Roar writers Lily Powell and Daisy Eastlake on the impact of the cost of living crisis on students facing a challenging financial year ahead.
The pandemic days of closed-down economies and isolated life may seem far behind us as we re-enter an unrestricted society and another year of education. Yet the repercussions of the tumultuous world we left behind are beginning to pose yet another sinister threat to the average person. Average energy bills are predicted by industry analysts to rise to £3,582 after an upcoming October energy price cap hike. But the average cost was a comparatively small £1,400 last year – and so another national crisis looms on the horizon.
The rising cost of living, from energy bills to price inflation, is an issue felt well beyond the shores of the UK. Restrictions placed on Russia for action in Ukraine, combined with post-pandemic demand, has caused prices to skyrocket. Russia provided 14% of the world’s total crude and condensate supply in 2021; the loss of this is being felt across the globe as more and more nations place sanctions on Russia.
The primary cause of the UK’s cost of living crisis is the rate of inflation greatly exceeding wage increases, resulting in a decrease of ‘real’ disposable income. This leads to increased hardship for many and lower spending generally in the economy. The Bank of England estimates that inflation rates are set to reach as high as 13% before the end of the year, rising a further 3.6% from its current 9.4% rate. Governor Andrew Bailey predicts that a recession is set to occur in the final months of 2022, with the economy set to shrink by almost 1% and this trend will likely continue until the end of 2023.
Prime Minister Boris Johnson has yet again come under fire. He faces criticism for jetting off to Greece only a month after his last holiday with his wife, Carrie. To many, the concept of buying a meal in a Greek restaurant amid current economic hardship seems ludicrous, let alone a (second) holiday. Again, the Prime Minister is living as if “it’s all just one big party… while the country struggles to pay their bills,” as a Labour spokesperson said.
It may feel that the Tory government is failing to address the increasing challenge of the cost of living crisis, yet Chancellor Nadhim Zahawi expressed confidence that the action taken by the government would allow the UK to “overcome the economic challenges” it faces. The Chancellor’s confidence is not universally shared; money expert Martin Lewis has said that it is for the “government alone” to do more to alleviate the scale of the crisis by “putting more money in people’s pockets”.
Martin Lewis’s requests, ironically, echo the fact that people have been at pains to physically put more money in their pockets in recent months. Shifts in personal money management techniques have seen a rise in the use of cash, with personal cash withdrawals at a five year high. £3.32b in cash was deposited and withdrawn from the Post Office counters in July alone – £100m more than previous months. With rising prices, tighter budgets and less disposable income, general consensus proves that people are “literally counting the pennies” by using cash to manage their budget.
As the summer draws to a close and semester one begins, the prospect of paying rent and bills for the upcoming semester is a daunting reality for many students. Before even addressing this problem, many students have to vault the initial hurdle of fighting their way through the property market. Anyone who has attempted to find a private rental flat this year will understand the struggle. RightMove reports the demand for properties outnumbering available supply by a drastic 3:1. Maintenance loans often don’t match up with cost of living either, with UniPol estimating that private rent in London consumes on average 88% of the maximum maintenance loan. Only 8% of students believe that the government is doing enough to support them; 90% of students admit that the cost of living crisis has had a negative impact on their mental health and wellbeing. For many, being a student means “every day is just a battle of being as cheap as possible”.
The impact of the cost of living crisis on students is unforgiving. Many are faced with unsubstantial student loans, bills rising from unaffordable to unimaginable, and the guilt of requesting additional support from parents who are also facing harder times. There are small ways for students to save money on day-to-day activities which may provide small respite; from making the most of student discounts and Freshers’ Fair freebies to lower temperatures on washing machines. A penny saved is a penny earned; what may feel like an irritatingly small amount may help reduce the stresses of the rising cost of living.
Government policy and help with the crisis is a day late and a dollar short. Budget cutting now falls to the savvy students who need to make every penny count.
