Written by Alishba Saadat, BSWN Research Intern.
“It is putting me off doing any leisurely activity… It is living life like a robot. It is taking the enjoyment away from socialising…. Going out and enjoying yourself with others shouldn’t cost you the earth.”
In the aftermath of the economic stresses caused by the COVID-19 pandemic, the UK trade economy was further disrupted through the impacts of Brexit and Russia’s invasion of Ukraine. This has resulted in the highest inflation levels in prices for household necessities experienced in the last three decades, creating a crisis where many families suddenly find themselves unable to afford the essentials of food, clothing, and housing. To exemplify the extent of this crisis, where the Bank of England usually aims to keep the Consumer Price Index (CPI) (the average change in the price of consumer goods that depicts the levels of inflation over a period) between 1% - 3%, the Office of National Statistics puts the current CPI– as of June 2022– at 9.4% for the last twelve months; a figure that has not been seen since 1982. The skyrocketing prices have overwhelmed consumers, as they are predicted to continue this upward trend until the last quarter of 2022.
Due to global reliance upon Russia for the import of gas, the prices of gas have been particularly impacted by the current conflicts unfolding in Ukraine. As a result, the UK’s national cap on gas prices has exponentially increased, forcing households that were averaging an annual expense of £1,200 on gas-based energy, to now be forced to spend over £2,000, with a predicted increase to £3,000 by the end of 2022. Similar surges have been seen in all other areas of consumer expense, yet with no proportionate increase in nominal wages – pushing people into a corner of struggling to choose between “heating and eating”, unable to afford all basic necessities at once. Crippling inflation levels have stunted people's quality of life, and poured into every aspect of their day-to-day.
“I am cold, hungry, and tired...”
Bristol’s Landscape of Disparity
In mitigating the effects of the cost-of-living crisis, it is first important to set it within the context of the pre-existing economic disparity that has always prevailed within the South West; that disproportionately disadvantages Minoritised communities. The Runnymede Trust noted in a 2017 report that Bristol has always tended to be more racially segregated than most of the UK’s core cities. Based on Bristol City Council’s data, Lawrence Hill, Bristol’s poorest ward in terms of average household income (which is predicted to be among the hardest hit by the Cost-of-Living crisis), is home to the highest percentage of Black and Minority Ethnic residents (59.6%). In contrast, the most affluent ward, Stoke Bishop, is comprised by only 8.7%. The same 2017 report noted how the disadvantages that ethnic minorities face in terms of education and employment in Bristol are much greater than what is generally experienced by ethnic minorities throughout England and Wales. Not only is there a big gap in employment and education rates between White British individuals and ethnic minorities as a whole, but within minority groups Black people receive disproportionately lower education and job prospects than others – leading to an unemployment rate (of Black Africans specifically) that is five times higher than their white counterparts.
All of this translates to severe economic insecurity for Bristol’s Black and Minoritised communities, which is not eased after the acquisition of employment – according to the Bristol City Council's examination of the ethnic pay gap. The mean and median salaries for ‘other than white’ employees are, respectively, 12.06% and 17.56% lower than those for white British employees – resulting in reports of 9.8% of Minority-ethnic households experiencing food insecurity, as opposed to the Bristol average of 4.6%. Even prior to the Cost-of-Living crisis, out of Bristol’s 2021 food-insecure population, 21% were Black, 17% Pakistani, and 12% Bangladeshi. These pre-existing problems that individuals from Minoritised backgrounds were struggling to cope with have now become aggravated; a national poll conducted by People Like Us discovered that 34% of racially diverse professionals found their salary to be insufficient to cover the newly inflated mortgage costs and energy bills, compared to just 27% of their white counterparts.
