Data insights: Where next with the cost of living crisis?

What is the picture now? 

Whilst inflation begins to steadily fall,  dropping to 6.3% in August 2023 from its 9.6% peak last October, the impact of the cost of living crisis doesn’t feel anywhere near over. Around half of adults (47%) are using less fuel in their homes because of cost of living increases, four in ten adults are finding it difficult to afford their rent or mortgage payments, and 48% of adults are still spending more than usual to get their food shopping. 

In London, our members Trust for London, have developed a cost of living tracker to see the difference in price of goods and services before the pandemic and now.. The tracker found a 27% increase in price that households in London with the second lowest incomes would see if they were to buy the same goods and services as they did in the three years to March 2020.

According to YouGov, 32% of Londoner’s are ‘just about managing’ when asked about their current financial situation and 15% are ‘struggling to make ends meet’ and 6% of people ‘are having to go without basic needs/or rely on debt’. We can also see that from August 2022 – 2023 from polling that people are still spending less on essentials (51%) and buying cheaper products (50%). You can see the comparisons across the 26 categories asked here. 

The Resolution Foundation have noted in their Summer 2023 update of The Living Standard Outlook – that “unemployment is expected to rise, having already gone from 3.5% in 2022 to 4.2% in Q2 2023 with predicted further rises and that living standards are projected to fall for lower-income households in 2024-25”. And that “results suggest there will be zero real growth in the median non-pensioner household income in the 2024-25 election year, despite the very welcome return of real pay growth. And, although there may be growth for higher income households, the outlook is worse for the lower-income half of the non-pensioner population, whose average income is projected to fall by 1 per cent in 2024-25. As a result, an extra 300,000 people are projected to fall into absolute poverty next year.”  

It's not just individuals feeling the difficulties either. Many organisations in the third sector are struggling with the cost of living crisis. In September 2023, CAF interviewed over 600 charities, as part of their Charities Resilience Index, finding that:

• Two-fifths (41%) of charities say they cannot help anyone else and 12% are turning people away.
• More than half are worried about survival.
• One in seven charities are locked into unfavourable energy tariffs.

Their Chief Executive, Neil Heslop, says of the report: “The relentless financial pressure on charities is continuing. Many are unsure how they will survive from month-to-month. Tens of thousands of charities are at full capacity, and sadly this means many are having to turn people away, people who desperately need their support. We can’t afford to have charities facing such uncertainty. The Chancellor recognised their critical work in the March Budget, but now a longer-term plan is required to build the fantastic, hardworking charity sector back up."

With the Government’s Autumn Statement coming on 22 November, some are calling on the Government to address these issues. The Trussel Trust have called for four immediate steps:

1. Confirm that benefits will go up in line with inflation in April. Rumours that benefits might be cut are deeply concerning given how many people are already having to go without food and other essentials.
2. Reduce the amount of money that can be taken off people’s benefits to repay debts to the Government.
3. Unfreeze Local Housing Allowance and bring Housing Benefit back in line with rents so it covers at least the cheapest 30% of private rents in every part of the country, and uprate it every year to reflect changes in rents.
4. Commit to long-term funding for the Household Support Fund, which is used by local authorities to provide local crisis support in England.

They say this would offer “meaningful support for people on the lowest incomes” and also encourage all political parties to “commit to a long-term solution to this problem – putting an Essentials Guarantee into legislation”. 

What are funders doing and what more can they do?                                           

In our Cost of Living report published last year, nearly half of respondents to our survey said that they have seen an increase in volume of applications over recent months. There is a ‘genuine sense of desperation’, as one respondent reported. At our Festival of Learning in May 2023, several funders noted the impact the cost of living crisis has had on organisations they fund and shared the different way how they are helping their grantees through including:

• Reducing admin; time and money spent on applying for grants to allow more time delivering .
• Giving grant uplifts in line with inflation where possible, helping charities meet their own increasing expenses.
• Broadening what spending can be included with grant programmes.
• Champion the London Living Wage, consider the costs required for organisation to pay people fairly and directly communicate with grantees about the Living Wage.
• Supporting small organisations to become sustainable, including time to think about the future. 
• Longer term, multi-year funding to allow organisations to plan and spend less time during crises seeking new sources of funding.

Further reading

• Festival of Learning 2023, London Funders - https://londonfunders.org.uk/resources-publications/publications/reflecting-our-festival-learning-2023
• The cost of living crisis: how are funders responding?, London Funders - https://londonfunders.org.uk/resources-publications/publications/cost-living-crisis-how-are-funders-responding
• The cost of living crisis and the impact on UK charities, Charity Link - https://www.charitylink.net/blog/cost-of-living-crisis-impact-uk-charities#:~:text=Over%2080%25%20of%20non%2Dprofits,will%20struggle%20to%20survive%20altogether
• How to talk to funders about the cost of living crisis, NPC - https://www.thinknpc.org/blog/how-to-talk-to-funders-about-the-cost-of-living-crisis/
• Cost of living tracker, Centre for Cities - https://www.centreforcities.org/data/cost-of-living-tracker/
• Cost of living data explorer, LOTI - https://observablehq.com/@loti/col-citizens-advice-data

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