Predictions that an estimated 1.5 million households across the UK will struggle to pay food, energy and other bills over the next year due to rising prices and higher taxes, have been confirmed by new research by the National Institute of Economic and Social Research (NIESR).
Poorest households are the hardest hit
In its quarterly outlook of the UK economy, NIESR warned that a combination of rising prices and the government’s decision not to scrap a planned rise in national insurance tax are hitting the poorest households hardest. In what is a massive double whammy, inflation is at a 30-year high – due to the war in the Ukraine, Brexit and the Covid-19 pandemic combined with other factors driving up fuel and energy prices – and this is being made worse by government policy.
The NIESR briefing stated:
“We expect GDP to increase by 3.5 per cent in 2022 – declining in the third and fourth quarters – then by 0.8 per cent in 2023 and 0.9 per cent in 2024. The medium-term outlook for GDP growth is slow even by the standards of recent history, returning to 1.5 per cent only in 2026. The combination of shocks – Brexit, Covid-19 and the recent shocks to energy prices – is set to leave the incomes of people in the UK permanently lower.”
From the frontline of poverty
This is not news to the people running food banks, community groups and other voluntary organisations. These groups are seeing massive increases in the number of people using their services, as rising prices pile on the pressure, with demand for weekly parcels rising significantly across country.
Emma Revie, chief executive of the Trussell Trust, said at the time of the chancellor’s spring statement:
“People are already making impossible decisions between heating and eating, and we know people are skipping meals, unable to afford to run cookers and fridges and taking on debt to buy the essentials. This is not right.
“Many more people will have no option but to use a food bank. By failing to make benefits payments realistic for the times we face, the government is risking turning the cost of living crisis into an emergency. People cannot afford to wait another year for this to be reviewed. Action to rectify this situation and strengthen our social security system needs to happen immediately.”
MP claims foodbank users simply don’t know how to budget
Controversially, during the Queen’s Speech debate in parliament this week, Conservative MP Lee Anderson claimed that there was not a massive use for food banks in this country. Rather than acknowledging the evidence from NIERS, Trussell Trust and many other experts, he said the surge in demand for food banks was due to “generation after generation who cannot cook properly. They can’t cook a meal from scratch. They cannot budget”.
I am writing this article after returning home from overseeing a cookery session. In contradiction of Lee Anderson’s comments, all the people attending the session regularly cook from scratch and to a tight budget producing nutritious and tasty meals for their families. His narrative however, is obviously far more palatable and easier for the Tory faithful to swallow than the fact it is his own party’s policies that are driving these same people to foodbanks for the ingredients that allow them to cook and to not go hungry.
Mike Dixon is chair of Airedale Neighbourhood Management Board, which runs the Airedale food bank as well as other community projects within the Airedale area. He told me that the general cost-of-living increases, in particular the increased utility costs, have had a significant impact on the referrals for food parcels, with a 10 to 20 percent increase across all age groups. Worryingly, there has also been an increase in requests for food parcels from elderly people, which is not something they’d experienced prior to the cost-of-living crisis.
“These increased requests are having a big impact on the amount of funding we need to look for and the amount of food donation we have to encourage to keep the service running for the needy of our area. We are of course experiencing a rise in our own utility bills for running the food bank, which again has an impact on funding.”
Help is needed now
As usual, it is the people without large amount of savings, poor households, who struggle the most. Professor Jagjit Chadha the NIESR’s director confirms that, “They are therefore constrained by whatever income is coming in day-to-day. Essentially, they are living hand-to-mouth and in that world they need support now.”
As such, the government’s emphasis on seeing where we are in the autumn and acting then is, to use the NIESR’s word, ‘inadequate’.
The NIESR estimates that the average household will suffer a fall in its real income of 2.4 percent this year, while those on the lowest incomes are experiencing a fall of closer to 12 percent. The think tank wants Chancellor Rishi Sunak to raise universal credit by £25 per week between May and October for five million households. In addition, it is calling for one-off cash payments of £250 to the poorest 40 percent of households during 2022/23.
With some £20bn of fiscal headroom identified in the Treasury’s forecast (Office for Budget Responsibility) it is something that is affordable.
Founded in 1938 by a group of major social and economic reformers, including John Maynard Keynes and William Beveridge, the NIESR is Britain’s longest established independent research institute. They operate as a charity, independent of all party political interests and receive no core funding from government or other sources.
