By Sam Ord
Downloading PDF. Please wait... Issue 2812

Cost of living crisis in Tory Britain—debt for poor, bungs for the military

Figures released by the Bank of England show that individuals are plunging into debt
Issue 2812
Two credit cards used to illustrate debt

Credit card debt is soaring, with loans rising 11.2 percent on the year in May

The cost of living crisis is sinking its claws deeper into working class people’s bank accounts with new reports exposing the real difficulties they face.

Figures released by the Bank of England show that individuals are plunging themselves into debt, with £800 million borrowed in May. Credit card loans rose 11.2 percent on the year in May—the month after energy prices soared and other forms of consumer credit rose by £400 million.

Many people’s incomes aren’t covering monthly essential costs and an increasing number of people are turning to high interest payday loans. One in ten low income households—1.3 million—have already taken on credit in order to pay their bills according to the Joseph Rowntree Foundation.

Rachelle Earwaker, a senior economist at the Joseph Rowntree Foundation said, “870,000 households are planning on doing that in the coming months.”

She added, “That gives you an indication of what is to come. We’re now seeing some of the impact of high prices but a lot of that won’t have kicked in yet, so I think it absolutely will get worse before it gets better.”

One payday loan provider, Amigo, offers a loan with a huge 49.9 percent annual interest rate. Loan providers trap people in an ongoing cycle of debt but many people don’t have a choice but to turn to them.

The Resolution Foundation think tank reports that real household disposable income growth averaged just 0.7 percent a year in the 15 years before the Covid pandemic. Between 1961 to 2005 it averaged 2.3 percent.

This reduction has hit those in rental accommodation, single parents and those with young children the hardest. Now half of all children living with single parents are in relative poverty. The majority of the 1.8 million single parents are women.

Nearly 70 percent of single ­parents have experienced food insecurity with 20 percent using foodbanks. Researchers blame decades of austerity and the lack of support given to single parents during the Covid pandemic.

Before 2008, lone parents were able to claim income support until their youngest child reached 16 or 19 but that age limit has been repeatedly cut. But the Tory government has no interest in helping people who are struggling.

Chancellor Rishi Sunak announced a one-off payment of £650 to 8 million low income households. That’s far short of what people need.

Meanwhile Boris Johnson’s ­government last week promised to increase spending on the military by £55 billion over the next decade. His message to ordinary people is to accept poverty, debt and dramatically falling living standards.


Tories don’t care about Covid

A new wave of Covid infections is sweeping Britain and threatening the NHS. But the Tories are determined that nothing should interrupt “business as usual”.

Covid cases rose by more than 30 percent last week with an estimated 2.3 million people thought to have had the disease in late June. Yet the government refuses to issue the most basic advice—including asking for mask wearing in busy areas and in hospitals.

That’s despite Jenny Harris of the UK Health Security Agency last week saying that it looks like the current wave of infections is yet to peak. She said there could be a further upswing in hospital admissions.

Harris said that the new wave of Covid hospitalisations is “quite likely” to exceed the previous peak in Spring. Yet the Tories insist that we must live with the virus, and that any decisions about public health protection are matters for individuals. That simply allows the spread to continue.

Covid could even combine with an expected early flu season this autumn to wreak more havoc in the health service. But, in yet another sign of complacency, the government has no plan to get Covid booster jabs to the 20 percent of over-75s that have not yet had one.

Sign up for our daily email update ‘Breakfast in Red’

Latest News

Make a donation to Socialist Worker

Help fund the resistance
One-off