Feb 11
2022: The Year of the Squeeze
In the final days of 2021, the Resolution Foundation published a bleak report projecting 2022 to be the ‘year of the squeeze’. This comes off the back of a year which already saw significant financial difficulties for people living on low to middle incomes: the ending of the £20-a-week Universal Credit uplift, inflation of prices, and other socioeconomic factors linked to Covid.
The overriding message of the report: prices are surging and pay packets are stagnating. The peak of the squeeze — where inflation is set to reach six per cent — is expected to arrive in the Spring. By the end of the year real wages will be just 0.1 per cent higher than they were at the beginning.
In April, families will be hit with a £1,200 income decrease as taxes and energy bills rise overnight — the energy price cap is set to reach, and potentially go beyond £500, which is on top of the £139 increase in October. An additional hit will come in the form of taxes rises; households will experience a surge in Council Tax, Income Tax (threshold freeze), and most significantly, National Insurance rates, which are set to rise by 1.25 percentage points.
The stark increase in energy bills will have a disproportionate impact on low-income families who spend a higher proportion of their income on energy — rising from 8.5 per cent to 12 per cent.
These findings are particularly worrying; levels of inequality were already visibly high prior to the pandemic, but with the ending of the Universal Credit uplift and inflating prices of goods, inequality is expected to sharply rise. Even with the uplift, half of people receiving Universal Credit were experiencing food insecurity, with 28% of claimants experiencing severe food insecurity between May-June 2021.
In Summer 2021, New Economics Foundation published a jarring report detailing the cost-of-living crisis in the UK. This has already come into effect following price increases for food and energy bills, welfare cuts and tax rises. This highlights how the system is failing to provide an adequate basic income, as evidenced by the increasing use of food banks and emergency support services.
How will this cost-of-living crisis during the ‘year of the squeeze’ adversely impact the community and Mustard Tree’s clients?
Since March 2020, Mustard Tree have gone from supporting 500 people a month with our Food Club to over 1,000 people a week. The ongoing demand for low-cost food is clear and in November 2021, there were nearly 3,000 visits to our three Food Clubs across Greater Manchester. Helping to alleviate the financial pressure of the weekly shop, Food Club offers a lifeline to people living on low and no income. Some of our clients have relayed that without this provision, they would be faced with the decision to ‘heat or eat’.
Food insecurity is a catalyst for social deprivation. Insufficient access to resources — food, housing, fuel, healthcare, and education — produces a more unequal society. Deprivation hinders opportunities to fully participate in society, leading to social exclusion and mental health issues. We expect these problems to worsen as the ‘year of the squeeze’ unfolds, and the cost-of-living crisis takes an effect.
At Mustard Tree, we believe in a Greater Manchester where everyone has the opportunity to be a connected, valued and contributing member of society. And so, we aim to alleviate the causes and consequences of poverty — working in partnership with other organisations that share this common goal. We welcome any local businesses, community groups and other organisations that would like to work with us to tackle our mission: combatting poverty and preventing homelessness.