“Back in 2018, I started a side hustle thinking that it would provide an extra income for savings. It has gone from being an opportunity to save to an essential lifeline…”
To gain more individualised insight into how the rising cost of living has impacted Black and Minoritised people, BSWN has surveyed a small focus group of 36 respondents from diversified backgrounds – 41.67% of whom were Black, 25% were Mixed ethnicity, and 11.11% were South Asian. The survey revealed 58% of the respondents to be experiencing a newfound struggle in affording basic amenities such as food, hygiene products, and healthcare essentials; while the two areas posing the greatest challenge are energy bills (a reported strain for 52.78% of the respondents) and transportation costs (deemed a struggle by 58.33%), both being linked to the national surge in gas prices. This sudden and excessive increase in gas-related areas of expenditure has put a strain on families’ overall budgets, with 30.56% now struggling to afford their unchanged rent or mortgages, and 27.78% facing the same challenges in paying council tax. A common feeling throughout many of the responses was that the doubling of monthly energy bills, more than any of the other forms of inflation, is the primary cause of people’s inability to afford other essentials. As one respondent (Female, 34-55, Black British) put it, “having to pay twice as much than usual on energy and fuel impacts the food budget,” perfectly encapsulating how literal the sentiment of picking between ‘heating or eating’ is.
“I am using heating and hot water less. Some spending has been curbed or stopped entirely because other things have become more expensive.”
Policy Mitigations
The Local Government Association (LGA) has reported four key areas the Bristol City Council is focusing on in its response to the Cost-of-Living Crisis – coordinating access to information, emergency and welfare support, reducing living costs, and keeping well. A series of positive steps have been seen within this framework, such as developing voluntary roles to build capacity within the advice sector and developing 26 community hubs across the city. However, given the fact that the city is in an active state of crisis, there is more the council can do.
“I am living with the lights off, in constant worry of incoming bills… there is the shame of not being able to do anything or go anywhere due to lack of money… shame and depression.”
Maximise Council Revenue Through Diversified Means
A major problem within the Council’s response to the Cost-of-Living crisis, understandably, is underfunding. An example of this is the national statistic provided by the LGA, that Councils will not be able to pay their staff (comprised of roles such as social workers and rubbish collection teams) more than slightly above living wage by 2024 – unless a £400 million cash injection is provided to local authorities by the national government.
Thus, Bristol City Council needs to investigate methods of improving revenue wherever it can in order to be able to provide fair wages to its members of staff as well as maximise the overall response to the Cost-of-Living crisis. It is important that records of businesses and residents are updated to ensure that no steady income is being missed out on. One way to ensure this is through Empty House Reviews – which can help authorities achieve an average of £782,761 in bonus funding, and in some instances such as in Lancashire in 2016, have brought in more. Bristol had a total of 3,735 empty homes in 2021, according to government data, many of which have been empty for two years or more; a large fraction of the empty houses being the second homes of wealthy families. Reviewing and validating these empty properties may be an immediate way to reduce budget deficits. Similarly, a Business Rates Review could make sure that Bristol’s biggest businesses, which include companies worth multi-millions, are paying as much as they should be, through a review of ever-growing warehouses, factories and offices. While identifying and validating new rateable value can be difficult and time consuming, it may be extremely valuable as a way of generating council funds. For example, a 2020/21 Business Rates Review by Leicester City Council was able to identify over 10,000 new rateable items, and generated £1,150,000 in revenue.
Make Council Support More Accessible
“I asked The Council for any extra help such as food vouchers, they told me no. I asked the GP for mental health help and was referred to a local group, who told me they can't help me because […] it seems I'm suicidal, and they don't deal with people who are that depressed... It's hard to ask for help, and when I did, I have no result.” (Female, 45-54, Black African)
There are numerous barriers that get in the way of people being able to access the support available to them. This can range from anywhere between a lack of awareness about options and eligibility, to language barriers and alternative communication needs. For example, the idea of a lengthy phone call regarding council tax payments may be enough for individuals with severe anxiety to completely avoid the process. Others may find it extremely difficult to get through reams of challenging letters from the Council when they are already struggling with poor mental health. The ‘Research Community’ at Money & Mental Health Policy Institute found that nationally, only one in six people are ever asked by their local council about their communication needs; and this causes many people eligible for support to miss out, or to not know how to go about accessing it.
Whilst the Community Hubs being set up by the City Council are a good step in providing people a physical space to approach local authorities with their concerns and questions, further work should be carried out by the Council in figuring out what barriers people face in gaining support, and what solutions are available. Possibly, through proactive outreach initiatives, public surveys, online portals, public campaigns advertising processes of asking for support, and community panels for feedback.
