The Cost of Living Needs Serious Attention

June 11, 2022 | By Paul Mackenzie Ross | Filed in: finance.

There’s been so much talk about the cost of living over the past few months. In many mainstream media outlets it’s commonly referred to as the “cost of living crisis”.

To illustrate interest in the subject, here’s a Google Trends graph of the popularity of the search term “cost of living” in the United Kingdom over 12 months to the 11th June 2022; around Christmas 2021 into New Year 2022, the term started to become more widely searched, until it has peaked in May 2022.

Graph showing cost of living searches in UK, 12 months to June 11th 2022 (Google Trends)

The trouble with this whole issue is that I don’t believe the country’s politicians are really grasping the reality of the situation. There’s a lot of “we’re doing everything we can” statements, but it’s not true. Offering a new version of Thatcher’s “right to buy” does nothing for everyday people in this country. That, to me, seems like a distraction to take people’s attention away from the fact that 41% of Conservative MPs have no confidence in their own embattled leader.

Also, the £150 payment toward our council tax was welcome, but all it did was reduce the degree of haemorrhaging of cash, simply made the draining of hard-earned wages from my bank account a little less severe. As for £400 towards our energy bills – where is it?

The point I’m making here is that having an extra £550 is nothing in the grand scheme of things. Let’s look at the figures…

Middle England Feels the Squeeze

Before we start, let’s just take a look at my particular circumstances…

I’m a white, middle class, middle aged, single parent with a good job. I earn more than the average wage but not as much as I should be, considering I have over 21 years experience in my profession and all the recruiters who try to tease me away to other roles offer me rather grand pay rises, anywhere between 10% and 50%.

I have an average house with a big mortgage and it’s no palace; it needs rewiring, redecorating, new windows, a new gate – and I just cannot afford all these things right now. In fact, I’ve not been able to for quite a few years, to be perfectly honest. I haven’t had a proper holiday in over five years, and I can’t even afford to renew my passport – what would I do with it anyway?

And if I was “feeling the squeeze” before this “crisis” hit, then now it’s even worse.

On top of that, if I’m suffering, then what must it be like for those on lower incomes? I’ve been there, unlike the majority of (all?) politicians, and it’s not very nice to live in an expensive world with little money.

So, how am I doing with energy price rises, rising inflation, and interest rates on the climb?

  • Mortgage payments went up, over £120 a month.
  • The NI contribution went up, costing another £30 a month.
  • My combined energy bill went up by over £70 a month.
  • The water bill increased too, up by £5 a month.
  • Broadband just went up by £20 a month.

My basic costs alone have shot up by £245 a month. That’s not even considering the rate of inflation on all those other bills – food, fuel, insurance, etc.

Then there’s the fact I’ve not had a pay rise in over two years. Were that to rise by the rate of inflation, I’d have another £150 in my pocket every month. Because my wages have stagnated, that’s effectively reduced my income from what it should be today.

So, if you add all that up, I’m £395 a month worse off. That’s a whopping £4,740 a year! (Where’s that agent with the “modest” 10% pay rise for me?)

That’s not to mention the additional big tax bill I had from HMRC, or that my car was only doing 23MPG and everything started to go wrong on it (Exhaust, engine, gearbox…) so I had to trade it in for a “new” car. Or that my meagre savings have been dipped into to pay for things, and they’re now depleted. Or that I had to pay for the “new” car using my overdraft facility and am now living on a credit card until the books start to balance out again.

And I’m one of the better paid people, what must it be like for those on average wages or even lower?

Any Solutions to This Cost of Living Crisis?

I’m not the Chancellor. I wasn’t a former hedge fund manager and now one of the richest men in Britain, allegedly earning at least £2 million alone from my investments every year. I’m not Kirsty Allsop, advising you to move somewhere cheaper. Nor am I an energy firm boss telling you to wrap up warm and maybe try an electric blanket rather than switching the heating on.

The Government are doing nothing to help us. They say they are but that’s not true. Where’s the windfall tax, sorry. levy from the North Sea oil? Where’s the higher rate of taxation that millionaires are asking to pay?

All I have done, as a middle Englander, is switch off my gas. I only turn it on when I know I need hot water for doing the dishes or having a shower. It no longer turns on for an hour in the morning and an hour at night.

I probably don’t shop at Sainsbury’s as often, and I’m spending more time in Aldi. As for the food I choose, it’s more microwave meal than stick it on the gas cooker for 30 minutes.

That 23MPG car is now a 35MPG diesel. Sure, the news is saying a tank now costs over £100 in some fuel stations for some cars, but at least I’m getting another 150 miles out of a tank now. It cost more to insure and DVLA charged me a whole month for 4 days of Vehicle Excise Duty (VED), but in the long run it’ll save me a massive £5 a month (Which will be economically viable after 6 months thanks to the DVLA being so tight).

As for paying off the mortgage quicker, offloading the credit cards, or having decent savings… that’s not happening.

So I’m stuck in an inflationary limbo, being squeezed for more money yet having none, and not being able to pay off my debts as swiftly as I’d like to.

And I’m definitely not the only one. There are millions of people, families, and households in the same boat, if not worse. We hear stories every day now of food banks not seeing as much food come in for those that need it, of choices between dong the washing or saving electric. Some people can’t even afford to drive, so they’ve ditched their cars!

It’s looking a bit dystopian, says the man with an always positive outlook.

Leave a Reply

Your email address will not be published.