Over the past few weeks, Carnegie UK staff have spoken at and attended a number of events, where one topic has rightly dominated the conversation: the cost of living crisis. Right now, the cost of living crisis is one of the most significant threats to wellbeing facing the UK.

At Carnegie UK, we see wellbeing as being about people having what they need to live well now, and in the future. The continued upheaval, insecurity and instability from the cost of living crisis shows that many do not have what they need, making society more unequal and damaging our collective wellbeing.

Many analysts and commentators focus – rightly – on the here and now. At Carnegie UK, our strengths lie in taking a holistic and long-term view. We do this using eight wellbeing tests – things that we know from multiple evidence sources contribute to a good life and a good society. Three of these tests in particular should be focused on when considering action to combat the cost of living crisis – tackling poverty, furthering equality and focusing on long-termism.

Tackle poverty: we know that people need to have their basic needs met before they can improve other aspects of their wellbeing.
Further equality: we know that wellbeing cannot flourish when there is inequality between people and communities.
Focus on long-termism: taking actions to safeguard the collective wellbeing of future generations.

We know that poverty was already a significant problem in the UK before the effects of both Covid and rises in the cost of living, and the current crisis exposes and impacts the very limited financial resilience of many households and communities.^[1] It also has an impact on wellbeing at individual, community and societal level. At an individual level, even short-term poverty affects mental and physical health, at a community level it challenges social cohesion, and at a societal level it threatens our social contract and the foundation of the welfare state.

Increased costs of living will also drive intersectional inequality. Soaring energy costs will more negatively affect those groups who have greater exposure to those costs, such as disabled people. Rising childcare costs means an increase in women ‘going missing’ from the workforce, as it is not financially feasible for them to return to work after having a child and they are more likely to be the lower earners in the household.^[2] Research by NEF has found that single female and black, Asian or other ethnic minority (BAME) households are experiencing costs that are 50% higher than their male and white counterparts (respectively) as a portion of their income.^[3]

While many are feeling the impact of increased costs of living currently, we cannot ignore its long-term, lasting effects, including on the youngest in society. For example, children growing up in poverty have also been found to be more likely to lack optimism and self-worth and to report that they ‘feel like a failure’.^[4] Children living in poor quality housing conditions have a greater likelihood of poor health outcomes during childhood, as well as adults.^[5] Financial problems can also cause significant stress and anxiety, which have long-term effects. As well as action now, governments need to focus on the long-term consequences of the actions they take.

While energy costs rise and various supply solutions are discussed, there is a risk that decisions made now do not take into account the longer term, environmental impact for future generations, threatening environmental wellbeing. At the start of June, regulators approved the development of the Jackdaw gas field in the North Sea – despite it originally being rejected on environmental grounds in October 2021.^[6] Looking at longer-term solutions, such as investing in energy efficiency solutions for homes and low-carbon heating options, would tackle fuel poverty, create warmer, healthier homes and help protect the planet’s natural resources.

These examples show how the holistic, rounded perspective taken by using a wellbeing approach to the cost of living crisis can ensure a long-term view while still tackling poverty and furthering equality. The current cost of living crisis shows that economic growth alone has not brought benefits for everyone. A wellbeing approach to government is needed, to ensure that policies and actions do not focus solely on economic growth, without consideration of other elements which make up a good society. This new approach to governance would put economic growth in its place, balanced with social wellbeing (that addresses the uneven costs of the pandemic and austerity) and protection for our environment and democracy for future generations.

^[1] https://www.fca.org.uk/news/press-releases/fca-finds-covid-19-pandemic-leaves-over-quarter-uk-adults-low-financial-resilience

^[2] https://www.thetimes.co.uk/article/held-back-the-mothers-who-cant-afford-to-return-to-work-r5r3k9bxl

^[3] https://neweconomics.org/2022/05/losing-the-inflation-race

^[4] https://www.basw.co.uk/system/files/resources/basw_25921-3_0.pdf

^[5] https://thecanadianfacts.org/The_Canadian_Facts-2nd_ed.pdf

^[6] https://www.bbc.co.uk/news/uk-scotland-scotland-business-61666693