Some families are up to £1,600 a year worse off due to the cost of living crisis – even after government support is taken into account.
The poorest in society suffer three major hits to their incomes in the year to October 2022, according to a report commissioned by former Prime Minister Gordon Brown.
As well as losing the £20-a-week increase in Universal Credit, benefits are failing to keep up with inflation – and a jump in the energy price cap is expected this autumn.
Poverty expert Professor Donald Hirsch, who wrote the report, says the government’s proposed package falls far short of the needs of low-income households – and that urgent action is needed.
His research suggests an out-of-work couple with two children will miss out on £1,300 a year, with larger households suffering greater losses.
This is despite working-age households on Universal Credit and other means-tested benefits receiving £1,200 of extra help – including cuts on energy bills and council tax. , as well as £650 direct to their bank account.
The report warns that this flat-rate approach puts larger families at a disadvantage, and Mr Brown said: “We are facing a humanitarian crisis that Britain has not seen in decades.
“As the cost of living continues to soar, families on the verge of making ends meet cannot bridge the gap.”
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He also called on the next Prime Minister “to ensure that families have enough to live on through this crisis and beyond”.
And writing in The Observer, the ex-Prime Minister warned that inaction risked “dooming millions of vulnerable, blameless children and pensioners to a winter of dire poverty”.
Mr Brown is urging Boris Johnson, Rishi Sunak and Liz Truss to agree an emergency budget this week – and says time is running out to update the Universal Credit payments system ahead of the company’s next price cap hike ‘energy.
Underlining the urgency of the issue, he also suggested that Parliament be recalled if it fails to do so.
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“Living in Survival Mode”
The report has been endorsed by 56 charities, church groups and politicians – and also includes the first-hand experiences of those affected by rising bills.
One of them is Lowri, who receives Universal Credit and takes care of her father and daughter. Her food and fuel bills doubled and she had to sell her daughter’s bike to make ends meet.
She said: “I’ve spent the last five years living in survival mode, surviving every day, constantly worrying about money. I’m emotionally and mentally drained living like this.
“It’s not living, it’s just existing. There’s just no way for people to pay all their bills, and all we do is exist to pay the bills. Terrified is an understatement.”
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The projected deficits in the report are based on figures drawn at the end of 2022, and there are fears families could be in even worse financial shape when energy regulator Ofgem makes its announcement about the hike of the energy price ceiling.
A government spokesperson said: “We understand people are struggling with rising prices, which is why we have acted to protect Britain’s eight million most vulnerable families with at least £1,200 of direct payments this year, with additional support for retirees and those claiming disability benefits.
“Through our £37billion support package, we are also saving the typical employee over £330 a year through a tax cut in July, allowing people on Universal Credit to keep £1,000 pounds more on what they earn and cutting fuel tax by 5p, saving a typical family £100.”