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Warning that 1.5 million households will struggle to afford food and energy

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Written by: Emma Lunn
11/05/2022
A think tank has called for more government support as it warns that millions of people face food and energy bills higher than their disposable income.

In a report titled Sailing in Treacherous Seas, the National Institute of Economic and Social Research (NIESR) warned that rampant inflation will push thousands of households into “debt and destitution”.

The think tank said the combination of shocks – Brexit, Covid-19 and Russia’s invasion of Ukraine – is set to leave the incomes of people in the UK permanently lower, with the squeeze on living standards being made worse by government policy.

For 2022-23, NIESR estimates that 1.5 million households across the UK will struggle to afford food and energy, with the highest incidence in London and Scotland.

Professor Jagjit Chadha, NIESR’s director, said: “These people, unfortunately, do not have the large amount of savings that better off households have. They are therefore constrained by whatever income is coming in day-to-day. Essentially, they are living hand-to-mouth and in that world they need support now.”

NIESR calculated that a Universal Credit uplift of £25 per week between May and October 2022 would cost about £1.35bn. It said an additional £2.85bn should be given to the 11.3m lower-income households, amounting to a one-off cash payment worth £250 per household for 2022-23.

The think tank said the Spring Statement in March didn’t do enough to help people or support regional regeneration as we emerge from Covid-19.

NIESR forecasts that consumer price index inflation will average 7.8% in 2022 and to peak at 8.3% in the fourth quarter, remaining above the 3% rate at which the governor of the Bank of England and chancellor of the exchequer are required to exchange letters until, at least, the fourth quarter of 2023.

NIESR also expects retail price index inflation to reach 14.4% in the same quarter, its highest level since 1980.

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