The cost of living budget: why it’s time to focus more on need

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patrick ruth, Kitty Stewart, and Rosalie Warnock Reply to Rishi Sunak statement of the cost of living and point out its inability to take into account the fact that households needs differ according to household size.

On May 26, Chancellor Rishi Sunak stood in front of the news box and delivered his third and most important budget response to the current cost of living crisis. As he announced the measures, he got involved: ‘WWe must ensure that those for whom the struggle is too hard… and for whom the risks are too great… are supported…We will ensure that the most vulnerable and less fortunate receive the support they need during this difficult time.”

Sunak then unveiled a pricey package that includes both universal assistance with energy costs and targeted assistance for those deemed “most vulnerable”: people with disabilities, the elderly and people on means-tested benefits. Eight million households receiving means-tested benefits will now receive two lump sum payments, totaling £650, with additional payments of £150 for low-income pensioner households and those receiving disability benefits. Every household in the UK will also receive £400 to cover the costs of their autumn energy bill.

This represents a large and costly intervention, with an overall package estimated at £15billion. Early analyzes rightly hailed the Chancellor’s desire to finally target support where it is most needed, which in itself is perhaps a sign that he is listening – at last – to the multitude of voices pointing to the extent of the difficulties that so many people face. There was also praise for a rare positive statement on Social Security from a Conservative Chancellor, with his speech including acknowledgment of the many reasons people might claim Social Security over their lifetime. Those of us who criticized the benefit cap (which has remained in place throughout the pandemic) were especially pleased to see that those who are currently capped will also receive this assistance (which has not happened with the £20 increase in Universal Credit during the pandemic).

But there is also much to criticize in this budget response, with big flaws in the use of a band-aid approach – what the Chancellor describes as “temporary, targeted and timely” interventions. The temporary nature of the support, which the Chancellor describes as positive, is experienced as creating a permanent climate of insecurity and anxiety, which leaves the families concerned unable to project themselves into the future and rather concerned about the future. . As families go deeper and deeper into debt to pay for essential household items (including food and rent), families simply don’t have the capacity to plan for or mitigate the next unmanageable financial pressure.

What is also problematic, and what has been highlighted in some of the budget responses, is the lump sum payment, which shows a refusal to recognize how household needs differ (and can differ significantly) depending on household size. This means that a low-income one-person household will receive exactly the same support as a five-person household, the latter facing extraordinary pressures at a time of rapidly rising prices. We have seen a reliance on similar lump sum payments in the response to COVID-19, and in particular the temporary £20 increase in Universal Credit. These payments do not take into account the greater needs and expenses of families with children, suggesting a reluctance by the state to effectively address child poverty.

It also reflects a wider refusal to adequately support larger families, a refusal that was embedded in policies introduced under David Cameron and George Osborne, and which now continues under Boris Johnson. Most notable here are the two-child limit and the benefit cap, which are the subject of our ongoing major research program funded by the Nuffield Foundation.

Our research shows the harm these policies cause – affecting children’s well-being, everyday life experiences, as well as the mental health of parenting opportunities. The policies sever the link in the social security system between need and right, forcing families to survive on levels of support that are recognized as inadequate. This link is further undermined by these most recent budget changes, with large families once again unable to get the help they so urgently need. Instead, they will have to stretch the support provided, an arguably impossible task that will inevitably see increased stress and anxiety for parents.

Just this month, as part of our ongoing research, we interviewed parents impacted by the two-child limit and benefit cap, with parents documenting how difficult life is for families at the height of the cost of living crisis. Parents like Rachel, who told us how much harder life has become due to rising costs:

I am poorer. I am really. So the cost of living has gone up… We had to cancel our direct debit from our energy company because they wanted almost £500 a month and I wonder where am I supposed to get that? So yes, things have dramatically spiral since October.

The support announced by the Chancellor is welcome. But he has to be bolder in recognizing that the cost of living goes up the most when you have more than one mouth to feed. For too long there has been a reluctance to place household needs at the center of our social security system. With the cost of living continuing to escalate rapidly, this needs to change, and fast.

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Acknowledgements: The project on which the above is based was funded by the Nuffield Foundationbut the opinions expressed are those of the authors and not necessarily those of the Foundation.

about the authors
patrick ruth is a Lecturer in the Department of Social Policy and Social Work at the University of York.

Kitty Stewart is Associate Director of the Center for the Analysis of Social Exclusion and Associate Professor of Social Policy at LSE.

Rosalie Warnock is a paid Lecturer in Human Geography at Christ Church, University of Oxford, and Research Assistant in the Department of Social Policy and Social Work at the University of York.

Photo by Peter Hall on Unsplash.

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