The cost-of-living crisis is a trending topic, plastered on the news and a talking point within communities’ day in, day out. It’s scary stuff. But how can you combat this? What choices can you make to help yourself and others around you?
What is the cost-of-living crisis?
In a nutshell, the cost-of-living crisis has come about due to the fall in ‘real’ disposable income. Usually, this is adjusted for inflation, after taxes and benefits. There’s significant inflation and increase in costs but no real rise in wages. Inflation has risen to 10.1% and the latest Bank of England forecast has inflation peaking at 13.1% in the fourth quarter of 2022. This month, the Office for National Statistics have reported around 89% of adults in Great Britain continue to report that their cost of living has increased, equal to around 46 million people. This is an increase of around 62% since November 2021. One huge factor that many of us are worried about is the rise of energy prices, which are going to be approximately £3,000 per year by October/November and a forecast of £4,200 in 2023 due to global supply disruptions, wholesale cost and the effects of the Russia-Ukraine War.
What support are we going to get?
The chancellor Nadhim Zahawi announced several support channels:
- £400 off energy bills for all households
- £650 payments for households receiving means-tested benefits with additional payments of £300 for pensioners and £150 for people receiving disability payments
- A £150 council tax rebate for households in council tax band A-D
- A 5p cut to fuel duty
- An increase in the threshold at which NIC’s begins to be charged on earnings
- Universal Credit (UC) taper rate, reducing the UC taper rate from 63% to 55% and increasing work allowances by £500 per annum from late 2021
On top of this, the Government brought in a tax rise for both income tax and National Insurance contributions. The Government are providing support, but for those in poverty and earning minimum wage, is this really enough?
What can we do for ourselves?
Many have found their own ways of saving money and cutting back costs to lessen the impact of this crisis; Martin Lewis and the Money Saving Expert website gives the public the best advice, specifically when it comes to energy prices. In his recent talk he’s expressed himself as being unable save people money by getting a switch to another company however there are some ways this unrivalled expert has said we can save on money, even if we can’t do that by switching energy provider or getting a fixed term on a new tariff.
1. Check your contracts – Phone contracts and broadband primarily. Millions of people are out of contract and can cut their costs by accepting a new one on a lower price. You can save by using price comparison tools.
2. Check your direct debits – You may find some direct debits you pay that you either don’t need or don’t use.
3. Selling items that you don’t need or use.
4. Go down the reduced aisle at your supermarket.
5. Check your council tax band and get that rebate
Finally, one aspect to look at is securing a pay rise from your current employer, approaching your boss, and having a conversation. Discuss your situation and give some figures. This can certainly help ease the pressure.
In conclusion, the cost-of-living crisis is very real, and people out there are having to choose to freeze, starve or both. There are steps we can take to lessen the impact to a certain degree, we’ve got support from the government (albeit not a lot), and we can do things ourselves to cut back on spending. In my opinion, we need to get more support from the government on top of keeping a close eye on our own spending. But whether we’ll get that support is a whole issue in itself.
How are you coping with the cost-of-living crisis?