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The UK’s incoming cost-of-living crisis

Roar writer Pablo Minguez Romero on the impending increase in the cost of living and how it affects students.

Prime Minister Johnson has had another crisis to add to the list challenging his leadership. Experts warn of a cost-of-living crisis threatening the UK.

Since the summer of 2021, Europe has been plagued by a persistent rise in the price of gas. The International Energy Association (IEA), has reported that the combination of a rise in demand- due to colder temperatures- and a struggling supply has led to gas prices becoming three to four times more expensive than in 2020. They expect prices to continue rising in 2022.

The cause

The cause for the lack of supply is ambiguous. IEA chief, Fatih Birol, has put the blame on Russia. Back in early January, he accused them of cutting supply as a means to pressure the west over rising tensions in Ukraine. However, Professor Jonathan Stern from the Oxford Institute for Energy Studies argues the root of the crisis lies in the current European gas market model.

The consequences

Whatever the cause, the effects are being catastrophic. The rising costs have already driven 27 UK energy suppliers to go bust in the last 6 months. What has, for now, protected consumers has been Ofgem’s (the UK’s energy regulator) price cap on energy bills. The current price cap is £1277. However, experts believe that when the price cap is updated in February, it could be raised to £1865—a nearly 50% increase.

This, combined with a tax-hike due to Jonhson’s raise of national insurance and the persistent inflation affecting the UK, a cost-of-living crisis is imminent. Millions of households will wake up from one day to another with more expenses. Millions could be plunged into poverty.

In a letter to the energy minister, pensioner charity of Age UK, Kwasi Kwarteng, warned of the dire consequences. The letter said: “The astronomical hike in energy prices now widely anticipated has already forced many deeply anxious older people on low incomes to turn their heating down below what is comfortable or advisable, with some switching it off altogether for some or all of the day and night.”

Pensioners aren’t the only ones at risk. As students who live on tight budgets, this concerns us too. The Royal Bank of Scotland reported that average costs of living for students are already “much higher” than in previous years. In London, 25% of students run out of money before the end of the semester according to the same report. The greater cost of utilities will just apply even more pressure to students’ pockets.

PPE student, Zuzanna Hebdzynska, rents a private flat in a council house. She says the rise would greatly affect her personal finances: “It would make it much much worse. Paying 50% more every month in electricity, that is unexpected, [it] would make a significant change to my budget”. The hike could affect her health too. She claims she’d have to cut consumption of “hot water and wouldn’t be able to use the heater”. 

This crisis could further worsen students’ mental health. “That’d be a little bit stressful knowing you’d have to pay more and not knowing where to get that money from and until you are in that new pattern of consumption, it’d be stressful and maybe a source of anxiety and definitely affecting my studies, my performance at university.” According to Finder.com, 58% of students‘ mental health has suffered as a result of tight budgets. The rise would only aggravate this.

The response

The government’s response has not been up to the task. The only action taken until now has been meetings of Kwarteng with industry leaders. The meetings were inconclusive.

The cost of inaction is too great, both to Johnson’s political career and more importantly to households comprised of students, who will suffer the consequences. The government must act now!

Second year Philosophy, Politics & Economics student at King's. Interested in American, British and European politics.

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