Northern Ireland’s poorest households left with only £29 per week during cost-of-living crisis

 As the cost of energy, fuel, food, and general household bills increase exponentially around them, with inflation currently at 10.1% and interest rates rising to 1.75%, many risk being plummeted into desperate circumstances.

Noyona Chundur, Chief Executive of the Consumer Council:

"The impact of the cost-of-living crisis has hit home for many. As Northern Ireland’s statutory consumer representative body, we have seen first-hand how worried, angry, and at risk of destitution, many citizens are.

To quantify the impact of the cost-of-living crisis on our lowest earning households in Northern Ireland, we have launched the Northern Ireland Household Expenditure Tracker, in partnership with the Centre for Economics and Business Research (Cebr). This is the first time this data at a Northern Ireland level has been published as a quarterly tracker showing what the lowest earning and most vulnerable households in Northern Ireland are experiencing financially including changes to their income, expenditure and in which areas they are spending most of their money, on a quarterly basis.

Between January and March this year, our lowest earning households, with an average annual income of £12,200, had just £29 per week left after paying their bills and living costs. The Northern Ireland Statistics and Research Agency (NISRA) estimated that in April 2022, 316,000 citizens in Northern Ireland were living in relative poverty, which shows the scale of this crisis.

Northern Ireland consumer position

Understanding the nuances of life in Northern Ireland, and how we differ and compare to the rest of the UK, is vital for quantifying and understanding the impacts of rising prices.

We have more vulnerable consumers. Citizens here have higher debt levels, less cash savings, and lower levels of financial capability and confidence in managing their money. Comparatively, more of our income comes from social securities; we have higher levels of economic inactivity, more rurality, and around two thirds of our households rely on home heating oil.

Our Household Expenditure Tracker shows that in January-March 2022, the most vulnerable households in Northern Ireland saw their income grow by only £0.27. Alongside this, their spending on basics increased by 3.5%, their discretionary income fell by 18.5% and with gross household income of Northern Ireland's lowest earning households being 11% lower than those in the UK, the situation has become desperate for many.

Image Caption Northern Ireland's lowest earning households had only £29 per week left after bills and living costs   Where the pressures are – Energy, food, and transport

Our Household Expenditure Tracker shows what consumers spend their money on – from energy bills, to leisure, and clothes.

Over half of household spending for our lowest earning and vulnerable consumers between January and March 2022 was in the current volatile markets of housing, energy, food and transport. How are these consumers going to cope if prices within these markets continue to increase, yet their income remains the same?

It is commonly stated that many consumers, because of rising prices, growing inflation, and lowering of discretionary income, are having to choose between heating and eating. Our findings demonstrate the sad and unthinkable reality, that for some consumers, neither is an option. With vulnerable households only having £29 per week available, one unexpected bill is all it takes to reach this point.

Rising energy costs

In 2021, 18 separate price increases in electricity and seven separate price increases in gas were announced in Northern Ireland. The average annual electricity bill from the regulated supplier was 66% higher in July 2022 when compared to January 2021. There have been a further 5 price increases in electricity and 6 price increases in gas in the first six months of 2022.

In July 2022, the cost of home heating oil was on average 113% higher than a year ago and nearly double the ten-year average price. The situation is even more stark for gas consumers with the average annual regulated supplier gas bill in Greater Belfast increasing by 165% between January 2021 and July 2022.

This will result in increased fuel poverty, increased destitution, and a lowered standard of living for many in Northern Ireland. The issue of self-disconnection will increase, as will debt and financial difficulties. The current estimates from the University of York show that almost 72% of Northern Ireland will be in fuel poverty by 2023 (551,000 households).

Image Caption ‎‏‏‎ ‏‏‎ ‎   Rising food costs

Households in Northern Ireland are only too aware of the reality of rising food prices, and our Household Expenditure Tracker shows that almost 20% of the lowest earning household’s outgoings is on food shopping.

When we asked how consumers feel about the current cost of living crisis, these are some of the answers we received: “I try to prioritise food and heat. I give the kids pasta with cheese and butter to fill them up and I would have a slice of toast”, “I just skip meals, go to bed, try to stay warm”, “What is life about if you can only afford to exist and nothing more”.

