Budget 2022: Let's get this in perspective, it's the poorest that'll suffer most

We’re all terrified about the cost of living. It’s not very surprising – we all know stuff is definitely a lot more expensive this year and we’re being bombarded from every angle by dire warnings and fear-fuelled panic.

It’s heating or eating this winter.

In two years time, according to the Office for Budget Responsibility (OBR) living standards will fall by seven per cent, wiping out nearly eight years of growth. Inflation is at its highest level in more than 40 years. Rents are at a record high. Mortgage rates are higher than they’ve been for more than a decade. And let’s not mention energy bills. The cost of living is UNBEARABLE.

Let’s be clear. It is impossible to overemphasise how relentless gruelling and terrifying the next few years are likely to be for Britain’s poorest. For those relying on benefits or the state pension, the cost of living really IS unbearable. Inflation does mean they can’t pay the gas bill and buy enough food to feed the family for a week. It is a living nightmare.

I’m glad that the Chancellor Jeremy Hunt and Prime Minister Rishi Sunak recognise this and, for the moment at least, have put help in place in the form of cost of living payments, energy bills support, higher benefits from April and a higher state pension.

But is this crisis really a crisis for everyone? Short answer? No. There are an awful lot of people living in the UK who have plenty of money and while they might not like parting with more of it, it’s not going to change their lifestyles. Not a jot.

There are also a lot of people who earn really rather a lot of money, but they also spend a lot of it. Flashy car, kids in private school, big house and very big mortgage.

They aren’t going to like the next couple of years because higher tax and high inflation means they are going to have to adjust their lifestyles. Good news for them, though, they can sell the Range Rover and get a Corsa.

Next up, 2.4 children, typical family, mortgage etc. The squeezed middle as they’re being called. Inflation, mortgage rates and energy bills are going to hurt. Definitely. But it’s doable. Swap supermarkets, start batch cooking, get clever with the heating timer, shelve the trip to Disneyland and go to Whitstable instead.

I’m not trying to be glib, but I do think we need to get some of this into perspective, and spend our time worrying about those who are really struggling.

Of course, there’s infinite variation in between these fictional stereotypes. Everyone has different financial pinch points, commitments and complications.

But broadly, here is what you need to be thinking about if you’re concerned.

Will I have to switch off my heating and start burning candles at night?

No. In fact, please, please, please do not turn off your heating. Use the timer so you aren’t wasting energy. Turning it off totally and then switching it on high can create damp, mould and all manner of breathing problems. Don’t turn your boiler temperature down either – that can result in Legionnaires Disease. The optimum temperature for Legionella to multiply is around 37°C. The water temperature needs to be above 50°C to kill it off.

If you can’t afford your bills, contact your energy supplier. They. Will. Help. You.

Honestly, nobody has a clue how energy bills might go. But it can’t be repeated enough – if you can’t afford your bills, contact your energy supplier. They. Will. Help. You.

How expensive is food going to get?

It’ll get more expensive until there aren’t enough people who can afford to buy it, and then it’ll stop getting more expensive.

Am I going to lose my home?

This is highly unlikely for those who own their homes.

If the mortgage is set to go up hundreds of pounds a month, don’t panic. If you have a reasonable amount of money in the property and you are still earning, a good mortgage broker will be able to give you options that will bring that down.

If you still can’t afford your payments, contact your lender. They will find a way to help you. Mortgage payment holidays, switching to part interest-only or agreeing a lower payment to tide you through are just a few options.

If you can’t afford to do that, still contact your lender as soon as you possibly can. Banks and building societies are not going to repossess your home except in really exceptional circumstances. They’ve been told categorically not to. The worst thing you can do is worry and not tell them.

Tenants, however, are more exposed. However, landlords are often the middle man between you and a mortgage company. If you can’t afford the rent, tell your landlord what you can afford. They can try to strike a deal with their mortgage company to take pressure off you both.

Of course, not all landlords are born lovely. If they won’t negotiate then they can issue proceedings to evict you. Yes, it’s worrying. But you shouldn’t panic. The process will take between seven and eight months. If you find yourself in this situation DO contact Citizens Advice who will help you to navigate you through the next steps.

Are house prices going to crash?

Probably not. Buyers will be asking for discounts, and if there are a lot of homes for sale in one place and no one wants to buy them – say everyone in that area wants a house and garden and there’s only two-bed flats – then prices will come down. A bit.

This is only a problem if: you’re selling your home; you remortgage to a different lender.

Even if your mortgage is more than your home’s worth, it’s irrelevant until you sell or remortgage.

Analysis: Chancellor Jeremy Hunt has scored a few good wins – but there are big problems that remain unsolved

Was this a good budget? A bad budget? Was it a proper Tory budget? Or was there a bit more red mixed in? A purple budget? Or just a red one masquerading? A budget worthy of Tony Blair and Gordon Brown? Or was it more David Cameron and George Osborne? Is it Austerity 2.0? Or tax and spend?

And what on earth does any of that mean?

Whether it’s good or bad depends on your point of view. Even though it was a Tory budget, not all Conservatives agree with it.

A mealy-mouth Jacob Rees Mogg – now on the backbenches – said ‘it’s not something I’m in favour of… taxation has got too high’. He wants to see greater spending ‘efficiencies’ instead. Labour, meanwhile, would like to see things like nom-dom status scrapped to help balance the books.

But there are a few general points Mr Hunt has scored off the back of it.

Markets liked it, it wasn’t a surprise, it didn’t do anything radical, it has some help for the vulnerable, and it’s asked those with more to help pay for that.

In my opinion, there are two goals he missed – and this really is just my personal take so do feel free to write to [email protected] and disagree – I promise to publish any especially brilliant comments.

First, social care. Shelving social care reform – again – is a political move and it is 100 per cent responsible for robbing our eldest, sickest, most infirm, most vulnerable and most troubled to pay for a healthcare system designed almost a century ago and which, in its current form, cannot meet the care needs of millions of people. That’s not its fault – it’s the politicians putting votes before lives.

Secondly, social housing and the private rented sector. Look, I know everyone renting is infuriated by having to pay rent to their landlord when they’d much rather be paying off their own mortgage but making landlords’ lives impossible is REALLY unhelpful for EVERYONE. Here’s why.

a. In Wales, two out of three council houses is provided by a private buy-to-let landlord. In England and Scotland, it’s also a huge proportion.

b. If private landlords can’t make money out of it, they sell. If they sell and that property is bought by a first-time buyer (yay) there are fewer rental properties available (a real not yay). Shortage of supply pushes up rents even further. And makes it even LESS affordable for the next lot of first-time buyers.

c. If they’re selling up and first-time buyers are buying up, where are people in social housing supposed to live?

d. The housing market is in such a mess that one in five households – people or families who should have their own homes – is living with another household. People who are nearly 40 are still living with their parents.

e. PLEASE don’t tell me the government’s promised to build however-many-million homes. If they don’t what happens? Nothing. Zero. Nada. No consequences for telling lies. It’s not even up to them for heaven’s sake. It’s up to the housebuilders. Unless government actually builds some more social housing. In 1992/93 they built 53,000 new council houses. In 2020/21 they built 7,500.

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