Britain’s lowest paid workers say the economy has never been worse | Cost of living crisis in the UK

Almost 80% of Britain’s lowest paid workers say they are now facing the toughest financial squeeze of their lives, according to new research from the Living Wage Foundation.

Liz Truss has averted a further rise in electricity bills with her “energy price guarantee” – a radical measure that could cost taxpayers more than £100 billion – but many poor households are already struggling to make ends meet.

A poll of more than 2,000 workers earning less than the real living wage of £9.90 an hour, or £11.05 in London, found that 78% said this was the worst economic period they had ever been through.

More than half had used a food bank in the past year, while 42% reported regularly skipping meals for financial reasons. More than a fifth of these workers, 21%, said they had no money left over at all after paying for necessities, such as rent and food.

Katherine Chapman, director of the Living Wage Foundation said: “Everyone is feeling the pressure of rising inflation, but our polls show that low-wage workers are being hit harder than most. These shocking findings bring to life what it’s like to be paid less than a real living wage during a cost-of-living crisis.”

She added: “It is more important than ever that those employers who can step up and provide a wage based on the cost of living.”

As many as 4.8 million people in the workforce have incomes that are less than the real living wage. The rates are calculated annually by the Resolution Foundation think tank, based on the minimum income required to cover basic living costs.

More than two-thirds of workers surveyed said their financial situation negatively affected their anxiety levels and their overall quality of life – with women particularly hard hit.

The Living Wage Foundation accredits employers who pledge to pay their workers at least the real living wage.

The new rate for 2022-23 is due to be announced next week, and is expected to mark a significant increase, given high inflation across the economy.

The separate “national living wage” – a legal minimum set by ministers – is currently £9.50, although it only applies to over-23s.

In the early stages of the Conservative leadership campaign, Truss had expressed skepticism about the need for “handouts”, saying she wanted to help consumers “in a conservative way to lower the tax burden”.

But economists had pointed out that tax cuts would not benefit the lowest paid, many who already pay little or no income tax.

As the leadership race drew to a close, it became increasingly clear that the new government would have to take more drastic measures to protect households. Without government intervention, energy regulator Ofgem had announced, a typical bill would be allowed to rise to £3,549 a year from October 1 – with another jump expected in the New Year.

Just before it became clear the Queen was seriously ill last week, the Prime Minister announced the government would put a cap on the unit price of gas and electricity, to prevent the typical bill from exceeding £2,500, with the cost to be met by the taxpayer.

She told MPs: “I know businesses and families are very worried about how they will get through this winter. Therefore, I felt it was important to act quickly to provide immediate help and support.”

Anti-poverty campaigners have welcomed the policy but questioned whether it could have been better targeted at low-income households, which were already struggling to make ends meet.

The latest inflation data, published earlier this week, showed that prices rose at an annual rate of 9.9%. The government’s energy measures are expected to shave up to 5 percentage points off inflation, which the Bank of England had previously expected to peak above 13%.

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