Camden households face cost-of-living 'catastrophe'

The cost of living is rising

Household shopping receipts – the cost of living is rising - Credit: PA

The cost of living could rise by £1,200 for individuals in 2022, with councils offering support for the most vulnerable.

Camden Council has said the year will be "especially daunting and challenging" for those already struggling and has council tax support schemes and other programmes.

The think tank The Resolution Foundation has said people will see a high financial impact as the energy price cap is raised and a 1.25 percentage point increase in national insurance contributions comes into effect.

At the same time, rising inflation means that real pay levels are set to stagnate, with real wages next Christmas forecast to be no higher than they are this year.

On top of this, the Bank of England expects the inflation rate to hit about 6% by spring 2022, meaning the benefits of any wage increases are likely to be eroded by rising prices.

Camden has renewed its scheme allowing some families not to pay a penny in council tax.

It has yet to confirm whether it will raise council tax in the borough.

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Cllr Richard Olszewski, cabinet Member for finance and transformation at Camden Council, said: “The cost-of-living crisis is not of our making.

"There are many factors beyond Camden’s control, including central government cuts to council funding, the impact of Covid-19 and Brexit on the economy, and government decisions to cut universal credit and increase national insurance contributions.”

He added: “We know that further rises to the cost of living will feel especially daunting and challenging at a time when many are already struggling to get by.

"In Camden we are doing all we can - with the resources and powers we have - to support those hit hardest.

"Anyone who is struggling or worried about their ability to pay can get in touch with us to discuss the support available to them.

“Our support includes continuing to invest £27m into our council tax support scheme, which we believe is the most generous council tax reduction scheme in London."

He said around 23,000 households in Camden are getting help with council tax, 71% of which are receiving 100% support and have nothing to pay.

Support is based on London Living Wage income bands so even if individuals are working, they may still be eligible.

He said the changes made to the scheme, make it much easier to claim.

“We are also tackling in-work poverty by investing £1.5 million every year into employment support, which is now helping residents who may have become unemployed due to the pandemic to access education, training and ultimately good, secure work that pays a London Living Wage and supports them to continue to live within their community in Camden," said Cllr Olszewski.

The Resolution Foundation said the peak of the “squeeze” looks set to be in April, when the cap on energy bills is expected to rise by around £500 a year while the cost of energy firm failures would add another £100 to consumer bills.

The price rise will disproportionately affect low-income families who spend more of their income on energy.

It is expected to account for 12% of the income of the poorest households compared with 8.5% now.

Chief executive Torsten Bell said: “The peak of the squeeze will be in April, as families face a £1,200 income hit from soaring energy bills and tax rises.

“So large is this overnight cost-of-living catastrophe that it’s hard to see how the government avoids stepping in.”

A government spokesman said ministers had put in place £4.2 billion in “decisive action” to help support families with the cost of living.

This includes reducing the universal credit taper – worth over £2 billion – and a range of measures to help with bills, including the energy price cap and cold weather payments, as well as freezing alcohol and fuel duty.