Juliette Flach, CAP’s Senior Policy and Public Affairs Officer, reflects on what came before the cost of living crisis and where these increased costs have left the UK.
The ‘cost of living crisis’ has buzzed around news headlines for the past two years and has been used to explain the financial difficulties people in the UK have been facing. But the sad truth is that although this is a catchy headline, it is not the full story.
As a charity that provides free, non-judgmental debt advice, financial education, support to help people into work and a benefits calculator, we have seen hundreds of thousands of people across the UK facing financial difficulties since we began over 27 years ago. The realities may not have always hit the front pages, but they have been at the forefront of the lives of people on the lowest incomes as they face spiralling debt and poverty.
The increased cost of living over the last two years has pulled more people below the poverty line, and for millions who were already facing a personal cost of living crisis, pulled them further under. Unless we reach a point where everyone has a liveable income through wages and/or social security, this will not change.
There is no doubt, though, that this extended period of high costs, low wage growth and inadequate social security levels has indeed put further strain on more people’s budgets. So much so that 22% of UK adults now say they have a deficit budget, where their income is not covering the cost of essentials. From our recent research, we know that living with a deficit budget can impact individuals physical and mental health, but the negative effects don’t only end there – it can also impact friends, family and whole communities.
As the number of people struggling has increased, CAP has continued to provide vital community-based support through partnerships with local churches. But this is no easy task. With around half of CAP clients facing a deficit budget, CAP’s frontline Debt Coaches and local teams are providing wonderful support, care and community in times of difficulty and Debt Advisors are working hard to help people facing the burden of debt. Yet, as the cost of living crisis begins to fade from the news headlines, we are still faced with the concerning reality that with incomes not covering the cost of essentials, people will remain trapped with impossible decisions to make as they go without essentials and get pulled into problem debt.
So what next?
With 9% having debts that they do not know how they will repay, the crisis is not over.
The support sector has been under persistent pressure, and as we look ahead anticipating a debt crisis coming next, the Autumn Statement needs to see decisions made that can reduce the impossible financial positions many face, and resource the charity sector as we continue to do all we can to fill the gap in the support that people need.
