Looking Ahead: Cost of Living

On 5 September, the UK Parliament returns, and MPs and Peers will be back at work. We’ll also have a new Prime Minister and a new Government as well.

In this mini-series, we’ll shine a spotlight on some of the key challenges of our time, what the Government is doing or proposing to do and what we think a Christian response might look like.

Today, we’ll look at:

The UK is going through turbulent economic times. Thanks to a combination of factors, prices are rising, and inflation is at its highest level for a generation. Combined, all this means people are going to feel the pinch.

Although CARE doesn’t focus specifically on the cost of living, we not only recognise it as the major public policy issue of our time, but we also know rising living costs impact some of the areas we do focus on.

For example, the increased costs of living will have knock-on effects on education, access to healthcare, affordability of healthy eating. We also know that poverty is a factor in family breakdown and the decision to go into prostitution or to have an abortion.

In addition, the rising energy costs will only make the problem more severe. The latest estimates suggest bills will rise by more than was previously thought. It’s forecast that by next year, families will pay more than £4,200 for gas and electricity.

What’s the Government doing?

Part of the challenge of responding to this growing crisis is that we’re currently waiting for a new Prime Minister to be selected. By convention, an outgoing prime minister does not make big economic decisions but acts as caretaker until their replacement is ready to take over.

In May, the then Chancellor, Rishi Sunak, announced a one-off £400 discount for all households in Britain and an additional £650 for the poorest families. This will be funded with a 25% windfall tax on profits of oil and gas companies. This was in addition to the £150 council tax rebate announced by Mr Sunak earlier in the year.

What are the candidates for prime minister proposing to do?

Mr Sunak has also said he would look to introduce another package of measures to help families. Liz Truss has said she would consider direct payments to the families worst hit by the crisis and she's also said her planned tax cuts will help as well.

What else could be done?

In terms of the economic policies of the leadership candidates, CARE is strictly politically neutral and so we won't pass comment. However, for decades, we've raised awareness of a deeper problem with the way taxation works in the UK. We believe making changes to properly recognise family responsibilities is not only in line with Christian prinicples, but would also help low incomes families as well.

Here's an example which highlights the scale of the problem. In the UK, for the average one income family with two kids, to enjoy the same standard of living as a single person earning £25,000, that family would have to have an income of nearly £60,000. If that family has four children, their income would need to be £80,000 per year to enjoy the same standard of living as a single person on £25,000. A salary of over £80,000 per year would put that family in the top 5% of UK salaries. A family with what is by any measure, a wealthy income, because of the way the UK tax system is structured, would only be as well off as a single person on £25,000 per year.

Reforming the income tax system to take account of family responsibilities is one way to help support low-income families especially and reduce the tax burden they carry. This, alongside other measures, will at the very least, help ease some of the cost-of-living pressures.

What’s a Christian response?

God made human beings in His image which means all life, from conception to its natural end has a unique dignity. As the psalmist says, God cares for human beings (Psalm 8) and one of the groups God speaks on behalf in the Bible is the economically poor. In the Old Testament laws, there were specific instructions for ensuring economic justice for those who needed help.

As Christians, as we’re able, we should help our neighbours who are in need. Some churches will run foodbanks, other churches are involved in ministry to homeless people or people in prostitution. Sharing possessions is another way we can help each other. We can also pray for the government, that wise decisions will be make.

And we can be calm in the face of the pressure. Jesus tells us not to worry about what we’ll eat or wear because God will provide. We must seek first His Kingdom and trust His promise that all we need will be given to us.

Further Reading

Read CARE’s most recent report on the current tax system and families | CARE

Why are British energy household bills so high? | Financial Times

Three leading campaigners show how the church can respond | Premier