Despite the cost of living in the UK soaring and inflation reaching a 40 year high, why is there a distinct difference in the way the government has approached this crisis compared to the COVID-19 pandemic?

What is the cost of living crisis?

The Big Issue defines a cost of living crisis as “a situation in which the cost of everyday essentials like groceries and bills are rising faster than average household incomes”. There are several drivers behind the UK’s cost of living crisis including the conflict in Ukraine, the COVID-19 pandemic, climate and environmental concerns and commodity price increases. Inflation is estimated to reach 18% by January 2023 by some forecasters driven by rising food, fuel and transport prices.

What is the impact of the cost of living crisis on households in the UK?

In April 2022 a plethora of changes came into place drastically impacting households across the UK. These changes included energy bills increases due to the energy price cap being increased by Ofgem to 54%. National insurance contributions being raised by 10% came into play, impacting the lowest income households the most. Council tax and water bills also raised whilst the income tax threshold was frozen and insufficient benefit and National Living wages increases occurred. These factors resulted in reduced household income to spend on essentials like food.

And, as inflation in the food and non-alcoholic drinks category reaches 12.7%, costs of a weekly shop are spiralling. Kantar estimates that UK households will be paying an extra £533 in annual grocery bills as own-brand ranges in supermarkets reach record popularity. 

In May 2022 the Office of National Statistics reported that 77% of adults in the UK were worried about the rise in living costs and in May the Food Foundation found a 57% increase in the proportion of households cutting back on food or missing meals altogether since January 2022.

What measures are the government implementing in response to the crisis?

As annual energy bills are predicted to hit £3,850 in January, the Energy Bills Support Scheme was announced in May. Every household in the UK will be given £400 towards the cost of their electricity energy bills. This non-repayable grant will be administered directly to energy bills from October 2022 until March 2023, and people do not need to apply to be eligible.

The scheme has been criticised for “awarding households twice or thrice” by not limiting grants for peoples’ second homes. There are also concerns that landlords will not pay the saving froward for those who privately rent and have bills included, as the grant is applied directly to the energy account.

It is also important to highlight that those with “older” pre-payment meters may miss out on the savings and instead will have to redeem the savings via vouchers at their usual top-up points. This is likely to disproportionately impact poorer households.

Means-tested cost of living payments will also be given to those on certain benefits. People who are on various benefits including Universal Credit, Jobseekers Allowance and Working Tax Credit received half of a £650 grant in July with the second half being paid out in the autumn.

A group of low-income households missed out on the grant because of the key window set by the government in April and May to assess needs aligned with a two payday period. This meant that their income level was artificially inflated by the governments system, not entitling them to the payment.

It has been announced that benefits payable from April 2023 will rise in line with consumer price inflation as measured in September 2022.

This is in line with normal benefit increases where once per year, in April, benefits rise to match inflation.

How do these measures compare to the COVID-19 pandemic response?

Our recent report “Mapping and monitoring responses to the risk of rising food insecurity during the COVID-19 crisis across the UK” highlighted the government interventions between Autumn 2020 and Summer 2021.

We found the incentives could be categorised into school food, emergency income, emergency food and shielding.

Thanks to campaigners like footballer Marcus Rashford, across Summer 2021 those eligible for free school meals were able to access vouchers to supplement food shops during the summer months. Also, there was a £3.50 per pupil per week funding boost during the COVID-19 pandemic.

Now in 2022, despite soaring costs for families, it is the local authority’s discretion whether free school meal vouchers are given to students across the summer holidays. Even if these vouchers were distributed universally, their value has not kept in line with inflation rates (funding rose 1.7% from 2014 to 2020 and has been frozen since).

The Child Poverty Action Group has found that millions of children across the UK are living in poverty but don’t qualify for free school meals due to the restrictive eligibility criteria. Expanding free school meals so more children are eligible, giving vouchers to families over school holidays and increasing the value per voucher are all ways that the government can help reduce the number of children going hungry and ease financial pressure on households during this cost of living crisis.

Emergency income incentives such as the Covid Winter Grant scheme, COVID Local Support Grant, Community Care Grants and Coronavirus Hardship Emergency Assistance Payments were implemented across the four devolved nations during the pandemic. Similarly, cost of living payments have already started to be distributed to people on certain benefits.

Although, there is criticism of one-off payments or grants from organisations like Disability Rights UK who state that “regular, predictable income [is] better for households trying to manage a budget”.

The other key difference between the government’s response now and during the pandemic is that the funding most of these scheme’s funding was distributed directly to local authorities to decide on allocation and grants were not always means tested. This allowed more households to access necessary funds during the pandemic compared to now.

During the COVID-19 pandemic payments for those claiming universal credit and working tax credits was increased by £20 per week. Despite campaigners rallying for the uplift to be maintained, the scheme ended in October 2021.

The £20 uplift was considered a lifeline to many struggling with financial security during the pandemic. This increase was implemented swiftly in March 2020 when the COVID-19 pandemic started whereas the benefit increase in line with inflation will not be implemented until the new tax year.

Although this system does match inflation, the delay to match can cause hardship and let people fall into crisis as the cost of living increases and benefit payments stay stagnant. The Department for Work and Pensions state that technical difficulties mean that benefit payment changes can’t be implemented any sooner.

Across autumn 2020 to summer 2021, the government provided funding to the voluntary and community sector to allow these organisations to continue to provide emergency food for households in need.

Various schemes were implemented across the devolved nations. In England, DEFRA continued funding FareShare to redistribute 7,600 tonnes of food. In Scotland, funding to FareShare ended and instead a £1 million fund was distributed across smaller organisations. Wales granted £2 million to local authorities, third sector organisations and not-for-profits. In Northern Ireland, similarly funding was allocated to councils to support the volunteer and community sector.

In contrast, during this crisis, there has been no government funded emergency food provisions allocated, despite households facing increasing food poverty. Food banks are also struggling to support households in need as number of donations drop.

The Independent Food Aid Network has found that 90% of food aid organisations have seen demand increase further since April 2022 and more than half have had to dip into reserves to give food aid to those who need it.

The government’s response to the cost of living crisis has in no way matched their response to the COVID-19 pandemic, despite both crisis’ putting people’s financial security and therefore health and wellbeing at risk. The government must act before inflation rates rise further and energy prices increase in October to prevent more UK households finding themselves in crisis.

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