According to recent data from the Office for National Statistics (ONS) Annual CPI inflation rate in July 2022, the largest contributing factor to the change in Consumer Price Index inflation rate is the cost of food. The rising cost of energy has increased food production and distribution costs, which in turn has increased the end price of goods purchased by consumers. We are also mindful of the differential impact of rising inflation at a regional level and on our lowest earning households.

That is why the Consumer Council is working with ONS, with support from the Department for the Economy, on the delivery of the first regional experimental Consumer Price Index in the UK. This will support our analysis to understand inflationary pressures in Northern Ireland, and when combined with our Household Expenditure Tracker and our wider research, provide detailed insights into the true impact of the cost-of-living crisis on consumers here.

Our citizens are already making cutbacks, borrowing, and using the help available. Supermarkets have reported customers are spending less - food shop sales fell by 1.6% in May 2022, 2.4% below their pre-coronavirus February 2020 levels. Our own research shows that citizens are having to go without, including those on restricted diets who have no choice but to pay more for their food. The Trussell Trust reported that in 2021, Northern Ireland saw a 75% increase on the last year, the largest rise across the UK Nations.

Rising transport costs

Our Household Expenditure Tracker shows that low-income consumers in Northern Ireland spend 13% of their income on transport, making it their third largest expense. Petrol and diesel costs have risen exponentially in Northern Ireland, with the cost of filing up a car reaching over £100 in some areas.

We welcomed Translink’s fare freeze that came in February and are pleased that our Transport Knowledge Hub (a tool which helps compare the use of public and private transport) is being used, showing that consumers are looking for alternatives and have an appetite to switch to public transport.

However with 70% of Northern Ireland consumer journeys being via private transport, short-term and long-term solutions are required within the transport sector too.

Image Caption ‎‏‏‎ ‏‏‎ ‎   Weathering the winter

It’s worrying to think of the future, and difficult to conceive what impact the cost-of-living crisis will have on our citizens financially, economically, and mentally. We all know the reality that consumers are facing now, only confirmed further in our Household Expenditure Tracker.

The Consumer Council will continue to help citizens through our front-line services providing support, advice, redress, and education, and in our behind-the-scenes work in campaigning for better consumer protection, policy development and support measures.

In the past year, we have helped nearly 9,000 consumers with independent advice, guidance and redress, all free services, returning over £380,000 to consumers as a result of complaint investigations across our statutory functions. We helped over 4,000 consumers in hard-to-reach groups through our in-person outreach work, and our price comparison tools were used over 160,000 times online. In partnership with the Department for Communities, Bryson Charitable Group, and local energy suppliers, we brought the Emergency Fuel Payment Scheme to consumers.

As the summer ends and consumers begin to receive more expensive bills that they have only to date been warned about, this crisis will become more acute, severely impacting those already in vulnerable circumstances, and adding pressures to those who have never struggled financially before. The £400 Energy Support Scheme promised to all households in Northern Ireland by the Chancellor will help. We recognise colleagues in Northern Ireland Executive and UK Government Departments, alongside the Utility Regulator, are working hard behind the scenes to make this available as soon as possible.

The Consumer Council will continue to monitor the situation to show the lived experience of life in Northern Ireland, influence policy making, represent consumer interests, educating and empowering them to make the right choices, and propose practical solutions to support people here. We will do so in close collaboration with Government, third sector partners, local communities and industry, so our citizens do not have to shoulder the burden of this crisis alone. And we will support consumers who need help through our helpline, 0800 121 6022, and community outreach."

Sources

1. Current inflation rate: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2022

2. Interest rate: https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2022/august-2022

3. Food shop sales figure: https://www.ons.gov.uk/businessindustryandtrade/retailindustry/bulletins/retailsales/may2022

4. 72% Fuel poverty figure: University of York: https://www.york.ac.uk/news-and-events/news/2022/research/fuel-poverty-uk/

5. Private transport usage: http://www.niassembly.gov.uk/globalassets/committee-blocks/infrastructure/2017---2022/documents/inquiry-research-papers/raise---decarbonising-transport-in-northern-ireland.pdf