A cost-of-living crisis - for whom?

It is widely accepted that the UK is experiencing a cost-of-living crisis. The phrase and manner of its reporting in the media suggests this is a crisis being felt broadly across the population as the market price for key commodities increases for all. This, in fact, hides the unequal impact of increasing prices as they compound longer term vulnerabilities for households already on low incomes.

Inflation in everyday living costs is greater for those in low-income households, as a larger proportion of their budget is spent on essentials. According to the Institute for Fiscal Studies, there is a differential cost-of-living increase of 11% for the poorest households compared to 4% for the wealthiest. This means households already struggling are being pushed deeper into poverty and debt.  

The unequal impact of the cost-of-living crisis is also being obscured by a predominant focus on recent and short-term factors. These include increases in the cost of food and fuel shaped by global commodity markets and the impact on energy supplies of the Ukraine conflict; the continuing uncertain implications of Brexit; and the longer-term market and economic impacts of the COVID-19 pandemic. Although these factors contribute to the current cost-of-living crisis, the underlying vulnerability of increasing numbers of the population to inflationary costs is more accurately explained by longer-term processes. These pre-date both the pandemic and the cost-of-living crisis, and include the growth of precarious and insecure work, stagnating wages and, following a decade of austerity, a longer-term reduction in the value of benefits and cuts to public services.

Longer term trends can be seen through the example of in-work poverty – defined as households who have at least one adult in paid work yet still unable to meet routine expenditure. Currently, five million workers in the UK earn a wage that doesn’t meet their living costs. In-work poverty has been growing in Scotland for some time. Data on our Understanding Glasgow website shows a rise over a period of 21 years in the proportion of working age adults and children in working households affected by poverty, a trend that began steepening between 2010-13.

As the current crisis bites, there have been a plethora of responses from local authorities and community based third sector organisations that mitigate the worst impacts of cold, hunger and housing issues. These are the same organisations that provided the first line of response to the COVID-19 pandemic, are still recovering from that, and who were already stretched from years of funding cuts.

We know that the current crisis will not be an isolated challenge and material need has been experienced by many households for some time across Scotland. The growth in demand and provision of food banks and emergency food aid over the last decade is just one example that demonstrates this. Although immediate mitigation and support is vital at the moment of crisis, longer-term resilience and flourishing requires actions to remove the sources of the underlying vulnerability.

A dual focus on mitigating the immediate impacts of material need and processes of change that can transform the conditions that cause both health inequality and vulnerability is crucial. This will reduce the impact and vulnerability not only to cost-of-living increases, but also future shocks, either anticipated (such as the climate emergency) or unanticipated. Building such resilience requires action to create access to a more equitable distribution of income, power and social connection.

There are similarities between the COVID-19 pandemic and the current crisis in that their impacts are unequal. The COVID-19 pandemic was shown to have distinctly unequal impacts for disabled populations, Black and Minority Ethnic populations, women, deprived communities and children and young people. The underlying vulnerability, being social and economic in character, therefore requires longer-term policies and practices alongside the crucial immediate support and mitigation.

At the time of the COVID-19 pandemic, GCPH framed responses as part of a longer-term process of recovery and renewal and as an opportunity to address fundamental cause of inequality. In addressing the cost-of-living crisis, the principle of tackling the underlying determinants of inequality to produce a fairer society and economy remain the same.

Recommendations from a range of GCPH research and publications offer a means of doing this. Actions required should address three broad areas: immediate mitigation; building longer-term capacity for health in communities, the economy and the places people live and work; and including the expertise of people and communities in the design and delivery of services and decisions around investments. Actions within these three areas include:

Immediate mitigation: addressing material need with a focus on those on the lowest incomes.

This includes:

• Income maximisation: high-quality money advice and welfare rights services to ensure people receive the benefits for which they are eligible and entitled. Successful established money advice partnerships such as Healthier Wealthier Children for health visitors and Financial Inclusion Support Officers in schools ensure people get the right support at the right time.
• Benefit income protection: maintaining benefit increases installed since COVID-19, ensuring benefit increases keep up with inflation, continuing the pausing of benefit sanctions.
• As other costs increase, supporting those at risk of rent arrears with protection against eviction.

Building longer-term capacity for health and wellbeing into our communities, economy and the places people live and work.

Such longer timeframe action can be positioned not only to address material need and underlying causes, but also the challenges of the climate emergency and climate adaptation. Such actions include:

• Using Community Wealth Building approaches that enable anchor institutions (such as the NHS and Local Authorities) to invest in creating health enhancing places and good work. This will involve the payment of the Real Living Wage.
• Conducting Health Inequality Impact Assessments (HIIAs) on all capital spend projects so that health, wellbeing and inequality outcomes of such investments are set out clearly.
• Diversifying ownership of essential resources such as food, energy and transport to enhance affordability but also build resilience to future economic shocks and climate adaption. 
• Given the strong evidence of the impact of (free) greenspaces on physical and mental health and community connectivity, ensuring that high-quality greenspace is available and accessible to all.

Designing services that harness capacity and expertise in communities and utilising local knowledge of what works.

• Recognise the role that local community-based organisations play as first responders in mitigating shocks and stressors such as COVID-19, food and fuel poverty and potentially climate change. Including them in the design and delivery of responses and redirecting funds if necessary. There also needs to be a shift in how funding is provided to enable the community sector to focus on what it does best, based on its knowledge of what works, and allowing organisations to plan for the long term.
• Involving citizens in participatory planning and participatory budgeting.
• The above should be conducted with a focus on engagement with equalities groups often excluded or suffering historical discrimination.

These recommendations are an overview of learning from a wide range of GCPH research looking at how we can best support new approaches and influence action to improve health and tackle inequality. Over the coming weeks, we will bring further blogs on specific responses including poverty mitigation, economic policy, food systems and the environment, transport poverty and participatory democracy.

This blog is part of a series of blogs on the cost-of-living crisis. The other blogs in the series can be accessed here:

Cost of living crisis: Working together is right on the money

Cost-of-Living Crisis: Hungry for Change