As Martin Lewis warns of imminent ‘civil unrest’ in the UK from the worsening cost of living crisis, state pensions and benefits rise by less than half of the rate of inflation – which is predicted to hit 8.4% later this year.
Monday’s (April 11) 3.1% rise for state pensions and benefits makes the value of payments the lowest they have been for 50 years with families facing “the worst financial damage since records began”.
Lewis, the founder of the MoneySavingExpert website said he is “scared for people”, telling the Telegraph: “We need to keep people fed. We need to keep them warm. If we get this wrong right now, then we get to the point where we start to risk civil unrest.
“When breadwinners cannot provide, anger brews and civil unrest brews – and I do not think we are very far off.”
Lewis said he has been inundated with messages from desperate people and his site has provided a new feature to try and help people cope.
“I feel slightly sick about doing it – we are talking hot water bottles in sleeping bags territory,” said Lewis. “This is one of the richest countries in the world. It’s pretty desperate, isn’t it?
“It is not an exaggeration to say that there are people we have to prevent freezing or starving.”
Benefits rise is ‘biggest fall’ for 50 years
The 3.1% benefits rise was set last November, based on the inflation rate then. Given inflation’s steep climb since, the benefits rise actually represents “the biggest fall” in benefits in 50 years.
“It means that in terms of their values, how much bread and milk you can buy in the shops, it is the biggest fall in value since 1972,” said Helen Barnard, associate director of an anti-poverty group, the Joseph Rowntree Foundation,
Barnard said the value of pensions and benefits has fallen in real terms in eight of the last ten years, and added: “We know the majority of people in poverty now are in working households.
“One of the problems is that too many jobs are not just low paid, but they’re insecure – you don’t know what money you’re getting one week to the next.
“You don’t get sick pay; you don’t get protection if something goes wrong. People are struggling to afford the basic essentials and having to rely on charities for toothpaste and toilet rolls.
“It’s humiliating for a lot of people.”
‘Historic fall’ in living standards
British households will experience an “historic fall” in living standards this year with incomes set to fall £900 according to the latest UK economic outlook report by PwC. The lowest paid are set to be £1,300 worse off and perhaps even more if the conflict in Ukraine deepens.
Inflation at 8.4% will cause a 2% drop in household incomes, representing the biggest fall in living standards since records began, and the biggest fall in real wages since the 1970s.
PwC say cost cutting measures and Russia’s war in Ukraine will slow economic growth to 3.8% this year, down from the expected 4.5%.
In the Guardian, Richard Partingdon states: “Despite economic growth in aggregate, the typical family will face the worst financial damage since records began around the time postwar rationing came to an end.”