Cost of Living Crisis: Hitting the Poorest Hardest

People on the lowest incomes – both in and out of work – have endured a decade of austerity; with freezes and cuts to social security benefits and in-work support; hollowing out support, undermining resilience and ability to cope with adversity.

They now find themselves disproportionately affected by the current cost of living crisis; crushing energy bills and faced with the stark choice of going cold or hungry to make ends meet. The Consumer Price Index has now spiked to 10.1%, let’s not forget the Retail Price Index has actually spiked to 12.3% with both measures expected to climb much higher in the coming months.

The current Chancellor has failed to recognise the plight of low income families, choosing to ignore the current crisis by sticking to the out-of-date benefit uprating formula which uses the September 2021 inflation figure of 3.1%.

Little wonder the Government's own Office for Budget Responsibility states that the rise in inflation to a 40-year high this year will reduce real household disposable incomes leading to the biggest fall in living standards in any single financial year since records began.

The Government’s much vaunted £37 billion Cost of Living support package is to be welcomed but warrants close scrutiny: it is made up of £22 billion which includes an increase to the National Living Wage and Universal Credit in-work allowances and tapers which do nothing to support pensioners and out-of-work households; & a £15 billion package which provides one-off payments but stubbornly refuses to address the issue of proper benefit uprating for those out of work and in low paid work.

Growing calls to implement a freeze in energy price increases have to date been ignored by a UK Government which is in paralysis given the Conservative Party leadership race.

Locally, the Finance Minister has referenced the sum of £435 million ‘which cannot be allocated to help families, workers and businesses with the cost of living and to support public services’. Aside from the £164.8 million allocated under the Energy Bills Rebate, the minister informed Advice NI that £100.1 million is a Barnett consequential related to the Council Tax Rebate in England, £27.8 million for the increase to the Household Support Fund and a further £143.2 million is also available, all of which we might expect an Executive to direct towards addressing the cost of living crisis. In other words, additional funding is available for households in Northern Ireland, but uncertainty remains about how this money, including the £400 energy bill discount scheme, might be used given the collapse of the NI Executive.

Advice NI is calling for the Governments both nationally and regionally to do more to help low income families whose budgets are already at breaking point. Benefit uprating in line with predicted inflation must be implemented without delay. Locally we have seen the vital impact that our ‘Evason’ welfare mitigations package can have in averting destitution; similar local Cost of Living measures and income maximisation schemes can help people survive the coming months. Increased poverty, hardship and destitution will be the consequences of a failure to act.