finance

A bleak winter awaits poorer Britons as costs rise and benefits shrink


Jade Lee has been on the front line as rising food and energy prices together with cuts to unemployment benefits have squeezed incomes ahead of what charities predict will be a bleak winter for poorer Britons.

The 30-year-old single mother has struggled to feed her own three sons while surviving on a mix of universal credit and the London living wage of £11.05 an hour. Every day she encounters others in worse positions when driving vanloads of food to soup kitchens, hostels and community associations across London for the social enterprise City Harvest.

“It is getting a lot worse — even by the week you are seeing the effects,” she said of Londoners falling into penury as prices rise, and a government decision, announced in the autumn Budget, to end a £20 a week uplift in universal credit begins to bite.

The UK capital had the highest number of people on furlough until the closure of the scheme in September and still had in October the highest unemployment rate in England, at 5.6 per cent.

City Harvest draws in surplus food that might otherwise go to waste from supermarkets, farms, restaurants and other outlets in and around the UK capital. It then redistributes to more than 350 charities across the city from its depot in west London, giving it a bird’s-eye view of hunger when it spreads. It is one of many charities, bracing for the full impact of the pandemic’s economic tailwinds — and lower paid workers in London are among the hardest hit.

City Harvest distributing surplus food from supermarkets, farms and restaurants to charities across London © Anna Gordon/FT

“For a lot of people whose lives were already hard, things have just got harder. The end of furlough, end of the universal credit top-up, higher fuel and food prices — if you’re on the edge already, this can take you over it,” said Todd Benjamin, a retired CNN anchor who sits on City Harvest’s board.

The consumer price index rose 4.2 per cent year on year in October, according to the Office for National Statistics, its highest level in almost a decade. The rise in prices has mainly been driven by constraints in supply chains since the global economy began to recover from the pandemic. There are increases in transport costs as petrol prices climb, while heating and electricity prices have jumped since the government raised the cap on energy bills in response to surging wholesale gas prices in October.

Line chart of Annual % change on consumer price index showing UK inflation rises to a near decade high

This is all contributing to what the Resolution Foundation, the think-tank focused on raising living standards, predicts will be the third sustained real term decline in wages in a decade if inflation rises to 5 per cent as forecast in the spring.

That prospect is aggravating grievances among public sector workers, including nurses who have been awarded a below-inflation rise of 3 per cent.

“Pay for nursing staff has consistently failed to keep up with the cost of living,” said Pat Cullen, chief executive and general secretary of the Royal College of Nursing union.

The RCN was already warning a year ago that costs in London, where rents are nearly double the national average, were driving many to consider leaving the city, with more than half of members surveyed saying they had relied on credit and borrowing from friends and family to pay essential living costs during the previous 12 months.

“The reality for many is that they are now turning to this kind of additional support just to keep their head above water,” Cullen said.

Jade, from City Harvest, said she had encountered nurses queueing at food banks.

But while low-income workers are feeling the strain across the board, the pain for those in work but receiving state support to help pay rent, for example, will be partially mitigated by a reduction to the taper rate that determines how much universal credit is deducted as you earn.

Those most acutely affected by the looming cost of living crisis are the unemployed. “For someone with a disability or a childcare issue that makes them unable to work, the social security system has never been less generous,” said Rory Weal, senior public affairs and policy manager at the Trussell Trust, which supports 1,200 food banks across Britain.

“Combine that with record high fuel prices and people are having to make impossible decisions every day between providing food for their children and heating their homes.”

The Trussell Trust said demand for emergency food supplies across its network was up 11 per cent in the six months to September compared with 2019, and was expected to surge again in December.

“It’s a level of need we should not be normalising,” said Weal. “We don’t want the pandemic to result in an acceptance of emergency food as the answer to poverty.”

Pressures on low income families have been aggravated by accumulated debt, according to Safia Jama, who runs the Women’s Inclusive Team, an NGO promoting the welfare of black and minority ethnic women in Tower Hamlets.

Safia Jama believes the pressures on low income families have been aggravated by accumulated debt © Charlie Bibby/FT

“A lot of people on our list are in arrears,” she said, pointing out what while the universal credit system allows recipients to manage their own finances, it also makes it tempting to draw on money meant for rent when other bills are going up.

Dave Mann, a church minister who chairs the Bonny Downs Community Association in East Ham, illustrated a similar point with the case of a woman in his community who had been paying £850 a month to rent a converted shed, leaving her £15 for food. Since the government cut the £20 a week uplift to universal credit, she was now running up £65 a month in debt.

Dave Mann: ‘Wages are not high enough to cover the cost of rent’ © Charlie Bibby/FT

Meanwhile, private landlords in the east London borough were increasing rents for multi-occupancy households by about £100 a month to cover bills, he said, and cutting power to those that could not pay.

 “Wages are not high enough to cover the cost of rent and people have been making do plugging the gaps for so long,” he said. “We are seeing people presenting as homeless now who we wouldn’t have dreamt of seeing a year ago.”



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