London Daily

Focus on the big picture.
Saturday, Sep 19, 2026

Cost of living for UK’s poorest could be 10% higher by autumn, thinktank warns

Cost of living for UK’s poorest could be 10% higher by autumn, thinktank warns

Resolution Foundation says prolonged Russian invasion of Ukraine would drive up food and energy prices
The poorest households in the UK could see their cost of living jump by as much as 10% by this autumn if Russia’s invasion of Ukraine leads to a prolonged conflict, a thinktank has warned, as Rishi Sunak faces mounting pressure to tackle the cost of living crisis.

The chancellor will deliver his spring statement on 23 March. He is reluctant to commit to significant extra spending, but Treasury sources concede he has acknowledged the necessity to take some limited action.

Options could include increasing benefits in April by more than the planned 3.1%, a new cut in the taper rate for universal credit so that claimants keep more of their earnings, or an increase in the national insurance threshold.

Labour and many Conservative MPs have urged Sunak to scrap the 1.25 percentage point rise in national insurance contributions, earmarked for health and social care, but government sources insist it will go ahead as planned next month.

The Resolution Foundation said the public finances look healthier than expected at the time of the autumn budget, with borrowing on course to be £30bn lower than forecast.

However, the economic outlook has deteriorated significantly. At the time of the budget, inflation was expected to fall back later in the year. Instead, the Resolution Foundation said food and energy prices were likely to continue to be driven higher, pushing inflation to a “second peak” above 8% in the autumn.

With the poorest tenth of households spending twice as much of their budget on food and fuel as the richest, they are likely to be hardest hit, experiencing an inflation rate of perhaps 10%.

James Smith, the research director at the thinktank, said: “The chances of a living standards recovery this year are receding as rapidly as inflation is rising, and the risk of another recession is looming into view. The chancellor will therefore need to make some tough, and potentially expensive, choices in how to respond.”

Separate analysis by another thinktank, the New Economics Foundation (Nef), suggests that even by April almost half of all children will be living in households that are unable to meet the cost of some basic necessities.

Nef found that a third of households, or 23.4 million people, would have to cut back on some basics, such as food or heating, as their income falls short of what they would need to provide a decent minimum standard of living – typically by as much as £8,000. As many as 48% of all children will fall into households in this category, Nef calculates.

Sam Tims, an economist at Nef, said: “The cost of living is increasing faster than at any point in recent history. While all families are set to feel a squeeze come April, the lowest-income households will be hit proportionately harder. There is little time left for the chancellor to take action to avert the worst real-terms incomes squeeze in 50 years.”

Nef’s projections are based on the minimum income standard – the budget needed to afford what members of the public believe are essentials. It is calculated by Loughborough University’s Centre for Research in Social Policy.

The consumer expert Martin Lewis said last week that some families would “simply starve or freeze” as a result of unmanageable increases in their cost of living, particularly driven by energy prices.

Sunak announced measures in February aimed at cushioning the blow, as the energy regulator, Ofgem, announced that the price cap that puts a ceiling on average bills would rise by almost £700.

His package included a £150 council tax rebate for properties in bands A to D, and a £200 cut in energy bills from October, to be paid back over five years.

However, the scheme was predicated on energy bills falling back again from next year, something that has now been thrown into doubt. It emerged last week that the business secretary, Kwasi Kwarteng, had been asked by Downing Street to draw up options for beefing up the scheme, though these would not be enacted until the autumn.

Meanwhile, the shadow transport secretary, Louise Haigh, warned that rising global oil prices in the wake of Russia’s invasion of Ukraine meant the average family would spend an extra £386 on petrol in the year ahead.

“This is a savage extra cost for millions of working people,” she said, renewing Labour’s call for the government to impose a windfall tax on oil companies profiting from surging prices.

“The Conservatives could help working people being hit hard by soaring prices; instead they’ve rejected the choice of a one-off windfall tax on oil and gas producers raking in billions. And to add insult to injury, within weeks they want to clobber families with a huge tax hike,” she added.

The Liberal Democrat leader, Ed Davey, used his speech at his party’s spring conference in York on Sunday to renew his call for a VAT cut as a response to surging inflation.

