The cost of living emergency is evolving as decades of failure to tackle Britain’s housing crisis also start to bite, experts have warned.
While inflation has turned the corner after halving from a 40-year high of 11.1 per cent, a new report by the Resolution Foundation think-tank has warned politicians and central bankers that saying this means the problem is over risks sounding out of touch with the public.
Many families are still faring far worse even than during the hardship of the pandemic, the report found. It highlights stark inequalities in how the cost of living crisis is having a starker impact on certain groups, including ethnic minorities and those with disabilities.
A YouGov survey of more than 8,000 people in October found that 38 per cent said their situation had worsened in the past three months – as opposed to just 15 per cent who said it had improved.
More than a fifth of people were in moderate or severe food insecurity in October, almost three times as many as during the pandemic, according to the report.
Rising mortgage and rent costs are further decimating household budgets as rising wages fail to keep up with inflation, the think-tank found.
“Whereas the cost of living crisis started before where the focus was on energy and moved to food, which was more or less the same shock to everyone, it has now evolved towards housing costs – and that’s different for everyone, which means the variation is going to be bigger,” said Felicia Odamtten, an economist at the Resolution Foundation.
Morgan Wild, head of policy at Citizens’ Advice, said that 2022 “broke pretty much every record in the book” for the number of people requiring assistance from the charity network, which was set up at the outset of the Second World War.
Citizens Advice has seen ‘massive cutbacks’ in people’s spending on food and transport— (AFP via Getty Images)
“You think it can’t get any worse. But it has steadily got busier and busier over the course of 2023,” he said at a Resolution Foundation briefing on Thursday.
Citizens Advice gives extensive debt advice, helping those who have fallen behind with bills go through their income and expenditure “with a fine tooth comb” to see how they can agree repayment plans with their creditors, said Mr Wild.
While the charity used to be able to help around 70 per cent of people get their budges out of the red, the numbers they can help with this “really hard and powerful exercise” has now fallen to 50 per cent, he said.
“We just can’t make their sums add up,” he said: “If you apply the rate of inflation on people’s expenditure to see what a basket of goods would have been in 2019 versus now, what you really see is a massive, massive cutback in consumption to go alongside that struggle to keep up with spending.
“You see massive cutbacks in people’s spending on food, on transport. The one thing you don’t see cutbacks in is housing. You can eat less, you can heat your home less, but you can’t consume half a house.”
Citizens Advice now helping a record number of people facing homelessness, he said, while warning that the supply of social housing is also “incredibly squeezed”.
“That’s the real constraint we have at the moment – the fact it’s now moved into the housing crisis means people’s strategic response is really difficult. You can starve yourself, you can stop heating your home, but can’t do anything about your housing situation.
“So we’ve got that twin effect now. The traditional cost of living crisis hasn’t gone away – food, rents, transport is still very expensive. But the crushing vice is now really housing, and our failure to tackle that over successive decades is now really starting to bite.”
