Cost of Living: ‘It’s lucky I don’t feel the cold as I can’t afford to put the heating on’

At Drumchapel Food Bank, Ryan McGeady has noticed a recent change in the items people are able to take home.

"We have people coming in who look at certain things and tell me ‘I can’t eat this because I can’t afford to cook it’, due to the rising cost of gas,” says Mr McGeady, volunteer coordinator at the facility in the north of Glasgow. “A lot of people in the last few weeks have been talking about not being able to pay for food because they have put all of their money into their gas bills. People are really having to choose between heating their homes and eating.”

Soaring utility bills, combined with a planned increase in National Insurance contributions and rising inflation, have created a “perfect storm” for poverty, debt and destitution, consumer groups have warned. A recent report from Citizens Advice Scotland found one in seven Scots find their energy bills unaffordable.

Over the course of the pandemic, Mr McGeady says the food bank has seen an increase in the number of users from around 60 a week to as many as 60 a day. And since the rise of the Omicron variant, there has been a noticeable increase in the number of working families who have been forced to use its services.

Ron Graham got on top of his financial problems after seeking help - but is now facing rising living costs. Photo: Chris Hoskins

"We are seeing a lot more families where people are perhaps working full-time, but then they have to isolate and they lose shifts or lose their pay,” he says. “There are a lot more families coming to use the food bank who we wouldn’t have seen before.”

Previously, there was a strict referral system in place, where service users had to have a voucher allocated by a social worker, GP or Citizens Advice adviser. Now, the situation is so desperate that Drumchapel has suspended the need for any formal referral.

“If people come to us and say ‘I need food’, we give them food,” says Mr McGeady.

The situation is likely to intensify in the spring. A study from think tank The Resolution Foundation said from April, families would typically face a £1,200-a-year hit to their incomes as the energy price cap is raised, sending utility bills spiralling and a 1.25 per cent increase in National Insurance contributions comes into effect.

Energy Action Scotland have published a map showing Scotland's fuel poverty.

At the same time rising inflation means real pay levels are set to stagnate, with real wages next Christmas no higher than they are this year.

Overall, consumer price inflation rose by 5.1 per cent in the year to November, according to the Office for National Statistics (ONS). In December, the Bank of England announced an increase to the base rate of 0.15 per cent. Many mortgage providers have since increased their rates as a result, pushing up costs for homeowners, which is also expected to have a knock-on effect in the rental market, as landlords increase rents to cover higher mortgages.

Meanwhile, councils in Scotland are set to raise Council Tax, after the Scottish Government removed a cap on how much local authorities are allowed to increase rates in the last Budget.

"People across Scotland are struggling to stay afloat amid a rising tide of poverty,” says Neil Cowan, policy and campaigns manager at the Poverty Alliance, in Glasgow. “Last year's unjust Universal Credit combined with the growing cost of living crisis means that many are struggling to keep their heads above water.

"Rising energy and food prices are tightening the grip of poverty on people's lives, as more and more people are forced into impossible decisions like whether to heat their home, pay their rent, or put food on the table. Nobody should have to make that decision, and it is vital that all levels of government - local, Scottish and UK - live up to their moral responsibility to protect people from this kind of hardship."

Sharon Bell, head of StepChange Debt Charity Scotland, agrees.

“With the nation facing rising energy prices, widespread rental arrears from the pandemic, and more financial pressures on the horizon like the increase in National Insurance contributions and Council Tax, Scotland is truly facing a ‘perfect storm’ of challenges to household finances,” she says.

The Scottish Government has long lobbied Westminster to u-turn on reversing the uplift to Universal Credit, to no avail. The benefit was reduced in November, by the Westminster ended the £20-a-week uplift in the benefits payment that was introduced in response to the Covid-19 pandemic.

Meanwhile, the spiralling cost of energy is only likely to get worse. Earlier this week, Chris O'Shea, chief executive of Scottish Gas owner Centrica, warned there was "no reason" to expect gas prices would come down soon and said an expected 50 per cent bill hike to about £2,000 a year from April – when energy regulator Ofgem lifts its price cap to account for soaring costs on the wholesale market - could continue for up to two years.

Frazer Scott, chief executive officer at Energy Action Scotland, describes the scale of the crisis as “unprecedented”.

He says: “In Scotland, we were already in a position where we already had 24 per cent of households in fuel poverty, pre-pandemic, and it has only got worse in recent times. This is an absolutely unprecedented crisis, the cost of gas is at an absolute all time high.”

He warns measures which the organisation usually suggests people can take to reduce their bills, such as closing curtains at night and washing clothes on a lower temperature, will “barely touch the sides” of mitigating expected price rises.

"People could probably save about £150 in a year if they did all the things that you're meant to do, but it's not touching the sides of the scale of the crisis that’s in front of us,” he says.

“In Scotland there’s a winter support package of about £7 million, which has been allocated to help people with energy costs. That is not going to be enough, but it's all the Scottish Government is able to do at this particular time with the powers that they have.”

The Scottish Government this week launched a new £3 million fund to help Scots struggling with their energy bills. People can be referred for payments of £100 to £500 by local authorities and housing associations, as well as charities and organisations which provide energy or debt advice.

Andrew Bartlett, chief executive of Advice Direct Scotland, which will administer the fund, says the charity has been contacted by people who were forced to ration energy, such as by heating only one room in a bid to keep costs low.

He says: “With recent energy prices rises and more on the horizon, we know many Scots are facing financial difficulties at the moment."

