It’s around a quarter of U.S. adults who are living paycheck to paycheck, as they call it in that part of the world and it’s become a real voting block in the US election, which is perhaps not so much the case here.”Back in the U.K., the fact that 11.8 million people are unable to utilize enough income to pay for life’s essentials is “a landmark to draw at the beginning of this particular point in time.” McCulloch said the headline inflation rate in the UK peaked at 11 percent and “that was hard on everybody.” The Bank of England tracked inflation at 11% in autumn of 2022 whereas it went down to 2% today, the lowest level in nearly three years. “But if you look at inflation on the absolute basics of life: food, energy, rent, basic clothing, you know, keeping yourself going, we were probably talking about inflation that peaked three times that,” says McCulloch. “And, if you look at what’s happening with renting, rents have gone through the roof.”As a personal illustration, McCulloch mentioned his own son’s recent struggle to find a place to live in London. “It was a war zone.” “I mean, you’re competing for decent accommodation and prices are skyrocketing. Food has shot up absolutely astronomically over the past couple of years and so a lot of policymakers are focused on the headline [inflation] rates, and the press talks about the headline rate. But actually it’s been far worse for those on very low incomes and on benefits. And they’ve very much underwater.“People have been talking about inflation dropping, which is definitely a good thing. Please don’t hear that I’m knocking that but all that says is if I’m underwater, I’m going further underwater but more slowly. And what does that mean for somebody on a low income? It’s something like, as for our clients, an average [deficit] of £270 per month. Too little to pay for what we’d call life’s essentials. So that’s pretty underwater.” Inflation may be going lower, based on what a middle class person would buy, but the recent inflation drop figure to two percent, by way of example, must be compared to other factors in a person’s income needed to survive. For example, McCulloch points out, energy costs in the UK have been hiked again by 10 percent.“And 10 percent the last time I looked on my calculator wasn’t the same as two percent. So again, in the basket of things a struggling family needs, there’s still an awful lot of pressure in there.”McCulloch feels uncomfortable with recent statements by British Prime Minister Sir Keir Starmer that the financial situation would worsen before getting better. “Struggling on for another couple of years is a big deal for our clients, particularly those on deficit budgets.”CAP also asked its clients if the issue of financial worries had affected their mental health, and the unanimous response was ‘yes’. “This is having a huge effect on people and from mental health springs physical health, springs all sorts of other things,” says McCulloch.
Deficit budget – the cost to stay alive’: exclusive interview with publisher of report highlighting 1/5 of UK in poverty
