Poverty in the United KingdomPoverty in the United Kingdom and the cost of living has increased steadily since early 2021. After Russia’s full-scale invasion of Ukraine, wholesale natural gas and oil prices soared, leading to more expensive bills for domestic consumers. The price of gas surged by 96% in a year and electricity has increased by 54% as it relies on gas for generation. Energy prices greatly impact the cost of living in the U.K., along with increasing prices of consumer goods such as food. The war in Ukraine has disrupted the country’s glass manufacturers, causing bottles for common products such as Coca-Cola to halt. According to the House of Commons Library inflation reached an astonishing 10.01% in July 2022, only dropping to 9.9% in August.

The U.K. remains at the high end of the worldwide inflation scale, ahead of the U.S. at 8.8% in April 2021, and 8.6% in the Eurozone from June. Low-income households spend more on housing, transport and food causing the high cost of living to disproportionately impact them, increasing poverty in the United Kingdom.

Movement in Geopolitics

Recent explosions of pipelines Nord Stream 1 which carried natural gas to Germany from Russia add pressure to the energy crisis. Although the pipelines have been inactive since early September, the accusations of sabotage of energy supply connections sparked anxiety in the U.K. and Europe. The fear has spread quickly as Norway, Europe’s largest natural gas supplier, has announced increased security on all of its gas and oil infrastructure. Panic could occur as millions are dealing with the mounting debt of rising food prices pitted against the high cost of energy bills.

Soaring costs of food and energy impact the most marginalized people the hardest. Bloomberg reports a peak inflation rate of 8.7% in June for low-income households. Whereas high-income households stood at 7.8% that same month. The data shows lived experience: if one earns more, one will likely have more to supplement rising prices; however, if one does not, one will likely fall short in purchasing power.

Confronting Crisis

Liz Truss’ tax cuts stunned economists and sent the pound into a free fall. On September 23, 2022, the British government announced a 45 billion pound tax cut ($48 billion USD) which caused the pound to drop to a record low of $1.03. In an unprecedented ‘mini-budget’ announced Friday, the government abolished the top 45% rate of income tax paid by the highest earners. As a result, YouGov polling shows that the Labour party has a 33-point lead over the Tories.

Only a year ago, Boris Johnson’s government made a decision to raise taxes to avoid public spending in the wake of the pandemic. Now the new government Truss has assembled caused markets to crash and investments in British industry to be withdrawn. In mid-September, the Bank of England announced that England might already be in a recession, as many are already feeling the sting of autumn without adequate heating.

Politico has quoted Truss in transit to New York this week saying, “Lower taxes lead to economic growth, there is no doubt in my mind about that,” although, with the value of the pound diminishing and the cost of goods, energy and transport already on a high the immediate effect is a negative one. The markets are one metric that helps weigh the viability of a Prime Minister. Currently, her reputation is not strong, even in her constituency. Truss has only two years to prove herself to voters with an election waiting around the corner in 2024.

Although Truss introduced the Energy Price Guarantee on September 8, 2022, which caps energy bills at 2,500 pounds ($2,788 USD) and went into effect on October 1, 2022. Even though this program will keep bills significantly lower than predicted, at least until January, many are skeptical of the Conservative government’s attempts to help people and businesses.

Charities Lending a Hand

Organizations such as Independent Age, Groundwork and the Smallwood Trust have stepped in offering grants for a range of people and communities affected by poverty in the United Kingdom. These grants will provide financial relief for material goods and basic essentials, as well as specialized needs.

Independent Age will give 25 grants of 45,000 pounds each to charities and community organizations helping older people through the crisis. Groundwork is partnering with One Stop Stores in awarding 1,000-pound grants to successful applicants. Smallwood Trust is focused on getting relief to women who need grants in the wake of the cost of living crisis. Women are especially important because they are underpaid and often overworked in society, on top of being the main caretakers in most households. As autumn begins, people are mobilizing to help each other through any difficult day, and that is always something to be thankful for.

During the period of volatility in the United Kingdom, the various organizations providing aid are extremely beneficial. Hopefully, with these charities’ continued efforts, poverty in the United Kingdom will reduce.

