Some families are up to $1,600 per year worse off as a result of the cost of living crisis, even when government assistance is considered.
In addition to losing the £20 per week increase due to the introduction of Universal Credit, benefits are failing to keep pace with inflation, and an increase in the energy price cap is anticipated this fall.
According to a report commissioned by former prime minister Gordon Brown, the incomes of the poorest members of society will suffer three major blows by October 2022.
In addition to losing the £20 per week increase due to the introduction of Universal Credit, benefits are failing to keep pace with inflation, and an increase in the energy price ceiling is anticipated this fall.
Poverty expert Professor Donald Hirsch, who authored the paper, asserts that the government’s package of initiatives falls well short of what low-income households require, and that immediate action is required.
His analysis indicates that an unemployed couple with two children will lose £1,300 per year, with larger households losing even more.
This is even though working-age households receiving Universal Credit and other means-tested benefits received an additional £1,200 in assistance, including reductions to energy bills and council tax, as well as £650 deposited directly into their bank accounts.
The report warns that this flat-rate approach disadvantages larger families and Mr. Brown stated, “Britain is facing its worst humanitarian crisis in decades.
Families on the verge of subsistence cannot bridge the gap as the cost of living continues to soar.
In addition, he urged the future prime minister to “guarantee that families have enough to eat throughout and beyond this crisis.”
In The Observer, the former prime minister warned that failure to act could “condemn millions of vulnerable and blameless children and pensioners to a winter of abject poverty.”
Mr. Brown urges Boris Johnson, Rishi Sunak, and Liz Truss to reach an emergency budget agreement this week and warns that time is running out to update the Universal Credit payments system before the next energy price cap increase.
In addition to emphasizing the urgency of the situation, he proposed recalling the legislature if they fail to act.
The phrase ‘living in survival mode
The report has been endorsed by 56 charities, religious organizations, and politicians, and it also includes first-hand accounts of those whose bills have increased.
Lowri, who receives Universal Credit and cares for her father and daughter, is one of them. Her food and fuel expenses have increased, and she has been forced to sell her daughter’s bicycle to make ends meet.
She stated, “I have spent the previous five years in survival mode, barely surviving each day and constantly thinking about money. I am emotionally and psychologically drained by living in this state.
“It is not alive; it simply exists. People cannot pay all of their bills, as our whole purpose in life is to pay bills. Terrified is an understatement.”
The estimated shortages in the research are based on data from the end of 2022, and there are fears that families will be in an even more precarious financial position when Ofgem, the energy regulator, announces the increase in the energy price ceiling.
“We understand that people are struggling with rising prices, which is why we have acted to protect the eight million most vulnerable British families with at least £1,200 in direct payments this year, as well as additional support for pensioners and those claiming disability benefits,” said a government spokesperson.
“Through our £37bn assistance package, we are also saving the average employee over £330 per year through a tax cut in July, allowing workers on Universal Credit to keep £1,000 more of what they earn, and reducing fuel duty by 5p, so saving the average family £100.”
