A Walk To A Local Shop

Last week I went to a local grocery store for some bits and pieces. One of the items I decided to purchase was a bottle of red wine. This isn’t something I do very frequently, consequently, I was surprised at how much the price of this item had risen. I made a passing comment about this to the middle-aged lady on the till, who replied:

‘Everything is going up, we’re constantly having to change the price tags’

I thought that the conversation would end at this point. But, as I was making my payment she continued with sadness and worry in her eyes saying:

‘I’m having to make decisions myself about what I can afford’.

I felt so sorry for her but didn’t really know what to do or say, apart from trying to offer some reassuring words. I left the store and began to think about her and how many other people must be in similar situations. Inflation is high and the prices of many things are rising, with the cost of what are the basic essentials (food and fuel), seemingly spiraling. Alongside high inflation, we also have rising interest rates. These affect those with mortgages, who don’t have a ‘capped’ rate. On top of this, higher interest rates also mean greater costs to those who take out credit or have outstanding balances on credit cards and some loans which they are unable to pay off immediately.

The Problem

We are told that the explanation for this is the invasion of Ukraine by Russia and Covid, which have caused instability in the economy. These are undoubtedly factors that have contributed to the situation. But I don’t think that is the full story. It is clear that there are also other contributing factors. In the UK, there have been poor decisions made by the Government (the Truss/Kwateng mini-budget being the most obvious). Alongside this though, we have seen waste in the support given to individuals and businesses and the questionable procurement of equipment and services given during the bad times of Covid. Further to this, I would also suggest, we can add the as-yet unspoken effects of Brexit on the UK economy. These things and numerous other factors have all contributed to the present situation.

But what is troubling is that the pain and suffering doesn't seem to be shared equally by all people. For, just as many people are finding things very difficult needing to skip meals, turn the heating off, relying on food banks, etc., we also see that other people are able to ride this cost of living storm, without feeling anything like the same impact that those suffering financial hardship experience. They are able to visit restaurants, go on holidays, and purchase consumables, and luxuries that for many are merely a dream or a significant loan/debt away. We are a very unequal society.

What’s being done about it?

The Government has stepped in with some help for all households with fuel bills. In the UK, households are receiving £400 spread out in 6 monthly installments throughout this winter. Those on means-tested benefits are also receiving a payment of £650 this year, which is paid automatically in two installments. The first payment of £326 was made in the summer. The second payment of £324 will be made in November. These payments are undoubtedly helping folk and are to be welcomed.

However, there are concerns for the longer term. The UK economy will be unable to finance such payments year after year. It is hoped therefore that inflation will be brought under control and with the tightening of expenditure, things will improve. Another budget is due on 17 November 2022, which will outline the Governments' new fiscal plans.

Time will tell whether this (and the increase in interest rates) will put things back on target, but many believe this may not happen as is hoped and the poor will be the ones that literally pay the price.

My Thoughts

It is good that households are being given financial support during these difficult times. But I question whether help with fuel payments should be given to all households. For many, this will make a significant difference, but to others, it will be of little help as it isn’t really needed and will largely go unnoticed. This is surely wasteful. And yet it must be appreciated that it’s not just those on benefits or low incomes who are struggling. This situation affects some of those we would consider ‘middle-income families’ and of course, all of those who are struggling with such basic needs should be helped regardless of their income. Need is need, whoever we are.

The UK is a sophisticated and wealthy nation. Surely, in 2022 we can find a better way of targeting such support to ensure that those in real need receive help. Personally, I don’t really think a universal benefit in this instance is appropriate. Wouldn’t it be better to be given the option to opt into (or out of) such a scheme? I recognise that It’s probably too late now for this particular scheme, but work should be done of finding a better way of distributing such support. I know some people have given their grants to charities or organisations that support people in fuel or food poverty. But the onus is placed firmly on the individual recipient of the grant, who may not have the time or get around to gifting the money. Could a system be developed which enables those who don’t really need the support to ‘gift it’ to charities or other organisations who support those in greatest need, without the need for them to receive it in their bank account and then gift it?

As I've already stated on a number of occasions. The support which is being given is welcomed, but it may not be enough for some. As a wealthy nation, it is unacceptable that people go hungry and cold in 2022/3. A better way of distributing support like this needs to be found. In the long run, this may make such support more affordable and really achieve the objective of ensuring we protect those in real need in our society.