How to get support during the cost of living crisis

We know that you have probably heard in the news about the cost of living crisis in the UK and that it is impacting everyone in different ways. Whether you’ve got outstanding debt or not, you might be wondering how to get support with rising prices.

To help anyone struggling with their financial situation, we’ve created this guide looking at the cost of living in the UK and where you can find support.

What is the cost of living crisis?

In summary, the ‘cost of living crisis’ is a phrase used to describe a situation when there has been a fall in ‘real’ incomes - where prices for everyday essential goods and services such as food and energy go up more than household incomes. This difference in costs ultimately can result in households struggling to pay bills due to this increase.

The cost of living is measured using the inflation rate which is calculated by the Office for National Statistics (ONS). Inflation refers to the price increase of something over time and this figure is updated by ONS monthly.

Why has the cost of living gone up?

There are multiple reasons, both in the UK and in other countries, why the cost of living has gone up including:

·       Demand for oil and gas

·       The aftermath of the COVID-19 pandemic

·       New post-BREXIT trading rules

·       The war in Ukraine

·       Supply chain problems

·       Climate change

What is the difference between a recession and a cost of living crisis?

It can be difficult to keep up with all the different financial terms that are used but there are differences between a recession & cost of living.

Recession - typically happens when there is an all-around drop in spending. Other than during the pandemic, the last time the UK had a recession was in 2008 as part of the Great Recession which affected countries around the world.

A recession in the UK can be defined by the following:

·       A significant fall in gross domestic product (GDP) – GDP measures if and how much a country’s economy is growing.

·       A rise in unemployment

·       A decline in real incomes

Cost of living – based on household finances; everyday essential goods and services prices increasing alongside static or more slowly rising income.

Where to find cost of living help

To help Brits with living costs and being able to afford rising prices, the government are focussed on providing cost of living help. This includes support with income, household bills, childcare, housing costs, travel costs, and those who are disabled.

And if you’re still not sure whether you qualify for any cost of living support and benefits, you can contact Citizens Advice for impartial, confidential, and free advice. Additionally, if you’re struggling and need help and support with your well-being and mental health, both Mind and Samaritans are available to talk to for free. 

Your local council may be able to help with some living costs like energy and water bills, food, and essential items. This support is known as ‘welfare assistance’ or ‘Household Support Fund’. To get this support from your local council, you don’t have to be receiving benefits and it won’t affect other benefits either.

Check what benefits you might be able to claim to help with the cost of living

If you’ve found that your circumstances have changed due to the increased cost of living then you might be wondering whether you’re able to receive any additional income. There are various government schemes and benefits already in place which might help you to afford essentials like bills and food.

Our benefits calculator, powered by entitledto, is a useful tool that can be used to give you an idea of which benefits you might be eligible to receive. For even more information on what you might be able to claim such as universal credit or jobseeker’s allowance (JA), read our full guide on debt and benefits.

Is there any new help for the cost of living?

With households across the UK being impacted, the government has introduced various new help for the cost of living, some of which we explore below. GOV UK has a useful Help for Households page where you can find out more about the support available to help with the cost of living along with energy-saving tips.

2023 and 2024 Cost of Living payments

Announced in 2022 and extended until 2023/24, there will be various Cost of Living Payments made by the Government. The package of support is designed to help households most affected by inflation and rising living costs. There are three different types of Cost of Living Payments which are:

·       Cost of Living Payment – To be eligible, you must receive certain benefits such as Universal Credit, Pension Credit, Child Tax Credit, or Income-based Jobseekers Allowance

·       Disability Cost of Living Payment – You’ll be entitled to this if you’re claiming disability-related benefits such as disability living allowance for adults/children, personal independence payment, and attendance allowance.

·       Pensioner Cost of Living Payment – To claim this, you must be over State Pension Age claiming Winter Fuel Payments. First introduced in 1997, the Winter Fuel Payment is a tax-free payment for anyone born before the 26th of September 1956. The money claimed goes towards paying any heating bills and can range between £250 to £600 depending on your individual circumstances. You can find eligibility requirements and other information on the official GOV.UK page for Winter Fuel Payment.

GOV.UK provides further information on Cost of Living Payments including detailed eligibility requirements and when these will be paid out.

Tax-free childcare

Eligible parents caring for children can get up to £2,000 per child tax-free every year, £500 per quarter, to help cover the cost of childcare. This is available to parents of children under 11 years old, or 16 if the child has a disability. It’s open to working parents, even if you’re self-employed, as long as you’re earning minimum wage and less than £100,000 per year. However, you may still be eligible if you’re not working such as if you’re on sick leave, annual leave, or receive certain benefits.

For more information on what might be available to you if you’ve got children in your household, check out GOV.UK’s Help for Households page on help with childcare costs.

Help to Save scheme

As of the 2023 Spring Budget, the Help to Save scheme will now continue until April 2025 - an additional 18 months than originally planned. This scheme is a special type of savings account that boosts savings by 50p for each £1 saved to help people on low incomes. For more information, StepChange has a helpful guide that goes further into the Help to Save scheme.

Bus Fare Cap Grant scheme

To help with everyday travel costs, the government introduced a single trip bus fare cap of £2 at the start of 2023, applicable to most services in England outside London. This cap is running until October 2023 at which point it will be capped at £2.50 until November 2024.

This scheme is designed to help those who need to travel a lot for work, school or medical treatment save money, whilst also aiming to reduce carbon emissions. Information regarding eligible routes included in the Bus Fare Cap Grant Scheme can be found on GOV.UK.

How Lowell can help with cost of living and debt

At Lowell, our customers are our top priority which is why we make our plans as affordable as possible based on individual circumstances. If you’re being impacted by increased costs and are struggling to make your debt repayments with us, then please get in touch.

Once you’ve let us know then we can work together to find the best solution based on your situation. And if you’d prefer to not speak with us directly then there are many other organisations that can offer you independent support and advice.

We understand that many people will be looking to save however they can and our guide on how to create a budget and manage your money is a good place to start when learning how to take control of your finances. We’ve also written blogs on helpful tips for budget recipes and budget packed lunches to save you money on your weekly shop.

For more helpful information on all things debt and working with Lowell, you can check out our debt guidance hub or the Lowell blog.

First published: 16th August, 2023