The Cost of Living Crisis and Where to Get Help
The cost of living crisis has undoubtedly affected every single one of us. We’re all paying more for our bills, food and everyday living. At Cashfloat, your concern is our concern, and we want to help you through this difficult time.
Cashfloat’s analysis of the cost of living crisis
At Cashfloat, we were wondering how the cost of living crisis is affecting payday loan applicants, and we thought we’d see if we could use some of the data we collect to shed light on the situation.
Here’s what we did:
We gathered information from all the payday loan applications we received between Jan 1st 2022 and the end of the year. Then we did some calculations.
- We looked at the disposable income of each applicant over 2022
- We calculated the average disposable income for all our applicants for each day of 2022
Disposable income (DI) = How much money people have left over after paying their essential bills and monthly credit commitments. Essentially, how much spare money people have. - Then we plotted all the averages on a graph to show how the average disposable income of our loan applicants changed over the course of 2022
Here is the graph showing our results:
As you can see, the average DI dropped drastically in June 2022 and didn’t properly recover. This huge decline in disposable income most likely came about as inflation jumped, primarily as a result of the rise in fuel costs.
Analysing our customers’ DI changes since 2015
After we’d identified the drastic disposable income change in the past 12 months, we thought we’d see if we could find out anything about DI changes over a longer period. We decided to look at how some of our customers DI has changed since they first started borrowing from us. We did this by analysing information from customers who had successfully taken loans from us since January 2015.
We calculated the average disposable income over time for customers that:
- Have had at least three loans with us since Jan 2015
- Took their last loan in 2022
The downward trend was just as obvious:
Only use a payday loan for an emergency
As a payday lender, we’re aware that people may look to use a loan to cover everyday expenses where they have ongoing financial difficulties. However, we continue to urge our customers to only borrow payday loans in a one-off emergency and not to use them to try and solve long-term money problems.
If you’re struggling because of the cost of living crisis, help is available
Cost of living help from the government – September 2023 update
The cost of living payment
The cost of living payment is a payment the government introduced to help during the cost of living crisis. Many people received payments under this scheme in 2022 and in early 2023. More payments will also be made in autumn 2023 and in 2024.
Payments are only available to those on certain benefits or tax credits. There are payments available for people on low income benefits and tax credits, people on disability benefits and for pensioners. You do not need to contact the government if you are eligible because payments are made automatically.
Payments were made to most eligible people in July and November 2022 and in May 2023. Future payments will mostly be made in autumn 2023 and in spring 2024. You can check your eligibility for cost of living payments here. If you have not received a cost of living payment that you think you were entitled to, then you should report a missing cost of living payment.
Cost of living support
Help with energy bills
The Energy Price Guarantee reduces the maximum amount energy suppliers are allowed to charge per unit of electricity or gas for British homes. Energy suppliers automatically make reductions to their customers’ bills if they are eligible.
The Energy Price Guarantee was reviewed in April 2023 and, from 1st July 2023, households without a prepayment meter will no longer get a discount on their energy bills. This is because the Ofgem price cap is lower than the Energy Price Guarantee level, which effectively removes the need for the Energy Price Guarantee. While this is the case, the Energy Price Guarantee will remain in place until March 2024, in case prices start to creep up again.
You should inform your energy provider if you are struggling to pay your energy bills. Most providers have plans in place to help customers who are having difficulty paying their bills. You may also be eligible for a grant or for emergency credit.
Christians Against Poverty provide further information about support for people who are struggling to pay their energy bills.
Help with transport costs
The government also introduced a £2 bus fare cap. This will be in place until October 2023. From then it will increase to £2.50, and then it will stay in place until November 2024. Information about which bus companies and routes the cap applies to can be found here.
If you are on Universal Credit, you may be eligible for a Jobcentre Plus Travel Discount Card. Find out more about it on nationalrail.co.uk.
If you have reached State Pension age or are disabled, you will be eligible for a free bus pass. Railcards are also available in the UK, and you can save up to ⅓ on rail travel with one.
Help with childcare costs
You may also be eligible for holiday activities and food for your children during the holidays through your local council.
Help from local councils
Local councils in the UK have schemes to help people with essential costs like food and electricity bills or even with things like clothes and furniture. You do not have to receive benefits to qualify for help from your local council. If you receive help from your council, this also won’t affect any benefits you do receive.
Here is a list of various locations in the UK and what local councils in these areas offer in terms of cost of living assistance.
More information can be found here.
Other help is also available in the surrounding area. Yorkshire Water, for example, also have schemes set up to help those struggling to pay water bills.
More information can be found here.
More information about support available to households in Liverpool can be found here.
Warm spaces
Most councils in the UK offer ‘warm spaces’ where anyone who is struggling to heat their home is welcome to go. Most of these warm spaces are libraries, churches and community centres. You can usually get warm drinks and hot meals there as well as advice and information.
You can find a warm space in your area on the Warm Spaces website.
Questions you might have:
Do pensioners get the cost of living payment?
During the winter of 2023/2024, pensioners who are entitled to Winter Fuel Payment will get either £150 or £300 extra on top of the standard Winter Fuel Payment to help with heating bills. This extra amount is known as the pensioner cost of living payment. This will be paid with the Winter Fuel Payment.
Will the cost of living ever go down?
This is the question asked by everyone. Some experts predict that the cost of living will reduce towards the end of 2024. The Bank of England, for example, predicts that inflation will fall by 5% by the end of the year. It’s hard, however, to accurately say how long inflation and interest rates will remain high. Most of the unpredictability is due to global events such as the war in Ukraine and the effects of Covid.
Where can I get help finding work?
Your local job centre is the best place to begin looking for work. There are also many job search sites online, such as reed and indeed, where you can find jobs near you.
How will I feed my kids during the school holidays?
Most local councils have schemes set up through which parents can get holiday activities and a food programme for their children if they get free school meals. Go to your local council’s website to find out more.
Research has shown that holidays can be difficult for low income families, and so it’s important to take advantage of all the help that is available. Advice regarding the cost of living crisis that is tailored to families can be found here.
How is disposable income worked out?
Here is how to work out your DI:
Income – living costs, such as rent, bills, food = DI
DI can be used to invest, save or to buy non-essential items.