The UK is experiencing a squeeze on living standards that is becoming impossible to ignore.
According to the ONS, almost nine in 10 adults reported an increase in their cost of living between March and last November, with nearly a quarter saying they were finding it tough to pay their usual household bills.
The Office for Budget Responsibility expects household incomes after tax to fall, and not recover, until the third quarter of 2024.
Meanwhile, the Resolution Foundation estimates that an extra 1.3 million people will fall into absolute poverty in 2023, including 500,000 children.
A convergence of factors
The UK cost of living crisis is severe, even when compared to the rest of the G7 group of nations.
A range of factors have converged to create a perfect storm that is likely to come to a head over the next 12 months.
It is being predominantly driven by high inflation which is outstripping wage and benefit increases. The price of food, energy, housing and clothes are changing rapidly and the rise in inflation shows no signs of abating.
The latest Bank of England forecast predicts that inflation will peak at 13.1 per cent in the fourth quarter of 2022.
This is at least partly caused by the 54 per cent increase in the energy price cap from April 1, and a further 75 per cent jump that’s due in October.
Inflation is not expected to begin falling for the next two years, with the Bank believing inflation will not reach its to per cent target until the third quarter of 2024 at the earliest.
In addition, rising housing and food costs are driving up wage demands, creating extra difficulties for employers as they try to attract and retain employees.
How a revolutionary new scheme might help
Innovative thinking and ambitious ideas from charities and social enterprises are being explored and launched to try and tackle the challenges.
Centrepoint, a charity which provides accommodation and support to homeless people aged 16-25, has launched a revolutionary new plan to tackle the issue head-on.
Its Independent Living Programme is currently building 300 rent-capped homes for disadvantaged young people. These will be rent-capped, and will cost each tenant a third of their salary.
To be eligible, young people will be supported in their search for jobs with skills training, further education, career advice, job applications, CVs and interview tips.
They will then be matched with businesses that sign up for the Centrepoint Works Scheme. Once they’re employed, they will then be able to apply for a home via the Independent Living Scheme.
As well as providing stability and security for potentially vulnerable young people during challenging economic times, it’s hoped that the scheme will help to ease the recruitment crisis.
Companies that back the scheme will be given access to a young, motivated workforce that is receiving support to establish themselves as independent adults.
Support and Investment
Javad Marandi, the co-chair of Centrepoint’s Independent Living Programme, believes that the scheme could grow considerably given the right support and investment from government and businesses:
“At the moment, the biggest hurdle to the growth of Centrepoint Independent Living is the novelty of the programme. It’s never been done before and, as with anything revolutionary, you have to prove the concept to all interested parties: potential investors, national and local government, and employers looking to sign up for the scheme. There is a chance for all to benefit and to be part of something truly extraordinary.”
Companies can help by donating money, property and land as well as providing employment opportunities for young people. Centrepoint can also help employers find and retain staff, taking away the risk of them not being able to afford rent.
Employees that have stable, secure housing gives them the knowledge that they are able to afford their rent for several years. This makes it easier for them to choose a job that will fulfil and motivate them, rather than one that will meet their immediate financial needs.
Centrepoint hopes that once they’ve shown concrete evidence of how the scheme works, both practically and economically, they will be able to build 30,000 homes across the country, ultimately helping people whatever their stage of life.