2 Saturday June 11 2022
the times
Navigating the cost of
living crisiscreating a cost of living crisis. This was
made even worse by tax rises when the
new financial year began in April. The
month was dubbed “Awful April” as
households faced a triple whammy of
price rises: council tax bills increased by
about £100 a year on average, the new
NI levy added 1.25 percentage points to
contributions (although the NI threshold
will increase in July and anyone earning
up to £40,000 a year will be better off
than before the levy came in) and energy
bills rose by about £700 a year for a
typical household on a default tariff.
And this was just round one. Inflation
will continue to rise and energy prices
are likely to increase again in October
(perhaps by about 46 per cent), after the
next price cap review. However, the
government has announced a one-off
£400 support package for all households
to be paid in October, plus an extra £650
grant for low-income households and an
extra £350 for pensioners who receive
the winter fuel payment.Is there a way to fight back?
I have to be frank: there is no magical
solution here; things are tough and
despite the government help they will
continue to be tough for some time. We
are facing a severe crisis — all we can do
is arm you with knowledge so that you
can face what’s coming.
We will guide you to make your
money work as hard as possible for you,
whether that’s by taking advantage of
free money from switching banks or
claiming the working from home tax
rebate or marriage tax allowance.
As always, economic downturns hit
the poorest households hardest. It will
be of little comfort to read about how to
cut back when you’ve already done all
you can.
If you have tried everything already,
seek help. There are charities that offer
free one-to-one debt advice (see below),
energy firms will have grants for those in
fuel poverty and local councils have a
pot of money for those most in need —
don’t suffer alone, reach out.
Debt and money problems can be
debilitating, but there is always a way
out. It might not feel like it right now,
but the cost of living crisis will pass.
Better days will come.Citizens Advice: 03444 111 444;
citizensadvice.org.uk
National Debtline: 0808 808 4000;
nationaldebtline.org
StepChange: 0800 138 1111;
stepchange.orgThere’s no
magic wand
but you can
fight back
Millions of people around the country are feeling the
pinch, but there are ways you can make your money go
further, writes Times Money Mentor editor Johanna Noble
W
hen the latest
interest rate rise
was announced in
early May, I cried.
It was the fourth
since December, in
response to rising
inflation rates.
I’m on a variable mortgage at present
as we’re looking (hoping) to move, so I
didn’t want to be locked into a fixed-rate
deal. But it has been costing me.
I am hardly alone. Millions of people
are feeling the pinch just like me. If it’s
not the rate rise, it’s the increase in
energy prices, council tax rises or the
new national insurance (NI) levy.
Coming out of a two-year Covid
trauma, we have now been plunged into
a cost of living crisis.
For some it means trading down —
that weekly Waitrose shop has been
replaced by Lidl and takeaways are
becoming a rare treat.
For others it is much worse — a
survey by the Food Foundation, a think
tank, published in May showed that
millions of Britons are skipping meals,
reducing portions or going hungry
because they cannot afford food.
The research found that the number
of people struggling to buy food rose by
57 per cent in the first three months of
this year. In April, when the energy
regulator Ofgem increased its price cap
on default energy tariffs by 54 per cent,
4.6 per cent of those surveyed went a
whole day without eating, up from
3.6 per cent in January.
The report also found that food bank
users have been requesting items that
did not need to be cooked because they
were worried about whether they could
afford rising energy bills.
This is Britain. In 2022.
How did we get here?
The timing could not have been worse.
During the pandemic many lost their
business or employment, were forced to
dip into their savings or took on debt.
Then prices began to climb, with
inflation, the measure of how much
prices are rising, surging to 9 per cent in
the year to April, its highest level in 40
years. Rising costs are partly linked to
the pandemic, with pent-up demand and
shipping delays stoking the fire. But
geopolitical issues such as the battle over
oil resources and the war in Ukraine
have exacerbated the problem, pushing
fuel (and other) prices even higher.
Unfortunately, inflation has far
outstripped wage and benefit increases,
“
There is no
easy solution.
Things will
continue to be
tough, but we
will guide you
to make your
money work as
hard as possible
‘The first things to
go were eating out
and takeaways’
K
irsty Devine, 36, from Halifax in
West Yorkshire, runs an online
interiors business called Simply
Divine Things. However, the business is
making no profit and her husband,
Darren, a mortgage broker, was made
redundant in December.
The couple have a 14-year-old son, Jack.
“We have almost nothing coming in,”
she said.
Darren is picking up about £200 doing
odd jobs and is retraining to be a gas
engineer, and the family are living off
“dwindling” savings.
Without inflation, Kirsty thinks it might
have been possible to get through this
crisis. But she is now facing rising costs
for her decade-old business as well as the
family’s personal bills, meaning she can’t
take money out of the business to live on.
“Everything that’s coming in has gone
straight back out again. It’s just been amass panic since February, with bills
consistently rising. This one’s going up,
this one’s going up, this one’s going up,
and you start to just feel dread as to how
you’re going to cover them,” Kirsty said.
“We’ve always been fine. We’ve always
had a nice lifestyle and enjoyed holidays.
We’ve not had to really think about it and
to suddenly go from that to this is
frightening.”
The family had to make cutbacks. They
used to eat out quite a lot but the first
thing to go was eating out and takeaways.
“My son has asked, ‘Oh, can I do this?
And can I have this?’ And every time I say
no, I feel awful, of course. But I have to say
no, that’s how it is at the moment.
“I’ve been baking my own bread, which
is considerably cheaper than buying it. We
cook a lot. We often like to cook quite
intricate recipes but we’ve had to knock
that on the head because of the cost of
ingredients.”
Despite inflation continuing to rise,
Kirsty is still hopeful there will be light at
the end of the tunnel.
“I just feel like if we can get through this
year, next year will be better. You have to
cling on to that hope, because otherwise
you won’t get out of bed in the morning.”Money Mentor
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