We are facing a cost of living crisis due to a string of bad political decisions

The spectrum of wealth is constantly stretching ever wider apart, with low earners trapped in a cycle of inflation and restrictions that will lead to a greater strain on the benefits system

Top of the worries of many families this week, as well as avoiding a positive lateral flow test before the big day, will be the cost of financing a family Christmas. With inflation at a 10-year high and the prices of consumer goods rising almost weekly, filling the table with festive food – often a struggle for the least well-off households – will be particularly challenging. The fallout from that pressure is not just financial but emotional; behind each struggling household budget is a parent or grandparent seeking to provide some comfort and relief after what has been a frankly miserable 12 months.

But while meeting the cost of Christmas is a once-yearly challenge, the cost of everyday life is now rising too and there are huge hikes coming in the new year that will hit the poorest the hardest.

First, there is the rise in national insurance, due to come into force in April 2022 – a regressive move aimed at rebalancing the economy after the vast cost of propping up the country during the pandemic. A rise of 1.25 percentage points is, proportionately, a gut punch to those on low hourly wages or stuck in part-time work, and a trifle to those trousering six-figure salaries. It’s deeply unfair, especially as it comes just months after the government pressed ahead with removing the £20-a-week pandemic benefit boost for universal credit payments (remember, 40 per cent of its claimants are already in low-paid work) despite criticism right across the House of Commons. The one in seven Tories who opposed their own government said it undermined Boris Johnson’s “levelling up” strategy to press ahead regardless of the country’s wider economic circumstances.

Meanwhile, in the next year, energy bills are predicted to rise to £2,000 a year – around two months’ salary after tax for those working 40 hours a week on the minimum wage. Although adjustments to customer tariffs mean the eventual cost per household could be somewhat lower, the threat of that size of payment hanging over families is a heavy weight to bear. Fuel costs are also rising, and yet fuel is often a basic requirement to access and execute work, in particular for roles that pay so little that full-time staff still need to claim government benefits.

Then we come to housing costs. For 4.75 million families living in social housing (let’s just round up and say that’s something like 17 million people, evening out for the larger households and single households) in England, the immediate future also comes with a very likely hike in the cost of rent. According to a report published this week by the Resolution Foundation think tank, millions would see the rent due on their council or housing association home rise by up to 4 per cent, adding an extra £202 a year in outgoings to already struggling budget sheets. Inflation is due to peak in April, just as these rent increases may come into being.

What an insult when so many low-paid households are also working in service industries such as retail and care that have collectively carried us through another terrible 12 months of the pandemic. Those who work in hospitality can expect more restrictions to be introduced in the coming weeks, meaning their incomes will be at further risk.

The last two years have put a financial strain on many families, but housing tenure is a clear point of division: social tenants now spend 19 per cent of their income on housing costs (and rising), and that’s after housing benefits are taken into account. Half do not receive housing benefits at all, and for many of them it takes up a much higher proportion of their income. For private renters the figure is higher, often posited at almost a third, but also the average income of private renters is also higher (though of course not in all circumstances).

But for homeowners – the wealthiest bracket of all – the cost of housing has actually dropped, accounting for just 9 per cent of monthly income. During the pandemic, homeowners with dropping housing costs are also more likely to have been making substantial savings, with commuting also reduced. The spectrum of wealth is constantly stretching ever wider apart. The lives of the richest and poorest are increasingly unknown to one another.

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So why can’t social landlords act to prevent this rise? If we’re facing a crisis in living standards for the poorest families, that’s the right thing to do. But it’s not that simple. Housing associations are commercial businesses. They do have a social imperative, and in some decisions they choose to operate with a social conscience, but they do not have a duty to do the morally right thing by their tenants – their primary responsibility is to their bottom line, to stay afloat, so that they can continue to provide low (that term is relative) cost housing. No individual or collective tenant’s needs will trump that. And to an extent, the same was true even when local councils controlled the majority of social housing in England some 40 years ago.

Which is to say the government has no strings to pull here, apart from the vanishingly unlikely possibility of a huge pot of grant funding, to stop rent rises from happening. A string of disastrous decisions – including the big one, Brexit – means that we’re trapped for the short term in a cycle of inflation and coronavirus restrictions that will lead to a greater strain on the benefits system as more households qualify to claim but also, sadly, to rising foodbank use.

A last-minute turnabout on the rise to national insurance for anyone earning and paying the ordinary rate of income tax could do a little to ameliorate the situation. A less likely intervention on energy prices would be even more warmly welcomed by anyone struggling to balance their incomings and outgoings this year. Johnson and his government have already tested the patience of an exhausted population this month. Its continued lack of compassion over the cost of living could prove a terminal condition.