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Thursday, October 6, 2022

Under-30s pay the highest price for the UK’s cost-of-living crisis | Household bills

The cost-of-living crisis is biting across the generations, but the under-30s are likely to be among the hardest hit. A recent report from the Intergenerational Foundation thinktank suggested the age group will bear the brunt of Covid and the health and social care levy.

In common with other workers, they face rising prices and bills. But those with student debts face another cost – millions can expect higher bills on student loans next year after the government froze the thresholds at which repayments start.

“Young people’s prospects have suffered,” says Liz Emerson, co-founder of the Foundation. “Covid borrowing, the energy crisis and sky-high inflation have exacerbated the situation, with policymakers choosing to extract more tax from younger, rather than older, generations by targeting earned, rather than unearned, income.”

According to chartered financial planner Rosie Hooper, young people face a “triple whammy” of tax increases, with a portion of any wage rises they are able to negotiate disappearing before they are paid.

This generation – dubbed “generation precariat” (that is, they are living precariously without security)– typically rents and earns less in real terms than those who were young adults in the late 1990s.

The median gross weekly wage of someone aged 18 to 21 has fallen by almost a fifth in real terms since 1997, while last week, the Office for National Statistics said that average wages in Britain had fallen at the fastest rate since 2014.

We spoke to some of them about their experiences.

Deri Smith 23, Bristol

When Smith, 23, saw a breaking news alert saying Britons were to face the biggest fall in living standards since records began, their first thought was “more?”(Smith uses the pronouns they/them).

The delivery driver says: “My age is often seen as the beginning of the rest of my life – but it’s stop, start, and often feels very much on hold. I feel like I don’t expect much from life other than a stable place to live, and time to spend with friends.”

The added burden of repaying student loans is increasing financial pressure, with Smith being expected to pay back £60 more a year under the new plans. They place housing at the forefront of all their worries, with the future “largely motivated by the cost of the place I’m renting”.

Smith pays £450 a month to live in a house of seven. The number was increased to reduce the bills.

Fears about the cost-of-living crisis are largely characterised by lack of control. As Smith points out, energy costs and council tax are two bills they have little, to no, control over. “I can restrict my shopping,” they say. “But managing energy consumption in a seven-bed house is next to impossible.”

Nairn McDonald, 26, North Ayrshire

Nairn McDonald
Nairn McDonald has seen energy costs rising sharply.

“The first time I noticed the cost-of-living crisis was putting petrol in my car,” says McDonald, 26, an unpaid carer for two disabled people, who himself lives with a disability. “Where £10 used to cover a week, it barely covers a few days.”

Last week, petrol prices hit an average of 163.5p a litre and MPs were warned they could reach 250p. A recent poll found 43% of motorists were cutting back on car use but for McDonald, this is not an option because of his disability.

Energy bills are also on his mind. In a vulnerable family – his mother has suffered several mini-strokes – keeping the home warm is vital to prevent illness and hospitalisation, he says. “We’ve noticed the prepayment meter has been beeping for more money.” When sitting with his elderly father, he says, he “made me switch the lights out despite the fact he had fallen only a few weeks earlier (due to the darkness)”.

McDonald is currently on universal credit. “When we had the £20 uptick, it just covered my bills and helped keep me afloat,” he says. “Since it has been reduced, I get about £60 a week, and my bills are no longer covered.

“We’ve had to change our approach to shopping and the items we get. We have started – like many others – doing meals which cover a few more, like soup or stovies, but that isn’t a long-term solution. It feels like nobody in power cares or wants to make the decisions and give people the support they need.”

Beth Steeples, 24, Derby

Beth Steeples
Beth Steeples: ‘For people who live alone, it is hard. I have to battle with gas and electric companies.’

Having moved from her family in Kettering to Derby in June 2021, she has been renting a house for eight months, paying £450 a month.

The qualified special educational needs teacher is in her second year of teaching and had a pay rise in December. But even before increases in student loan repayments, and national insurance, the effects are palpable. “My energy bill was £65 a month and has gone up to £154 a month,” she says, while £110 of council tax is expected to rise to £150.

When she first moved in, her bills, including rent, came to £850 a month. They are now £1,100, and she has cancelled her pension contributions to try to save for a house of her own. Even with her pay rise, she says she will be “no better off”.

Wealth management firm Quilter estimates her national insurance contribution will rise by £226.56 a year.

The cost-of-living crisis is also seeping into food bills. “I’m constantly looking for reduced [price]food to freeze. For people who live alone, it is hard,” she says. “I have had to battle with gas and electric companies to get my meter updated to avoid overpaying – I cannot afford to pay more than I should each month.”

Over the past year she has worked shifts at a restaurant, done babysitting and childcare, and worked as a personal assistant during weekends and school holidays for children with SEN. “I cannot sustain myself on one income,” she says.

Claudia Billings, 24, Nottingham

Claudia Billingss.
Claudia Billings is doing relatively well but pessimistic about the chancellor’s £200 contribution towards energy bills.

Billings is a chartered surveyor in Nottingham, and is earning a higher than average salary for her age. Having gained her degree through an apprenticeship, she has not had to face a rise in student loan repayments.

“I wouldn’t say I’m particularly worried – I’m taking each day as it comes. It’s more of a frustration – that not much is being done to help.”

Billings is pessimistic about chancellor Rishi Sunak’s promise of a £200 rebate on energy bills. “It doesn’t touch the sides for most people.” And she doesn’t like the fact that it will have to be repaid over five years. “I will have it, but I don’t want it,” she says.

While her energy bills for gas and electric used to be £40 a month, she expects that to rise to £95. And over the last two years, she has seen her council tax go up by £96.

Currently renting a two-bed flat, she hopes to save for a deposit for a house this year. But she is put off by the state of the housing market. Figures from Halifax suggest the average deposit for a first-time buyer is £59,000. “It’s no wonder young people struggle to get on the property ladder,” she says.

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