Lobbying with the National Government
One of the greatest powers local authorities have is a strong voice before state legislators; and most of the policies that would have any meaningful impact on the Cost of Living Crisis can only come from the State. Bristol City Council must thus use that voice to champion for smarter national policies. The solution to alleviate a crisis that unequally impacts different demographics, is through policies that redistribute its burden in a more equal way; and thus, saves those at the lowest rung of the economic ladder from financial devastation. Therefore, some meaningful notions to be lobbied for are:
Smarter Taxation Policies Rather Than One-Off Payments
Currently, the state has taken a few initiatives to relieve the effects of the Cost-of-Living crisis, but these mostly entail one-off grants and rebates, which make little meaningful impact. For example, the Energy Bill Support Scheme that offers energy customers a £400 grant, along with an energy bill rebate package for select households across the country of £550 each. These offer little relief when considering the total rising costs of energy, and moreover, have disadvantageous loopholes – such as the Cold Weather Payments offering poorer households an extra £25 a week when the temperature reaches 0°c; which would not apply to anyone in a city like Bristol, where temperatures of 0°c or lower are rarely seen, yet it still gets cold enough to make heating an essential. The only way to provide consistent and meaningful relief to underserved households is to impose greater taxes on the wealthiest that allow the price hikes overwhelming the poorest to be reversed.
Increased Windfall Tax on Oil & Gas Companies
The surge in energy prices due in part to the shortage in oil and gas supply has caused a large share of UK energy companies to benefit from a massive increase in profits. Companies like BP and Shell have nearly tripled their profits since the start of the year, yet the Windfall Tax imposed on them in May 2022 (to levy some of these profits to the state) has been only 25% – generating less than £5 billion. An increase in the Windfall Tax, coupled with policies that ensure consumer prices remain capped despite greater taxation and policies that continue to encourage investment throughout this, would incentivise private energy companies to diminish their excessive profit margins and generate public funds while lowering the average household energy bill.
Increased Wealth Taxes on Billionaires While Regulating Landlord Taxes
A joint report by Oxfam, the Institute for Policy Studies, the Fight Inequality Alliance, and Patriotic Millionaires found that a system of taxing the UK’s top 1% richest individuals (at a structure of 2%, 3%, and 5% for increasing levels of wealth), would generate an annual £43.71 billion. This would allow Universal Credit to increase by £20 a week, and make the recent 1.25% hike in National Insurance contributions, which poorer households have been struggling with since the start of the cost-of-living crisis, completely redundant; along with creating the potential to invest in a new programme that retrofits homes in the UK to reduce energy consumption and prices, and deter future energy-cost crises.
At the same time, for the duration of the Cost-of-Living crisis, a temporary or short-term decrease in the tax landlords pay might be a useful incentive, coupled with the right policies capping rent, to relieve the cost of housing. While in the grand scheme, landlords are a crucial and untapped source of generating public funds, as "unearned income is taxed at a much lower rate than earned income” per MP Tulip Siddiq; in the present moment, the effect on landlords of cost-of-living crisis inflation is resulting in a renter’s crisis, making housing unaffordable as rent skyrockets. An increase in landlord’s profit margins through relaxed taxation, for the time being, will also regulate the erraticism in the market and incentivise landlords to hold on to their properties; preventing situations like the one reported by a respondent to the BSWN survey:
“My children and I have been illegally evicted, so that the landlords could sell the property while prices were high… we had no legal recourse or recompense for any of it, despite being tenants in good standing.”
Bringing Energy Companies Back into Public Ownership
While the current crisis in energy costs is the result of increased wholesale gas prices, the privatised nature of the UK’s energy provision to households has greatly aggravated the situation; and reflects largely on the failures of de-nationalising a household essential, as a whole. While currently, the greatest relief the state can offer is to remove the VAT on energy bills households are paying to private companies; through nationalisation, in future crises, the government will be equipped to provide whole or at least more effective subsidies. Thus, as a long-term policy, there is an evident need to bring energy provision in the UK back into public hands and free the sector from the pressures of shareholders and dividends, and the accumulation of excessive profits.