– Shane Chase
Photo: Flickr

New Prime Minister
Britain has experienced major changes in recent days, with entirely new faces of leadership in the monarchy and government. In the same week, Queen Elizabeth II peacefully passed away in Balmoral Castle and the United Kingdom’s Prime Minister Boris Johnson stepped down, allowing for Liz Truss to take his place as the leader of the Conservative Party and head of the government. This will have implications on the U.K’.s foreign policy, poverty and general political affairs. Understanding the new Prime Minister’s political experience is necessary to predict her policies regarding poverty and the rising costs of living in recent years under former Prime Minister Johnson.

About Mary Elizabeth Truss

As a college student, Truss openly opposed then-Prime Minister Margaret Thatcher’s policies and the institution of the British monarchy. During college, she served as “an activist for the centrist Liberal Democrat Party,” according to NBC News. Upon her graduation from Oxford University in 1996, she switched to the Conservative Party and ran as a Tory candidate in 2001 and 2005. She then became a Member of Parliament for South West Norfolk in 2010.

In addition to her position in the Parliament, Truss has held many offices and titles in U.K. politics that show her dedication and passion for issues in economic and environmental stability, women’s rights and food industries.

Despite the new Prime Minister’s shifting opinions and positions over the years that led people to question her loyalty and authenticity, her campaign to return to fundamental Conservative values, such as lower taxes and shrinking the state, appealed to her party members. The nation hopes she can restore Britain’s reputation and allow for a fresh start following former Prime Minister Johnson’s time in office when the British government was riddled with scandals and tumult.

Britain’s Energy Crisis

Since the Ukraine-Russia war, Britain has struggled with an energy crisis and economic challenges, which partially contributed to Johnson’s resignment in the first place. The inflation rates are the highest Britain has seen in the past 40 years, with costs of gas and electricity hitting record-breaking numbers.

Since the 1980s, U.K. inflation remained below 10% but increasing prices of energy, food and basic essentials have sent the rate to 10.1% as of July 2022. The Bank of England expects the rate to rise up to 13% in October 2022 after the Office of Gas and Electricity Markets (Ofgem) implements an energy price cap increase. Energy bills are rapidly increasing as experts expect the energy price cap to increase by 80% from October following Ofgem’s actions, bringing the annual energy bill to a total of £3,549 for an average household.

The price of wholesale gas also poses a problem for Britain with uncertainty and instability looming. The Russia-Ukraine war has put pressure on most of Europe’s gas market and Britain is no exception. President Vladimir Putin has reacted negatively to the EU price cap and threatened to cut off Russia’s energy supply to Europe if the EU imposes the price cap on his supply.

Limited fuel and energy have exacerbated living conditions among vulnerable lower-income households, leaving 30% of households in the West Midlands living in fuel poverty. The End Fuel Poverty Coalition predicts that by this winter, 6.9 million households in the United Kingdom will face fuel poverty. Such a drastic drop in living standards with plummeting disposable incomes has threatened the overall health, economy and stability of Britain.

Truss’ Intended Policies

Despite issues pertaining to energy, gender equality, international aid and foreign relations, the public is clinging to hope for the new Prime Minister to improve conditions in the country. Her determination and dedication to the U.K. are clear, considering her heavy involvement in politics since her youth. She has demonstrated a clear commitment to NATO and the Group of Seven, ensuring the U.K. remains “an effective leader” on a global scale, which bodes well for the future of the U.K.’s international affairs.

Despite previously being outspoken on “lowering the tax burden, not giving out handouts,” Truss has made considerable efforts to support the struggling British population with their energy bills. She has plans to freeze the cost of gas and electricity and cap the average bill at around £2,500 annually, but it is predicted that high-income households with larger bills would benefit most.

Questions also remain about the funding for such a project, with estimates ranging around £180 billion, which will also become a burden for taxpayers in the long run. Still, the plan is expected to decrease the severity of a recession and provide support for those struggling in the cold winter.

The UK as a Global Powerhouse

The U.K. budget once stood as the most influential and resourceful in supporting education for women, battling polio, providing food rations and restoring living conditions in many underdeveloped countries. However, following the beginning of the pandemic in 2020, the U.K. cut the budget for the Department for International Development from 0.7% to 0.5% of the gross national income.

