For the second time in 2 years, the UK is in the midst of an economic and health crisis. The rising cost of living risks many being unable to afford essentials to maintain their health, and bringing increased stress and anxiety as families try to make ends meet.
The government have announced welcome action to cap the unit price of energy – which has been estimated to have a potential cost in the first year equivalent to the furlough scheme and self-employment support during the pandemic. Yet despite this magnitude of spend, many families are still expected to have a tough time in the coming months. The reaction to the ‘mini-budget’ has worsened the economic and fiscal outlook, with people at risk of bearing the cost of restoring fiscal credibility – and a greater threat to health – through potential future cuts to public services and social security.
Large-scale action on the energy cap, coupled with previous support announced, will help to offset the majority of coming energy price rises. But that won’t be the case for all families and won’t cover increases in prices of other essentials – food costs rose by 13% in August 2022. By June 2022, 1 in 6 households were already in serious financial difficulty with consequences for their health. Financial market turmoil has spread concerns more widely, particularly to families with fixed rate mortgage deals coming to an end soon.
Our latest polling found that 57% of people think rising living costs are a high or very high threat to the health of UK citizens, while 72% believe overall health and wellbeing has declined in the past 12 months.
With family incomes set to be squeezed with still high predicted inflation into next year, further anticipated interest rate increases and energy consumption set to rise between now and March, there is a difficult winter ahead.
Lower income families are most at risk from a higher cost of living because they have less money to spend in the first place, and increases in costs from energy, food and fuel represent a greater share of those existing levels of spend. The poorest fifth of families spend almost two-fifths (37%) of their income on essentials (food, housing, fuel and power).
They are also more at risk of poor health – nearly half (48%) of the poorest 40% of families in the UK contain at least one person with poor health.
There are several ways that the rising cost of living can affect people’s health. Being unable to afford sufficient food leaves people malnourished. Being unable to keep a home warm leaves people at risk of developing respiratory diseases and, for the most vulnerable, at risk of death.
World Health Organization estimates suggest that around a third of the higher number of deaths that occur in the winter compared to summer are due to cold homes. In a particularly cold winter or where energy prices are unaffordable, there is a significant risk that this will be higher. Increased poor health may also place greater strain on health services, which are already experiencing severe pressures that are set to get even worse over winter.
Alongside this, constantly worrying about having enough money to pay bills or buy food can also lead to stress, anxiety and depression. It should also be remembered that stretched finances and the concerns that stem from them are far from limited to only low-income families. This impacts on people’s health both in the short and long term, where stresses can contribute to the build-up of psychosocial problems over time. In turn this puts a strain on people’s bodies, resulting in increased stress, high blood pressure and weakened immune systems.
Higher costs also increase the risk of more people falling into problem debt, particularly for lower income families where rising costs mean that debt repayments will represent a greater proportion of the money people have to spend after essentials are covered. Though higher income families are more likely to have debt – so large changes to their repayments also risk an increase in debt issues. People in problem debt are nearly three times as likely to have ‘bad’ or ‘very bad’ health.
Beyond the energy price cap there is still likely to be a significant role for government to alleviate hardship through the coming months. That is why focusing on tax giveaways that overwhelmingly benefit the richest is wrong. Instead the government should be carefully monitoring the wider effects of the cost-of-living crisis, maintaining public services and targeting additional support to prevent people falling into hardship and poor health.
Over the medium term, guaranteeing that benefit rates are increased in line with current inflation from April will help provide a lasting boost to lower income families. More could also be done to use this time (gained by introducing the emergency measure of the price cap) to develop more sophisticated mechanisms with energy companies that can deliver targeted support such as a social tariff.
Any lasting plan for growth must recognise that a healthy population is key for a healthy economy. Rumours that the health disparities white paper will be scrapped suggest this lesson of the pandemic is yet to be learned. The absence of a plan for public services to cope with higher immediate costs, and the increased likelihood of cuts over the medium term to balance the public finances, risks a deterioration in population health, which would act as a headwind to growth. Not only is the NHS under severe pressure with insufficient plans to tackle backlogs and a difficult winter ahead, it was never meant to go it alone – a strong welfare state through investment in areas such as housing, social security and education supports good health.
This article was originally published in the HSJ on 23 September 2022.