UK's New Cabinet Faces the Cost-of-Living Crisis Challenge

For weeks at a time, until her daughter gets paid, Donna O’Hara cannot buy groceries. During those days, the 54-year-old mother of four must rely on food banks or borrow money to get by. She began depending on charities providing free emergency food after her son and his girlfriend moved out in February following the birth of their child. The loss of their contribution to household bills pushed her family's finances to the brink.

“Mentally, it’s stressful and embarrassing to go to a food bank—extremely embarrassing,” she said. “I hate asking for help. I hate borrowing money.”

This strain compounds an already precarious situation. O’Hara has multiple myeloma, a type of blood cancer, and has been hospitalized three times since October due to infections that forced her to pause chemotherapy. Her two children are on Universal Credit, the UK's main monthly benefit for working-age people. After paying child maintenance, her son has only £340 (about $460) a month to live on because he cannot work while awaiting gallbladder surgery. O’Hara herself receives £1,800 a month in housing benefit while her rent is £2,500, leaving her unable to pay in full and at risk of eviction.

The UK's cost-of-living crisis has worsened since inflation spiked in late 2021, initially driven by pandemic disruptions and later by soaring energy prices following Russia's conflict with Ukraine. For households like O’Hara's, however, the burden runs deeper, rooted in over a decade of austerity, weak wage growth, and stagnant productivity, compounded by the economic impact of Brexit.

That long history is central to Prime Minister Andy Burnham's political platform. To address the crisis, the new PM has unveiled a 10-year plan focused on expanding social and affordable housing, reforming Universal Credit, and investing in local economies. He is currently traveling the country to listen to people's financial concerns.

Research by the Joseph Rowntree Foundation shows the severity of the problem. According to Sam Tims, the organization's chief analyst, an estimated 7.4 million low-income households could not afford at least one essential item in the past six months—a record high. He notes that the basic rate of Universal Credit is now lower than it was a decade ago, and argues for combining the removal of the two-child benefit cap (implemented in April, estimated to lift around half a million children out of poverty) with a protected minimum floor in Universal Credit and increased local housing allowance.

According to Adam Lang, director of policy at Carnegie UK, their surveys show just over a quarter of households cannot cover an unexpected expense of £850 (about $1,150), and one in twenty cannot afford to feed their family. Notably, the situation has not improved over the past three years. Lang cautiously supports Prime Minister Burnham's approach but warns against expecting a single set of measures to solve everything.

Evelyn Henderson-Child, senior researcher at the Centre for Local Economic Strategies (CLES), observes that even when economic growth occurs, it does not reach those struggling with the crisis. Policies focused on growth often prioritize high-productivity sectors while overlooking areas that sustain society and create jobs, such as food, retail, transport, housing, and care. The solution lies in who benefits from growth, not just the growth figures, and requires restructuring the economy to distribute benefits more fairly.

For O’Hara, the debate over growth statistics is meaningless. “Some people say, 'live within your budget.' Try living within your budget when you have to count every penny just to buy a loaf of bread,” she said. “It’s not my fault I have cancer and can’t work. Life shouldn’t be like this.”