Ron Graham, 63, from Irvine, is one of thousands of Scots in that situation. Having sought help from charity Christians Against Poverty (CAP) to manage his finances last year, he is now facing rising costs which will stretch his already tight budget.

Mr Graham suffered serious mental health problems after losing his home due to lending a large sum of money to friends who did not pay him back, but managed to repay his bills and is due to be formally debt free shortly. However, with a sharp increase in the cost of living, he is now concerned about how he will manage in the future while sticking to a budget.

Mr Graham, a grandfather of seven, who served for five years in the RAF and ran his own decorating business until ill health forced him to give up work in 2017, says: “It is a great feeling to be out of debt now and I am so pleased that I asked for help.”

But when the uplift in Universal Credit was cut on November, he immediately noticed a difference.

He says: “I felt it was really unfair to take away the extra £20 a week. I realise it was only meant to be temporary, but with price hikes, energy bills and so on, it is difficult, people are really struggling.

"I’m just trying to save the pennies as much as I can. I shop about to see where the best deals are and even if it’s 10 or 20p cheaper somewhere, I go there. I want to eat healthy food and look after myself, but the fresh fruit and vegetables are so expensive.

"It’s lucky I don’t feel the cold as I can’t afford to put the heating on very much, I hardly put it on at all – although I am asthmatic, so I have to be careful. I’m in a situation where I am not working at the moment, though I hope to go back to it one day. I have worked all of my life and I'm not looking for handouts, just a little help.”

Shopping around is the only way Mr Graham can keep his food bill down. According to the British Retail Consortium’s latest figures, fresh food inflation accelerated significantly in December to three per cent when compared to the same period the previous year, while ambient food, such as canned and dried produce, rose by 1.7 per cent.

Outside of basic essentials such as food and heating, the cost of every day luxuries for many is also on the rise. A survey from the ONS earlier this month found two thirds of people said their cost of living has increased in the last month. Separately, Citizens Advice Scotland (CAS) found around half of people say they have cut back on things such as eating or drinking out; ordering takeout and buying clothing and accessories.

A recent study by discount code website Savoo found the average price of petrol has reached a record high of £1.44 per litre – 30p per litre more than a year ago – while the cost of a typical pint has risen by 20p since 2017 to £3.78.

The analysis found over the last fifteen years, disposable income has remained relatively stagnant at around £30,000. However, if salaries had risen in line with inflation over the last three decades, the mean disposable income would be 81 per cent more at £56,861 on average, meaning that the typical person is £25,397 less better off each year when compared against inflation and the cost of living.

First time buyer Hannah Burley, from Edinburgh, who bought a flat with her partner late year, says the couple’s outgoings are increasing, while their salaries are staying the same.

Ms Burley, a communications executive, says: “We bought our first property in October and have a fixed rate mortgage for two years. The rise in base rate doesn’t affect us right now too much, but I am concerned about what happens when that ends – it’s going to be hardly a year and a half before we need a new mortgage deal.”

She adds: "When we were working out what we could afford in terms of monthly payments, I calculated a budget and decided we could afford a certain amount a month based on our outgoings. I was very relaxed about everything as I knew we could afford what we had budgeted towards, now everything seems to be increasing. We have a bit more space in our new place and because now everything is on the rise: our bills have gone up, particularly heating.”

"Stuff seems to be getting more expensive in the supermarkets. Now we own a property, I’m concerned that when something breaks, we’ll have to pay for it and we have insurances we didn’t have before. When we moved in to the flat, we had plans to buy more furniture and that’s slipped quite far down the priority list as the money now needs to be spent on other things.

“Everything is noticeably increasing in price, while salaries are staying the same and I don’t see where it’s going to end.”

Greg Brown, mortgage director at property law firm Aberdein Considine, believes increased mortgage rates, combined with the rising cost of living, could see mortgage lenders tighten up on borrowing criteria.

He says: "Existing home owners who are locked into a lower fixed rate on their current home and stretched themselves to get that property, may find that the rate they get when they come to remortgage is not as good. With house prices rising faster than salaries, lender may potentially need to look at affordability in the future as people may no longer be able to afford the homes they want to buy because the rates are higher.

"I don’t think we’ll necessarily see an immediate impact, but further down the line, definitely. Lenders are very risk adverse and especially as pressure increases on household budgets from areas such as fuel increases, energy bills and council tax, there may well be an impact.”

David Redpath, chief executive of CAS’s Citizens Advice and Rights Fife, says higher income families are tightening their belts, while middle to lower income families are falling into crisis.

The number of crisis grants handed out in Fife – which apply to people who previously did not need emergency help – rose by 23 per cent over the past year.

He says: “It's like a pressure cooker in people's homes at the moment. If you're a higher income family, the sacrifices or the the cutbacks that you have to make are more trivial. You might not get as many takeaways and so on so forth. What we're seeing in the terms of the lower income families, is that they've got to make really gut wrenching decisions and it goes back to almost basic human needs.”

He describes a knock-on effect, which sees financial deprivation filter into social harms.

He says: "When a family [in these circumstances] has to isolate due to Covid, the pressure is huge. People are cooped up together, potentially in a cold environment because they can't afford to heat their home and potentially hungry because they've not got the access to school meals.”

“A reduction in income is very much a tangible thing. Social harms are very difficult to put into context, but you will see relationships break down, pressure in the household, you will see poor health outcomes."

He adds: “It's it's very apparent that people are finding things extremely difficult. And if this continued increase in the cost of living is not mitigated somewhere along the line, those problems when they get worse, just get exacerbated.”

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