“The war in Ukraine has turned a cost of living crisis into a cost of living emergency. That’s why I’ve called for an emergency measure,” he said. “I’ve called for a cut in VAT, right now. A fair tax cut – worth £600 a household. To help families. To help businesses. To help our economy.”
Newsletter

Related Articles

0:00
0:00
Close
England Tightens School Food Standards With Restrictions on Deep-Fried and High-Sugar Foods
Oxfordshire Village Votes Symbolically to Leave UK Over Proposed Asylum Centre
Michael Marra Elected Leader of Scottish Labour
BBC Cash Reserves Fall Sharply as Financial Pressures Mount
George Osborne Calls for UK to Rejoin EU Customs Union
UK Explores Joining Canada-Led Global Defence Bank
Thirlwall Inquiry Highlights Management Failures Surrounding Lucy Letby Crimes
Parliamentary Committee Calls for New UK Law to Address AI Risks to Human Rights
UK Considers Giving Regional Mayors Greater Oversight of Water Companies
UK Opposition Presses Burnham for Stronger Response to Russian Security Threats
Reform UK Faces Scrutiny Over £72 Million in Donations as Political Finance Rules Tighten
Millisecond Software Failure Behind UK Air-Traffic Outage That Cancelled More Than 2,000 Flights
Bank of England Holds Interest Rate at 3.75% as Energy Prices Complicate Inflation Outlook
Burnham Warns of Difficult Choices in October Budget as UK Inflation Rises to 3.1%
Addison Lee Founder Loses £20.5 Million Non-Domicile Tax Case
BrewDog Creditors Face Heavy Losses After Collapse
Thirteenth Metropolitan Police Officer Dismissed Over Charing Cross Conduct
Oxfordshire Village Votes Symbolically to Leave UK Over Asylum Accommodation Plan
NHS Approves Life-Extending Treatment for Women With Incurable Breast Cancer
Software Defect Blamed for Major UK Air Traffic Disruption
Twenty Women Underwent Unnecessary Mastectomies at County Durham NHS Trust
British Steel Costs Taxpayers £1.3 Million a Day as MPs Demand Long-Term Plan
UK Parliament Advances Sovereign Grant Reform Setting Royal Funding at £99.9 Million
King Charles Urges Human-Centred Approach to Artificial Intelligence at Scotland Summit
House of Lords Begins Scrutiny of Voting-Age and Political Finance Reforms
UK Labour Market Shows Growing Divide Between Younger and Older Workers
Nearly Seven in 10 UK Small Businesses Delay or Cancel Growth Plans as Costs Rise
Andy Burnham Reaffirms UK Net-Zero Target Amid North Sea Energy Debate
UK Parliament Demands Credible Financial and Decarbonisation Plan for British Steel
MPs Urge Government to Reject Thames Water Rescue Deal and Prepare Special Administration
Bank of England Holds Rate at 3.75% as Energy Shock Raises Inflation Risks
TUC Calls for Social Energy Tariff Funded by Higher Taxes on Bank Profits
UK Parliament Enters Conference Recess After Advancing Sovereign Grant Legislation
King Charles Hosts Artificial Intelligence Leaders at Dumfries House Summit
Nearly Seven in Ten UK Small Businesses Delay or Cancel Growth Plans as Costs Rise
Anthropic Details Malicious Use of Claude in Cyber, Weapons and Influence Operations
McLaren Announces £500 Million UK Investment and 1,000 New Jobs
Scotland and Wales Sign Cardiff Agreement to Deepen Cooperation on Shared Policy Priorities
UK Government Moves to Fully Fund Teacher Pay Award as Strike Threat Recedes
UK Competition Regulator Deepens Scrutiny of Microsoft’s Business Software and AI Market Position
NHS England Reforms Focus on Cutting Waiting Lists and Improving Digital Care
England Maintains Mandatory Housing Targets in Push for 1.5 Million New Homes
UK Government Plans Statutory Industrial Strategy Council to Strengthen Long-Term Economic Policy
Asthma Charity Warns of Major Gaps in Childhood Diagnostic Testing Across England
TUC Chief Paul Nowak Appointed to Bank of England Court
Bristol Opens £35 Million Deep-Tech Innovation Hub at Temple Quarter
Oxfordshire Village Votes Symbolically to Leave UK Over Asylum Housing Plan
Andy Burnham Deepens UK Defense and AI Cooperation With NATO and Canada
UK Government Announces Neonatal Safety Reforms After Thirlwall Inquiry
Bank of England Weighs Rate Decision as UK Inflation Rises to 3.1%
×