Many people wait around a year after getting into financial trouble before seeking the debt advice they need, The Big Issue heard. Image: Pexels
In association with Experian
A little over a year ago, the UK cost of living became everyone’s problem. From energy bills to food costs to stagnant wages, the price of everyday life now outstrips the cash flowing into many UK households.
While the future remains unclear there are lessons we can all learn now.
As part of our Big Issue Talks Money series, supported by Experian’s United for Financial Health programme, we asked experts what impact a year in the cost-of-living crisis has had on people’s lives, and how they can get the help they need.
Even before the worst of winter bites, nearly half of British adults – 23 million people – are struggling to stay on top of household bills, according to research by debt charity StepChange. It found that nearly a third of people have been forced to cut energy usage or sacrifice a healthy diet to afford credit repayments in the three months to October.
“Rising energy costs have been this sudden, overwhelming shock for people,” says Sue Anderson, head of media at StepChange. While several factors are driving up the cost of living, soaring fuel bills were a “gamechanger”, both for those finding themselves in arrears for the first time and those already on credit repayment plans. Interest rates have made headlines in the latter half of 2022, but it’s inflation – which hit 10.1 per cent in September – that is impacting people with no financial safety net.
“Our clients are more likely to be tenants rather than homeowners, and to be on incomes that have already been pared to meet the cost of essentials,” Anderson says. “What we haven’t seen yet is how this ends, because we know people routinely try to deal with it using various, often harmful coping strategies before they get to debt advice. It’s not uncommon for it to take around a year for someone to stick their head above the parapet and say, ‘I need help’.”
StepChange has been urging people to ditch the stigma and ask for help as soon as issues arise instead of borrowing more, taking out expensive credit or relying on loan sharks.
“Based on our research, we’re not sure that people understand what we mean when we talk about debt advice – they might think of it as tea and sympathy, a bit of budgeting and nothing more,” says Anderson.
For nearly six million people who rely on Universal Credit, autumn 2021 saw the government cut payments by £20 per week – more than £1,000 per year – removing an increase implemented at the start of the pandemic.
It made an already desperate situation critical, says Sabine Goodwin, coordinator of the Independent Food Aid Network (IFAN). Government data shows that after the increase was introduced, food insecurity among households in receipt of Universal Credit dropped by 37 per cent compared to before the pandemic. Now the pressure on budgets is so severe that people who have volunteered at foodbanks are needing emergency parcels for themselves.
“We’re facing a relentless increase in demand while seeing a drop in both financial and food donations,” Goodwin says. IFAN supports and advocates for more than 550 independent foodbanks across the UK.
A survey shows 91 per cent have seen an increase in demand since July, with many dipping into cash reserves or reducing the size of parcels. Even buying in bulk has become a problem, through increased costs and lack of supply as a result of Russia’s invasion of Ukraine.
Last month IFAN delivered a letter to Downing Street calling on the Prime Minister to make work and social security pay enough to end the need for foodbanks, which are facing a winter of “unsustainable” pressure.
“We’ve got to use this moment of desperation to push in the right direction,” Goodwin says. “The answer is not in surplus food or food aid services, it’s in increasing people’s incomes so they don’t need charity support in the first place.”
The cost-of-living crisis isn’t just about economics. The shockwaves are hitting the mental health of people ever more acutely in the aftermath of the pandemic, ramping up an already close relationship between poverty and poor mental wellbeing.
More than 1.5 million people in the UK are on a waiting list for mental health support. Samaritans was contacted 12,000 times about money or work concerns in July alone, and calls to Mind that mentioned finances have risen 30 per cent in a year.
“This has come at a time when we haven’t had a chance to recover from the last big shock of the pandemic,” says Dr David Crepaz-Keay, head of applied learning at the Mental Health Foundation (MHF). “Everyone without fail has had their psychological resources depleted over the last three years. But some people are much more vulnerable to the cost of living having an effect on their mental health, depending on things like support networks and financial safety cushions.”
He says younger adults are particularly exposed to what’s happening: “With no savings or stable employment or relationships, that reduces your ability to move from stress and anxiety to doing something constructive about it. And, after the past three years, this could be tipping people over the edge.”
Organisations like MHF work with frontline services to build awareness of mental health impacts of poverty into support for people struggling to make ends meet.
“If you’re struggling with your mental health as a result of your finances, it is important to speak to people who can help with money worries,” he says. “You don’t make your best decisions when your mental health is flaky, and treating these issues as separate can just push the problem further down the line.”
Crepaz-Keay says it’s important not to catastrophise. “It is psychologically damaging when people are bombarded by hopeless bad news. We would encourage people to think carefully about the news and social media they absorb.
“Being exposed to non-stop crisis reporting impacts mental health and saps your ability to manage the challenges you face as an individual. We should be supportive of families and social networks, but consciously supportive of ourselves too.”