The cost of living crisis: is the picture really improving?

In the ever-changing economic narratives, recent news on the UK's cost of living offers a glimpse of a brighter future. Headlines tease lowering inflation rates and more disposable income for the average family, but if you dig just beneath the surface you’ll discover the reality. The struggles are intensifying for those on the lowest incomes and for the charities working tirelessly to support them.

There are surface improvements Between 2022 and 2023, we experienced the most significant year-on-year decline in living standards since the Office for National Statistics records began in the 1950s [i]. This sobering statistic is a reminder of the extreme hardships the country has faced in recent years.

But economic indicators are now painting a steadily improving picture. Progress may be slow, but it does appear to be moving in the right direction. According to the Bank of England, inflation has decelerated from its peak of 11 per cent in 2022 to 3.4 per cent in 2024 [ii]. Data also suggests that household incomes should rebound to their pre-pandemic peak by the end of 2026 [iii]. For many people this offers glimmers of hope, but for the most vulnerable people on the lowest incomes, the financial squeeze is only getting tighter.

There is no question that these are challenging times for vulnerable people: 1.4 million adults across the UK are facing fuel and food insecurity [iv] and three in 10 children are estimated to be living in poverty [v]. These staggering numbers reflect a dire reality for families on the lowest incomes. Many are resorting to smaller food portions or skipping meals altogether, just to make ends meet.

Benefit cuts, insecure housing, low salaries and bleak unemployment forecasts combined with nearly £15 billion in unsecured debt weigh heavily on the poorest communities [vi]. Among those who are struggling, people living with long-term illness and disabilities are often the most at risk. Around one-third of the 9.3 million non-working adults cite long-term illness as their main reason for not working [vii]. This means that many people with long-term sickness are left no choice but to seek help with food and the essentials.

In Benefact Trust’s “Beyond Funding” podcast, we were joined by Sophie Carre, Director of Public Engagement for the Trussell Trust, a charity supporting a network of more than 1,400 food banks across the UK. Sophie talked to us about how tough the situation is for disabled people. She revealed that a shocking 75 per cent of people who visit Trussell Trust food banks report that they, or at least one member of their household, is disabled.  

The Trussell Trust is an anti-poverty charity and community of food banks providing practical support to people who can’t afford the essentials, and campaigning for a future where none of us need to use emergency food to get by.

The groups and volunteers who run food banks are essential to our communities. They provide more than just food, they offer compassion, advice and vital practical support. Trussell Trust has seen poverty getting broader and deeper for a long time, with its figures showing a shocking 120 per cent increase in food bank need over the last five years [viii].

During all this, charities are experiencing both highs and lows. Those such as the Trussell Trust are beacons of hope amid the poverty storm, supported by the generosity of donors. In the midst of the cost of living crisis, people are giving more to charity with a reported £13.9 billion donated in 2023 [ix]. This increase is driven by donors giving more on average, rather than more people giving to charity, but it shows how vital donors consider charities to be during these hard times. The dedication and drive charities have, bridging gaps in support for vulnerable people, is unmatched.

But their efforts are hindered by the widening gap between need and available resources. Take the Trussell Trust  again for example. This frontline organisation is seeing its food banks stretched to the limits. Between April 2022 and March 2023, Trussell Trust food banks provided almost three million emergency food parcels, the highest number ever recorded. Yet despite their tireless efforts, food banks are struggling to keep up with soaring need.

The Trussell Trust’s work reflects the issues faced by many charities. As the need increases, they require more support and unfortunately it begs the question: where is this support coming from?

Many charities rely on funding from their local government, who themselves are at-risk. Charities are concerned about the future of this funding, with 28 per cent of organisations expecting a reduction in council funding over the coming year [x]. 

In the face of these rising pressures, grant funders are stepping in to provide help. Grant funders such as ourselves have an opportunity to help bridge gaps in support. Funders can provide financial aid but also offer guidance and resources to help charities navigate these challenging times. Now, more than ever, grant funders have the chance to empower charities and make a lasting impact on their resilience and sustainability.

And while the future outlook may seem bleak, I believe there is positive change on the horizon. By rallying together and advocating for meaningful change, we can all pave the way for a fairer future and ensure that the next few years offer more than a few glimmers of hope. It really is time to build a society where no one is left behind. Together, we can overcome the challenges ahead and create a future where every individual can flourish.

Helen Gray is Director of the Benefact Trust. Find out more out more about Benefact Trust at www.benefacttrust.co.uk. Watch or listen to Benefact Trust’s podcast: Ending Hunger with the Trussell Trust

[i] Office for National Statistics (ONS)

[ii] Bank of England

[iii] Office for Budget Responsibility

[iv] Office for National Statistics (ONS)

[v] Joseph Rowntree Foundation

[vi] Joseph Rowntree Foundation

[vii] Office for Budget Responsibility

[viii] The Trussell Trust

[ix] CAF UK Giving Report March 2024

[x] Pro Bono Economics VCSE Sector Barometer