels, a record high. Far from easing, early indications suggest that this year will be even worse.  

Just this week, new research from YouGov found that almost half of those on Universal Credit ran out of food in the last month and couldn’t afford to buy more. Many also are unable to afford energy bills, prescriptions, pain relief, over the counter medication and essential travel costs, such as the school run or getting to work. Compared to a similar survey this time last year, more people have been pulled into debt and been forced to turn to a food bank. 

This overlooked crisis is escalating, and it brings dire consequences for individuals, communities and the UK as a whole. Last month, leading health bodies wrote to the prime minister warning him that the number of people having to go without essentials poses a grave risk to the nation’s health. They joined the growing calls for urgent reform of Universal Credit, with legislation to ensure that it always at least covers the cost of essentials. Last week, the prime minister convened a meeting of NHS leaders to plan for an extremely challenging winter ahead for the NHS. Thus far, however, there has apparently been little discussion of ways to address one of the biggest drivers of ill health—rising and deepening poverty. Worryingly, instead of improving support, rumours of a benefit cut have been circulating. This would be nothing short of catastrophic. 

Reviving the UK’s sluggish economy is, rightly, a high priority, with rising unemployment making an unwelcome return this month and significant numbers of people out of the labour market due to ill health. One factor rarely mentioned, however, is the extent to which rising and deepening poverty undermines economic growth. Severe material hardship holds people back from being able to take up opportunities. 

Worsening mental and physical health, coupled with NHS backlogs in treatment, leave many who would like to return to work stranded, facing hunger and debt. When people can’t afford basic living costs, covering expenses such as travel to interviews or work and investing in training are far out of reach. Many of those living in deep poverty become socially isolated, ashamed of their situation and unable to afford the cost of meeting family and friends. A recent landmark study into Hunger in the UK found that a quarter of people referred to Trussell Trust food banks are severely socially isolated. Less than half have access to the internet at home. 

This is a bleak picture, but this month we have also seen a bright spot of hope. The Poverty Strategy Commission, an independent, cross-party group chaired by Baroness Stroud, published its first report. In an era of division, the Commission demonstrates the scope to build consensus. It brings together experts and political figures from across the spectrum, all unified behind the report’s analysis showing that poverty is both rising and deepening, and all agreed that is this both unacceptable and solvable. 

The Commission identifies a “missing” £36bn in resources needed to eradicate poverty in the UK, equivalent to an increase in resources of £6,000 a year for each of the six million families living in poverty. Crucially, it does not suggest that this should be corrected simply through more government spending. Instead, the Commission sets out the need for significant and sustained action from businesses, civic society and individuals, as well as action from UK, devolved, and local governments. 

As part of its deliberations, the Commission concluded that this action needs to be underpinned by a new social contract. This is vital if we are to sustain action to reduce poverty over multiple parliaments and through economic fluctuations. When all parties fulfil their part of the social contract, no one should be in poverty. The details of this are still to be worked out, but examples of principles that might be reflected in it include “those earning as much as expected by the new social contract should not be in poverty”, “people who are not expected to work (because of disability or caring responsibilities) should not be in poverty” and “no-one should be in deep poverty.” These may sound blindingly obvious but putting them into practice would transform our society. 

In the short term there are plenty of chances for the government to start on this path.  

First the King’s Speech. Will it include legislation to guarantee that benefits will cover essential costs and an Employment Bill to create more secure jobs that can protect people from poverty? When will the Renters Reform Act come into force? 

Next the Autumn Statement: will the chancellor use this to provide more protection for those on the lowest incomes?   

More broadly, this year’s party conferences will allow each party to lay out its stall ahead of the next election. 

As the autumn unfolds, this then is the question that should be posed both to the government and to all of the political parties manoeuvring ahead of the start of the election campaign: what is your plan to turn back the rising tide of hunger, hardship and debt?