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First published:
02/10/2023

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Challenge Poverty Week: Inadequate Incomes

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After 15 years of stagnant wages, UK workers are now £11,000 poorer each year. With the UK’s inflation rate just above 6%, the highest among the G7 nations, it's no surprise that many are worried about paying their bills whilst saving for the future. 

Change Mental Health understands that the rising cost of living and wage stagnation can affect your mental health and finances. The cost-of-living crisis is mainly due to these skyrocketing prices while wages have remained unchanged. This means households have less money to cover their monthly expenses, leaving many families struggling to choose between heating their homes and putting food on the table.  

In light of Challenge Poverty Week, we'll explore the impact of inadequate incomes during the cost-of-living crisis and, more importantly, what support options you have available. 

What’s the impact of an inadequate income? 

Families and individuals grappling with low incomes often find themselves struggling to make ends meet, facing a daily battle to cover essential expenses such as housing, food, and utilities. The consequences of inadequate incomes extend beyond financial hardship, affecting physical and mental wellbeing. For many people, it can make you: 

  • Feel very anxious 
  • Make you feel irritable 
  • Have trouble sleeping 
  • Withdraw from social situations 
  • Lead to depression 

It's important to recognise that these emotional and practical challenges are widespread and require our collective attention. Poverty affects numerous families and individuals across the UK with over one million people (including 250,000 children) living in poverty within Scotland alone. Addressing these issues and providing support is an ongoing commitment that benefits both individuals and our society. 

What options are available when money is tight?

You may have heard this many times, but a helpful first step is to really nail down your household budget. This is essential for making informed decisions. If the idea of budgeting feels overwhelming, try breaking it into smaller steps, like focusing on income one day and household bills the next. Using a budget planner can make budgeting a lot easier. 

It's also a good idea to see if you might qualify for any extra benefits. Figuring out the benefits system can be a bit tricky, but we've got plenty of information to guide you through it. Be aware that benefits for each home country might vary. Regardless, here is some information that is worth looking into: 

Universal Credit 

Universal Credit (UC) is a financial support program designed to assist individuals with their day-to-day expenses. 

You might be eligible for Universal Credit if you have a low income or require assistance with covering your everyday expenses. Your circumstances could include: 

  • Being unemployed 
  • Currently employed (including self-employment or part-time work) 
  • Unable to work due to a health condition (including mental health) 

To apply for Universal Credit, however, you must meet the following criteria: 

  • Be a UK resident 
  • Be 18 years old or older (with some exceptions for those aged 16 to 17) 
  • Be below the State Pension age 
  • Possess money, savings, and investments totalling £16,000 or less 

The amount you will receive from Universal Credit will depend on several factors. You can read more about it here. 

Should I feel guilty claiming Universal Credit?  

Feeling guilty about claiming Universal Credit is not uncommon, as some individuals may feel a sense of pride and may worry about relying on government support. In fact, you could be part of the UK households missing out on £19 billion in unclaimed welfare benefits.  

However, it's essential to remember that the programme exists precisely for those who require assistance during challenging times. Rather than feeling guilty, individuals who qualify for Universal Credit should try to view it as a safety net provided by society to help them through challenging periods, such as job loss, illness, or low income. It's a way to ensure that your basic needs are met, ensuring financial stability and wellbeing. 

If you meet the eligibility criteria and require financial support, you should not hesitate to apply. It's a resource intended to provide a helping hand during challenging times, and there should be no guilt associated with seeking the assistance you genuinely need and deserve. 

Cost-of-Living Payments 

For those who are currently on an eligible low-income benefit, you may be eligible for a cost-of-living payment. Here are the upcoming payments: 

  • £300 to be paid during autumn 2023.  
  • £300 for households with pensioners to be paid during winter 2023 to 2024. 
  • £299 to be paid in spring 2024. 

Winter Heating Payment/Child Winter Heating Payment 

Beginning this winter, the annual assistance payment aimed at aiding children and youth in heating their homes will be renamed the Child Winter Heating Payment (previously known as the Child Winter Heating Assistance). 

Families with qualifying children and young individuals (aged up to 19) who are already receiving eligible benefits, will be automatically granted a payment of £235.70. 

Even if you do not have children, you may still be eligible for the Winter Heating Payment where you will be granted a payment of £55.05. 

Energy Price Cap Decrease this October 

As of October 1, 2023, Ofgem has lowered the energy price cap to £1,923 (from £2,074 last July). 

Although not a benefit, the energy price cap sets the maximum rate that energy providers can bill you for each unit of energy when you're on a standard variable tariff. Its value is determined by typical household energy consumption patterns and mirrors recent declines in wholesale energy costs. 

It's important to note that while the price cap restricts the rate per unit of energy, your total bill depends on numerous factors, including your energy usage, payment method, location, meter type, and consumption habits.

I’m in debt. What should I do?

Inadequate incomes can often serve as the catalyst for financial hardship, increasing the likelihood of individuals finding themselves in debt. Dealing with debt can be very stressful. When you find yourself in debt, it's essential to take initial steps to address the issue and regain control of your financial well-being. The first steps you should take are: 

  • Assess your debt 
  • Create a budget  
  • Prioritise repayments  

If your debt becomes overwhelming, which is often the case, do seek professional help, and avoid taking on more debt while working on your financial recovery. Remember that dealing with debt is a process that takes time. Be patient with yourself, be kind to yourself, and consider seeking practical or emotional support from your friends and family.  

You can read more about dealing with debt here. 

Mental Health and Money Advice Service

If you or anyone you know is struggling during the cost-of-living crisis, you can consult the following resources from our Mental Health and Money Advice service for support: 

Or, if you would like to speak with one of our specialist advisers at our Advice and Support service for free and impartial advice, call our Advice line on 0808 8010 515, we are open Monday to Friday, 10 a.m. – 4 p.m., or email us at advice@changemh.org

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