23 March 2022

“A KitKat is now a luxury”: the looming death of disposable income

Prices are spiralling, limiting the spending choices of Britons across the country to the bare essentials.

Joanne Barker-Marsh just had to sit her 12-year-old son Harry down for a conversation about takeaways.

Once a week, the 49-year-old who lives in Rochdale, Greater Manchester, would treat her son to a cheap takeaway meal such as a sandwich from Subway, while forgoing dinner herself.

Now, she can’t afford to.

“That’ll have to stop,” she told me, speaking on the phone from her house, which is on the market – but is unsellable without expensive essential maintenance work.

“I’ve just had to have a chat with him that maybe that [takeaways] won’t be as often, and maybe we can make it at home instead,” she said.

“But I’m running out of ideas, because you can only make it sound so fun for so long, and then it’s just not fun – it’s s**t. His mates are going to Nando’s. But I’ve even noticed they’re not going as much any more.”

Barker-Marsh is a single mother to her son who has special education needs. She lost her job as a successful film producer in 2012 after her relationship broke down; she and her ex-partner had co-owned their production company. Since then, she has worked in a cleaning job that she could fit around childcare, but was laid off during the pandemic.

Now, she receives Universal Credit, volunteers for local charities and participates in Covid Realities, a project funded by the Nuffield Foundation documenting life on a low income in the pandemic age.

As inflation rises, prices and bills have been spiralling. Barker-Marsh’s monthly supermarket shop has risen from £75 to £101. In nearly £1,000 of debt to her energy company, she has had to cancel her direct debit so that it doesn’t clear out her bank account. When the Chancellor, Rishi Sunak, reversed the “uplift” to Universal Credit last October, which he had introduced when Covid-19 hit, she lost a further £20 a week.

The war in Ukraine’s impact on energy markets is exacerbating the squeeze on budgets. Ahead of the Spring Statement on Wednesday 23 March, the Treasury is under pressure to help struggling households, which come April will face a 1.25-percentage point National Insurance hike, and 54 per cent energy price cap rise.

Already, low-income families in the UK have reached the limits of their budgeting practices and resourcefulness, according to new research by the University of York. Going without essentials such as food and heating has become a routine part of daily life for such families, and is impacting their health.

“Families have nowhere else left to cut, and there is a pressing need for the UK government to improve the social security system so it supports families and guarantees them a decent level of income,” said Dr Ruth Patrick, who leads the research programme from the University of York’s Social Policy & Social Work.

Neither wages nor benefits are keeping pace with the cost of living. Even when Universal Credit is uprated by 3.1 per cent from April, it will lag behind the predicted inflation level of 8 per cent in spring.

Rises in energy bills will take the number of households with children in fuel poverty to over 2.5 million – doubling since 2019 – from the beginning of April, according to new calculations by the End Fuel Poverty Coalition. More than a third (38.6 per cent) of households with children, and more than half (55.7 per cent) of lone-parent households, like Barker-Marsh’s family, will be in fuel poverty.

Six months ago, Barker-Marsh began “scanning the thermostat” because of rising prices. Her house is poorly insulated, at over 100 years old, with no carpet and no skirting boards. But during the cold winter days, she can’t afford to put the heating on – the pipes get so cold that her boiler keeps breaking.

“We’ve been freezing,” she said. “We’ve had a lot of tears and become quite poorly. I just felt constantly ill, too tired to cook, and thinking I can’t have the oven on because of how many kilowatts it would use. So I’ve been reducing cooking, reducing the amount of times we’re washing the pots, or having a bath. Those have become luxuries, when they just shouldn’t be.”

Paying more for food, petrol, heating and almost every other essential, Barker-Marsh faces unbearable spending choices for herself and her son. Disposable income is a thing of the past. Her last haircut was nearly a year ago, and she has sold all but one of her camera lenses – equipment she needs both for potential job prospects and her own sense of purpose and joy.

“I’m reading messages from people saying money prioritisation used to be ‘do I go to the hairdressers or do I go to the pub?’ Now, it’s about ‘I’m prioritising feeding my children over feeding myself,’” said Martin Lewis, the consumer rights campaigner behind the Money Saving Expert site and one of the most trusted figures in Britain, on 20 March.

Once a month, Barker-Marsh would buy her son – who has “massive issues with food” – a steak from the discount shelf. But even those “yellow-sticker steaks” are too expensive now. He also enjoys making “pretend ramen” (Pot Noodle with an egg and some chicken added) but she has noticed the price of a single Pot Noodle has crept up to £1 in some shops in the past couple of months.

Her son’s favourite cereal is twice the price it was a year ago, tins of beans she uses to bulk out stews have risen 30 per cent across the board, and pasta has gone up 25p a pack. Fresh food is becoming completely unaffordable; the bunch of bananas she buys herself each week has gone up from 79p to £1.39.

“In terms of any kind of luxury, is a KitKat a luxury? Yes, it is. My brain won’t let me [buy them]. It says: ‘no, we don’t need those.’ Changing the brands and quality of food we eat is a definite. We’ve redefined what luxury is.”

Small pleasures are melting away. For Harry’s upcoming 13th birthday, he wants to go with friends to Laser Quest. “I just have to manage his expectations and just put it on hold, and I hate to do it, I love him and I don’t want to keep sledgehammering him.”

Even Lewis, the man known for ingenious budgeting tips, said he is “virtually out of tools to help people now”, and that this is “the worst” assault on living standards he has seen – including the financial crash and the first phase of the pandemic.

“It’s not something money management can fix,” he said. “We need political intervention.”