Emergency cost of living support payments have had negligible effect on the finances of millions of low-income households facing a “new normal” of debt, skipping meals and fuel poverty, according to a survey.
The latest cost of living tracker by the Joseph Rowntree Foundation (JRF) found the government’s £900-a-year payments, which are paid in three £300 instalments, provided only short-lived respite for poorer households struggling to afford everyday basics from food to shampoo.
The anti-poverty charity warned high levels of hardship had hardly budged over the past 12 months and were in danger of becoming “baked in”. It said record food inflation and soaring energy bills, combined with inadequate universal credit rates, emphasised how unaffordable everyday life had become for many.
Although the £300 payments on average amounted to the equivalent of a fifth of eligible households’ monthly income, the survey found they provided little in the way of breathing space for families and were rapidly used up, mainly to pay down debts and buy food.
Although the support payments were appreciated by many claimants, they were “clearly insufficient to reduce ongoing day-to-day financial strain,” the charity said. Instead, it concluded, “they appear to have prevented already worrying high levels [of debt] getting worse.”
JRF’s survey of 4,000 UK households earning less than £26,000 a year – the bottom 40% of incomes – found that 39% were behind with at least one bill with average arrears of £1,600. A third of households had applied for a loan but were rejected, while more than a fifth said they had borrowed from loan sharks or payday lenders.
Although 80% of those surveyed who were on universal credit had received a cost of living payment at the time of the survey in May, 90% said they had gone without essentials, and 69% said they had cut back on fresh food, with a similar proportion saying adults in the household had skipped meals.
Rachel Earwaker, a JRF senior economist, said: “Over the past year people have been telling us about being unable to afford hot meals, shampoo or a warm shower. We are seeing these levels of hardship persist and it has become a horrendous new normal.”
She added: “That places a huge burden on families in the here and now, but we need to get real that this is a hardship crisis that won’t end as inflation starts to fall. Higher prices will remain baked in, and cost of living payments, while necessary, are not even providing breathing space for people who desperately need it.”
Households have been hit by average price rises of more than 18% over the past two years, with energy prices climbing by 110% over the same period. At the same time earnings rose by 13% and benefits by 14%, with many low-income households – a third have savings of under £200 – having little in reserve to cope, said JRF.
A government spokesperson said: “We are providing record financial support to those who need it most, with a £94bn cost of living support package worth around £3,300 per household.
“On top of this we have raised benefits, including universal credit, by 10.1%, increased the national living wage and are helping families with essential costs through the household support fund. We also remain committed to halving inflation which will ease pressures and help everyone’s incomes go further.”
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June 20, 2023 at 06:01AM
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Cost of living payments failing to help low-income households in UK - The Guardian
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