During her time as foreign secretary, Truss launched the International Development Strategy to focus on humanitarian commitments and investments in foreign economies. The British are hopeful that Truss will continue her advocacy to ease the burden on impoverished households and increase funding commitments for foreign development aid.

– Nethya Samarakkodige
Photo: Wikipedia Commons

U.K.'s Foreign Aid
The World Food Programme (WFP) has been facing significant challenges in helping Afghans struggling with poverty and food insecurity. The Integrated Food Security Phase Classification (IPC) said that “nearly 20 million people are facing food insecurity” in Afghanistan. Furthermore, the IPC said that 6.6 million of them are struggling with “acute hunger.” The key factors exacerbating food insecurity in Afghanistan are sharp economic decline, drought and high prices for food. However, the U.K.’s foreign aid to the WFP alleviates that burden which allows the organization to help the Afghans.

The Importance of Foreign Aid

The financial assistance from the U.K. and even other countries, allowed the WFP to provide nutritional support and emergency food to 17 million Afghans, according to the WFP’s website. This highlights the importance of foreign aid spending in saving the lives of those living in poverty or below the poverty line.

There was a feeling of hopelessness amongst international affairs observers regarding Afghanistan after the Taliban came back to power and the economy deteriorated sharply. Nevertheless, the financial assistance the WFP has received from countries willing to help gives people hope that Afghanistan can be rebuilt one Afghan at a time. The proof is in the accounts of the Afghans the WFP is helping.

The Success Story of Alia and Her Husband

The Taliban takeover of Afghanistan and the pandemic has caused many Afghans, especially women, to lose their jobs and livelihoods. Alia used to own a beauty parlor in Afghanistan and her husband worked as a mechanic and both provided for their “four sons and three daughters,” the WFP reported.

However, after the economy collapsed and the Taliban took over, Alia lost her job because the Taliban would not allow women to work and her husband stopped working “because of health problems.” Nevertheless, the U.K.’s foreign aid to the WFP gave Alia, her husband and her children income and food. Furthermore, their children were also able to go to school afterward. However, they are not the only Afghans who received foreign aid that stabilized their lives.

The Story of Asefullah and His Family

Asefullah is a 13-year-old kid living in the Khost Province of Afghanistan with his “family of seven.” The family is living in poverty and their only source of income is the oldest sibling who “makes enough to buy bread and nothing else,” according to the WFP. However, after the U.K.’s foreign aid to the WFP, Asefullah and his family “no longer face many problems” because the food they have received kept them “alive for the past nine months.”

The story of Alia, Asefullah and their families shows the necessity of preserving or even increasing, foreign aid to developing and war-torn countries. Foreign aid not only reduces poverty but also saves families struggling to make a living.

How Much the UK and Other Countries Spend on Foreign Aid

The foreign aid budget is the most important tool in the international effort to tackle poverty. As of May 16, 2022, the U.K. is spending “about £11.5 billion” every year on foreign aid and international development. Forty percent of the aid budget goes to international organizations such as the U.N. and the World Bank. Liz Truss, the U.K.’s Foreign Secretary, stated on May 16 2022 that the aim of the U.K.’s foreign aid budget is “improving economic security worldwide and increasing jobs and growth at home,” according to BBC.

Furthermore, on May 16, 2022, the U.K.’s foreign office pledged to spend £3 billion on humanitarian aid “over the next three years,” considering it “a priority,” BBC reported. In fact, the U.K.’s foreign aid to the WFP in 2021 was £376.260.054 making it the fourth-largest donor in 2021. In other words, the lives of people struggling with poverty and food insecurity depend on the foreign aid budget of countries, specifically powerful ones such as the U.S. and the U.K.

Looking Ahead

Unfortunately, many countries had to reduce their foreign aid spending due to the economic impact of the COVID-19 pandemic. Thus, it was reasonable to conclude that countries would not be able to tackle poverty and food insecurity in developing countries. Nevertheless, U.K.’s foreign aid to the WFP managed to stabilize the lives of families in Afghanistan. Therefore, this proves that the recent trend of reducing the foreign aid budget has not impacted the determination of powerful countries to help the vulnerable in developing countries globally.

– Abdullah Dowaihy
Photo: Flickr