Last week, an “anxious” Chancellor Rishi Sunak was heavily scrutinised for being an “illusionist” post his spring statement for not being able to protect the public from the rising cost of living. Accused of “gaslighting”, the Chancellor said he had “always tried to be honest with people”, and “I can’t protect them from absolutely everything that we face.”
The panic and criticism come at a pivotal moment when universal free lateral flow tests will end on Friday, which means £1,000 a year 'tax on caring' for care home relatives. Families visiting relatives in care homes face paying up to £1,200 a year on Covid tests, as the Government was blasted for putting a “tax on caring”. People aged 80 and over will still be able to get them, alongside those with compromised immune systems – if they have symptoms. That would mean a family of four visiting someone once a week would fork out almost £24 a week, or £1,246 per year.
Credit card debt soared by £1.5 billion in February as the cost of living spiked across the UK, along with an additional £400 million in alternative borrowing, including personal loans and store cards.
The current economy also implies that staff in the NHS, the civil service and schools may leave to join private firms due to low wages in the public sector. Without cleaners, porters, healthcare assistants and other low-paid workers, the staffing crisis will deepen unless the government acts swiftly with a real pay rise that leaves inflation in the shade, it has been widely reported in the UK media.
The CEO of Child Poverty Action Group, Alison Garnham told us, “Millions of families are finding they can’t afford essentials as costs soar and the hardship will intensify unless the Government steps in with more support. On current plans, benefits for working and non-working families will increase by only 3.1% next month when inflation is expected to be eight per cent. That’s an unmanageable real term cut of £663 per year for families on universal credit at the worst possible time. Already 31 per cent of UK children are in poverty, rising to 46 per cent of kids living in minority ethnic families. Unless the Government brings benefits into line with inflation next month, more families will be pulled below the poverty line with disastrous consequences for the children concerned.”
Inflation is set to average 7.4 per cent this year as energy bills spiral. Vulnerable people at a higher risk of dying from Covid-19 are facing an “unacceptable” choice between testing and cutting back on food and fuel needed to attend vital medical appointments. Bank of England Governor has warned that real incomes to be hit by ‘historic shock’ bigger than in any year in the 1970s.
Rishi Sunak’s spring statement did not do enough to tackle public sector pay, despite record levels of inflation - which stands at 6.2 per cent- and rising energy bills. The Office for Budget Responsibility, however, predicts average earnings will be £11,000 lower than pre-2008.
In an interview on Sky News, amid massive controversy about his wife Akshatha Murthy and her father’s firm Infosys’ trade with Russia amid the Ukraine-Russia crisis (Read P13), Sunak said: “I think what we’ve done is substantial. If you take together £9 billion to help people with energy bills announced last month, the significant tax cuts that we announced yesterday, they will all help. But of course, they can’t mitigate all the difficulties that high inflation is causing. No chancellor could do that.”
Millions of families are set for a council tax lifeline. Caroline Abrahams, charity director at Age UK, said: “Anything that puts more money into the hands of pensioners who are struggling with the rising cost of living is a good thing.
“For older people who pay in a different way, this approach may not work as well or as speedily. And if the Government was to put conditions on who receives this money according to property band, then older people who have a low income but who are living in a valuable home would lose out, which seems unfair.
“What’s clear is the Chancellor’s Spring Statement was something of a damp squib and did not do enough to help those who need extra support the most. The Government needs urgently to make amends.”
Asian Voice asked the community businessmen, small businesses, charities and individuals about the impact of the rising cost of living and energy bills on them, and the probable solutions.
Small businesses are some of the worst-hit
Deepak Tailor, founder of LatestFreeStuff.co.uk which is the UK's leading site to claim freebies and samples from top brands in the UK with over 1 million members said, “High energy bills, heating and inflated prices are going to hurt everyone over the rest of the year. The government really needs to step up with more cuts on fuel duties and support for small businesses. We small businesses are some of the worst-hit because there is no energy price cap for us. We pay the full rates for energy as the wholesale rate fluctuates. There have been some financial measures, but with the downturn of covid and then this crisis I feel like some businesses won't survive.”
Deepen Patel of Meet&Deep News Twickenham said, “It is incredibly challenging operating in these turbulent times, being careful with our expenditure whilst continuing to stock a wide range of products for customers who are working from home. Stock control, availability of products and pressure from customers to keep prices low, as well as paying weekly rental for subscriptions such as PayPoint regardless of whether we are breaking even or not all make it extremely challenging to operate our business. If cases increase, we will need to develop a new business strategy focused on home delivery or online services even if we are to survive.”
Impact can be seen right from homeowners
Architectural Designer & Director of MCAPS Global Ltd Mayura Chandekar told the newsweekly, “With the rising cost of living and energy bills, the impact can be seen right from homeowners to business owners. Businesses like ours are having to develop strategies to work around this scenario. As an architectural practise, we are required to make several site visits for design & pre-construction stage meetings. We have gone virtual for these meetings, saving our time for travel, saving travel expenses and also the clients save the fees they would need to pay for the site visits. Within the team, we are trying to continue hybrid working post-Covid. This results in saving the expense of travel and office energy bills.
