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Social Justice

‘People are skint’: Six million workers have no savings as expensive 2022 looms

Millions of households are at risk of financial disaster between low wages and the soaring UK cost of living, Labour has warned

Millions of families are without a financial safety net and facing a “miserable January” as the UK cost of living crisis gathers pace, according to Labour analysis.

More than six million adults in working households had no savings at all to fall back on even before the pandemic, the research showed, while over half of working families had less than £3,000 to act as a financial buffer.

People are at risk of being pushed off a cash cliff-edge between the universal credit cut, rising council tax, eye-watering energy bills and the upcoming national insurance increase, Labour said.

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“This is a crisis made in Downing Street,” said Jonathan Ashworth, shadow work and pensions secretary.

“Eleven years of the Tories has seen family finances hammered and now it’s shaping up to be a miserable January with heating bills rocketing, prices going up and punishing tax rises on the way.

“The simple truth is people are skint with little if any savings to fall back on,” Ashworth added. “Ordinary working families shouldn’t be forced to pay the price for Boris Johnson’s economic failure.”

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Labour’s analysis of Households below Average Income (HBAI) figures, recorded by the government, showed that nearly 27 million people living in working households could be rocked by the financial shockwaves of inflation and government policy.

The data was collected before the pandemic, when economists say households had more cash to spare. Since Covid-19 hit, average disposable income has been hammered and is unlikely to return to pre-pandemic levels for at least two years, the Institute for Fiscal Studies said.

Inflation hit a ten-year high in November and is expected to keep increasing next year. Families could be an average of £1,200 worse-off in 2022, according to Resolution Foundation data published this week, between the sharply rising UK cost of living and stagnant wages which don’t keep up. Household bills are likely to be pushed even higher in April when Ofgem increases the energy price cap.

“We recognise people are facing pressures, which is why we’re taking £4.2bn of decisive action to help,” a government spokesperson said.

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“We are providing extensive support to those on the lowest incomes – including putting an average of £1,000 more per year into the pockets of working families on universal credit, increasing the minimum wage and helping with the cost of fuel bills.

“Our £500m Household Support Fund is also giving more help to the most vulnerable, and councils have been given an extra £65m to support low income households with rent arrears.”

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