Almost 80% of the UK’s lowest-paid workers say they are now facing the toughest financial squeeze of their lifetimes, according to new research by the Living Wage Foundation.
Liz Truss has averted a further increase in utility bills with her “energy price guarantee” – a radical measure that could cost taxpayers more than £100bn – but many poorer households are already struggling to make ends meet.
A poll of more than 2,000 workers earning less than the real living wage of £9.90 an hour, or £11.05 in London, found that 78% said this was the worst financial period they had ever faced.
More than half had used a food bank in the past year, while 42% reported regularly skipping meals for financial reasons. More than a fifth of these workers, 21%, said they had no money at all left over after paying for essentials, such as rent and food.
Katherine Chapman, director of the Living Wage Foundation said: “Everyone is feeling the pressure from soaring inflation, but our polling shows that low-paid workers are being hit harder than most. These shocking findings bring to life what it’s like to be paid less than a real living wage during a cost of living crisis.”
She added: “It’s more important than ever that those employers who can, step up and provide a wage based on the cost of living.”
As many as 4.8 million people in the workforce have earnings of less than the real living wage. The rates are calculated annually by the Resolution Foundation thinktank, based on the minimum income required to cover the basic costs of living.
More than two-thirds of the workers surveyed said their financial situation was negatively affecting their levels of anxiety, and their overall quality of life – with women particularly badly affected.
The Living Wage Foundation accredits employers who promise to pay their workers at least the real living wage.
The new rate for 2022-23 is due to be announced next week, and is expected to mark a significant increase, given high inflation across the economy.
The separate “national living wage” – a legal minimum set by ministers – is currently £9.50, though it only applies to over 23-year-olds.
During the early stages of the Conservative leadership campaign, Truss had expressed scepticism about the need for “handouts”, saying she would help consumers “in a Conservative way of lowering the tax burden”.
But economists had pointed out that tax cuts would not benefit the lowest paid, many whom already pay little or no income tax.
As the leadership race drew to a close, it became increasingly clear the new government would have to take more drastic action to shield households. Without government intervention, the energy regulator Ofgem had announced, a typical bill would be allowed to increase to £3,549 a year from 1 October – with another jump expected in the new year.
Shortly before it became clear the Queen was gravely ill last week, the prime minister announced that the government would cap the unit price of gas and electricity, to prevent the typical bill exceeding £2,500, with the cost to be met by taxpayers.
She told MPs: “I know businesses and families are very concerned about how they will get through this winter. That’s why I felt it was important to act urgently to provide immediate help and support.”
Anti-poverty campaigners have welcomed the policy but questioned whether it could have been better targeted towards low-income households, who were already struggling to make ends meet.
The latest inflation data, published earlier this week, showed prices rising at an annual rate of 9.9%. The government’s energy measures are expected to shave up to 5 percentage points off inflation, which the Bank of England had previously expected to peak above 13%.
