Emergency cost of living support payments have had minimal impact on the finances of millions of low-income households who are facing a challenging situation of debt, food insecurity, and fuel poverty, according to a survey conducted by the Joseph Rowntree Foundation (JRF). The JRF’s latest cost of living tracker revealed that the government’s annual payments of £900, distributed in three £300 installments, only provided temporary relief for struggling households with regards to affording essential items like food and shampoo.
The anti-poverty charity warned that despite the support payments, levels of hardship have remained largely unchanged over the past year and are at risk of becoming deeply ingrained in society. It emphasized the soaring food prices and energy bills, coupled with inadequate rates of universal credit, which have made the cost of daily life unattainable for many individuals.
Although the average £300 payments represented around one-fifth of eligible households’ monthly income, the survey found that they offered little breathing space for families and were quickly exhausted, primarily being used to pay off debts and purchase food. While the support payments were appreciated by recipients, they were deemed insufficient in easing the ongoing financial strain faced by low-income households. However, they did manage to prevent the already high levels of debt from worsening.
JRF’s survey of 4,000 UK households earning less than £26,000 per year, which represents the bottom 40% of income earners, revealed that 39% were behind on at least one bill, with average arrears amounting to £1,600. Additionally, a third of these households had applied for a loan but were rejected, while more than a fifth had resorted to borrowing from loan sharks or payday lenders.
Although 80% of universal credit recipients surveyed had received a cost of living payment at the time of the survey, 90% reported going without essential items, and 69% claimed to have reduced their consumption of fresh food. A similar proportion admitted to skipping meals. Rachel Earwaker, a senior economist at JRF, expressed concern over the persistent levels of hardship, stating that individuals have been unable to afford basic necessities such as hot meals, shampoo, or a warm shower, creating a distressing new normal.
Earwaker further emphasized that the hardship crisis will not subside with the decrease in inflation, as higher prices are set to remain a significant challenge. Cost of living payments, while necessary, are failing to provide the much-needed breathing space for those in desperate need.
JRF highlighted that households have experienced price increases of over 18% in the past two years, with energy prices surging by 110% during the same period. Meanwhile, earnings have only risen by 13%, and benefits by 14%. With many low-income households having minimal savings – a third possess savings of under £200 – they are ill-equipped to cope with these financial burdens.
A government spokesperson defended their efforts, stating that they are providing record financial support to those most in need, with a cost of living support package valued at £94 billion, equivalent to approximately £3,300 per household. They mentioned the benefits increase, including universal credit, by 10.1%, the raise in the national living wage, and assistance for families through the household support fund. The spokesperson also reaffirmed the government’s commitment to halving inflation to alleviate pressures and enhance the purchasing power of individuals’ incomes.
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