“The construction industry is experiencing a nearly 25% rise in material costs in the market making budgets on many projects tight. This has been really challenging for us, as the construction of good design elements cost money. The approach we are having to take on small budget jobs is to design smartly keeping the costs low, come up with ideas that are unique but achievable at a lesser expense.
“On jobs where design was ready prior to the rise in material cost, we are going through a value engineering exercise. We have meetings with builders where design elements that are not ‘must dos’ are eliminated or tweaked to simpler versions.”
Low-income families have felt embarrassed or ashamed
Shadow work and pensions secretary Jon Ashworth gave the nickname “Me Tax” to Mr Sunak while warning that pensioners have been “cutting back on hot meals” and “forgoing hot showers” as they cannot afford the cost.
Hanuman Dass, Founder of Go Dharmic Charity told us, “In the last two years, we have seen a new wave of poverty and mass unemployment. Our various Go Dharmic hot meal distributions, between London and Glasgow, have seen a huge rise in attendance. Many of our volunteers have spoken to people who have lost their jobs and been unable to keep up with payments. This has led some to lose their homes and be unable to provide food for themselves and their children, relying on our food parcels, distributions and grocery kits.
“Many low-income families have felt embarrassed or ashamed, and we’ve had to work with schools to find and provide food kits for the families that need them. There is great pressure on parents, many will skip meals to feed their children, and they will feel lost and hopeless. This is why besides supplying food and grocery kits; our volunteers offer companionship and social support. It’s important to emphasize that poverty has social and mental effects, as well as physical ones.
“On top of distributing food and basic essentials, we, at Go Dharmic, believe open and warm communication is vital to providing the support economically suppressed families and individuals need.”
Hospitality industry hardest hit
Indian hotelier and founder of Speciality Restaurants Anjan Chatterjee told Asian Voice, “It was very difficult to manage during the pandemic period because we had already got our restaurants fully ready to take off on the 4th of April 2019. We were absolutely ready with full fitouts done. But then came the pandemic and the rest is history. While we could do some negotiations with our bureau solicitors but we had already taken people with the real estate we could have a discussion for comfort, we got some comfort from Portman estate, but by then we had already invested a capital expenditure of around £1.6 million and on top of that, we had to manpower recruited on our payroll will be who we had to pay the bills partially pay them and then plus we were playing paying the energy costs and insurances etc, other fixed costs.
“It was a question of survival at that point in time. So we were waiting and watching and looking for better weather to take off till the after the Delta variant arrived, and we had the courage to you know, take off at that point of time on the 7th of October. So, October-November-December things went very well after this. Then again 15th December onwards there was turbulence because people would not come in because of Omicron and then January was a washout beginning of February was also washed out then again.
“While we were handling other costs and tried to manage to survive somehow, the energy costs being doubled. That further aggravated things and hence the losses increased.”
Chatterjee has two suggestions for the government. He said, “Considering the kind of hit that the FMB industry is taken, one would be to request the government to continue to give us to have the VAT rate at 12.5% for a period of next two years (18 to 24 months) and give a special rebate on the energy costs for this sector.”
Valerie Kolat of Dapur Malaysia (popular for Malaysian street food) said, “The current rise in prices is having quite an impact on our business. Staff wage rises are going up, cost of ingredients has gone up by between 15% to 30%, our contract with our energy company is coming to an end and they have quoted us double the amount. For hospitality, VAT will be back up to 20% in a few weeks. All this while trying to keep on top of the rent and catch up with any back rent from 2 lockdowns. What we have found is that people’s habits have changed irrevocably, while we are strong on the take outs, dining in is still hit and miss and generally unpredictable. Ideally, something needs to be done about the fuel and energy cost, whether it's reducing the VAT or cutting the fuel duty more than what was announced. Another year for on 12.5% VAT for hospitality would also help after the debacle over Christmas.”
Asians do not have conversations about finances in their households
Sonya Barlow is the host of the BBC's The Everyday Hustle, a show specially to discuss how Asians can hack the everyday hustle to get richer. Speaking to Asian Voice she said, “As an Asian social entrepreneur author and radio presenter, the cost of living is a topic discussed openly across all forums. Traditionally, Asians do not have conversations about finances in their households and for this reason, everyone must take responsibility by having the conversation, educating themselves and budgeting. Small steps we can put into place include lessening the number of times the kettle is on, the time we spend in the bath (even 5 fewer minutes makes a difference) and swapping the car for walks where and if possible.
“As Asians we should also be supporting our local community and businesses, so invest in buying products from family-run stores, rather than large mainstream commercials. And lastly. get savvy - stop the subscriptions that aren't being used, e.g not every person in the house needs their own amazon account - contact your energy and electricity providers to understand if you are getting the best deal and start generating passive income by selling old clothes, items of the house or even homemade items through forums like Instagram, Etsy and Facebook Marketplace.”
Meanwhile, members of the European Parliament on Tuesday questioned India’s position in the Ukraine war. Since Russia’s invasion of Ukraine, the United Nations have held several major votes condemning Russia’s actions. In all of them, however, India abstained. Despite the EU urging India to condemn Russian violations of international law in line with its commonly affirmed partnership values, India chose to abstain from the resolutions.
