In 1980 50% of young adults aged between 18-34 owned their own homes.
Today only 20% of young adults live in their own homes. (1)
This is because of increasing house prices. In the 1980s the average house price was 4 times the average wage. Today the average house price is eight times the national wage.
It now takes 13 years on average to save for a deposit on a property. Assuming you start at 22, this would mean you’d be 35 before being able to afford a place.
This is a 100% increase in the cost of the most prized possession in British society: one’s house.
House ownership is part of the British dream. The idea is you work hard, save money, and are able to buy your own place. But house ownership is becoming increasingly unreachable for younger people.
This is especially true if you live in London, where the average house price is 30 times the average wage. There is no point someone on the average salary even trying to save for a house in London.
And even if you do live in London, saving for a deposit would be a struggle for most. If you want a social life, or family, and you have to pay rent, that doesn’t leave a lot left over.
Relevance to A-level Sociology
This makes me think of Merton’s Strain Theory. A crucial part of the British Dream – house ownership – is now unreachable for most through legitimate means.
So according to Merton’s Strain Theory we’ve probably got a lot of younger adults suffering anomie.
The problem is it’s VERY difficult to gain enough money to buy your own home through illegitimate means. So there’s possibly a lot of people who are responding through ritualism, retreatism or rebellion. In other words, there’s a lot of pent up misery and anger out there.
There is some evidence in this from of surveys on home ownership.
One survey in 2022 found that 66% of Millennials and 59% of Gen Zers saw home ownership as a mark of success. (Conducted in America, sample size 2500). Affordability was the main reason for not owning a home.
Another survey of of 1500 young adults in Britain conducted in 2023 adds further support. This survey found that 81% of young adults were either Furious, frustrated or angry about housing affordability. 44% had either completely given up or thought it unlikely they would ever buy a house.
All of this suggests there is a lot of pent up frustration out there amongst Young People. This can only be made worse by the increasing inequality in house ownership. The top 10-20% of 30 somethings are able to get significant parental support for a deposit. How can this not fuel a sense of resentment? It should do because this is people benefiting from wealth they have not earned.
What is interesting is how the political elite seem oblivious to all of this. Think about how they paid so much attention to the recent cost of living crisis. But this crisis was only a 20% increase and mainly offset by wage increases. In contrast, here we have an ENTIRE two generations facing a 100% increasing in house ownership. And what have to Tories done about this: absolutely nothing.
is the cost of living crisis caused by a growing global middle class pushing up the price of scarce resources?
It’s possible that the current cost of living crisis in the UK is due to a long term trend of a growing middle class increasing demand for scarce natural resources, which pushes their prices up, further compounded by an increase in wages and thus cost of production as developing countries have become richer since the 1960s.
While this is clearly positive development, we in the UK have not invested sufficiently in the kind of technologies which could have helped us live more efficiently and thus protected us against the current short term shocks which have led to spikes in the cost of energy, raw materials and food.
The cost of living crises: a long term trend?
The UK government’s line on the cost of living crisis is that it’s driven by the post-pandemic squeeze on supply chains, and the war in Ukraine restricting the supply of raw materials, food and energy.
And the government can’t admit this but there’s a lot of objective data that suggests the current crisis has been made slightly worse by BREXIT making it more difficult for British Business to trade with Europe.
However I think there’s something more fundamental going on – in that even without the above three mega-events – we’d still be seeing an increase in the cost of living in the UK – all these events have done is rapidly accelerate a trend that was always inevitable given the trajectory of our high-consumption global development over the last several decades. (Moreover at least two of the above events are symptoms of that same economic trajectory).
The prices of energy, food, and the raw materials we need to keep our industries going, build our houses with and make the stuff we all want, are determined in a global economic system of demand and supply.
This is just basic economics – the more demand there is for goods, the more the prices of those goods increase, and the less supply there is of those goods, again, the more the prices increase.
A Growing Global Middle Class
Over the past several decades developing countries have become wealthier – in population terms the main drivers for this are China, India and also countries in South America – and we’ve seen a massive increase in the middle classes in those countries.
Research by PEW (1) has found that in 1975 the global middle class numbered 1 billion, by 2006 it numbered 2 billion and by 2015 there were 3 billion people in the global middle classes. 25% of these live in advanced economies and 40% live in the BRIC nations: Brazil, Russia, India and China, with the rest living in other countries.
Brookings (2) put the size of the global middle class at 3.8 BN in 2018, the point at which there were equal middle class and rich consumers relative to those classified as poor and vulnerable.
This is a huge success story for global development – with literally billions of people being lifted out of poverty and into relative affluence but this has also meant a huge increase in demand on the limited global resource base – on energy, food, and various raw materials.
We now have billions of more consumers demanding those resources that only a few decades ago a scant billion living mainly in affluent Europe and America could afford.
Just one indicator of this is the increase in demand for beef since the 1960s (3) – a very inefficient use of land per calories – but nonetheless something that consumers clearly want to eat more of as their incomes increase…
Back in the 1960s and 1970s, in the post-colonial era, it used to be the case that the raw materials we used to import, and increasingly the finished products (clothes, cars, and increasingly tech gadgets) we imported were cheap because of ‘our’ relative wealth and ‘their’ relative poverty – we benefited not only from being the only ones able to afford cars and consumer durables (low demand on raw materials = cheap resources) but also their cheap labour due to the relative differences in wealth between developed and less developed countries.
But now that many of those once poor countries aren’t so poor, we’ve got the double-whammy of more demand on those limited global resources and having to pay higher wages to the people in China (mainly China) who want to earn enough to buy the very same products they are making.
So I think what we are seeing now is basically just a more crowded marketplace, more demand for limited resources, more demand for higher wages, and thus higher prices for basic products.
Of course it’s not just the free market that determines these prices (there is no such thing as a purely free market) – the power of Nation States also comes into play – as they try to use policy-led coercion or brute force to secure cheap resources for their populations – according to David Harvey this is what the illegal U.S. War in Iraq was about – all about oil – and it’s probably what Putin’s war in Ukraine is about – Ukraine has lots of natural resources and it’s a bread-basket – as Putin sees it (probably) that is massive region full of natural resources that he wants to secure for Russia rather than those resources being sold (on the ‘free’ market to European countries.
And this also explains why ‘enlightened’ states in Europe and America are prepared to put up with human rights abuses in Qatar and Saudi-Arabia – they have huge oil reserves to put it bluntly and death sentences for gay people isn’t going to over ride the perceived importance of maintaining access to that of so precious resource – and oil of course isn’t only necessary to keep our cars on the road it’s also necessary to keep our military machines operating – so these unsavoury relationships are about maintaining both economic and military power.
Extraction of Profit from the U.K. over Investment?
Now to my mind we could, as a nation, have secured ourselves against this inevitable cost of living crisis driven ultimately by resource scarcity in the context of an increasingly wealthy global population, but we didn’t.
Instead we as consumers have squandered a decent portion of our wealth on consumer frivolities (holidays, throw away clothes, meals out etc. etc.), take on more debt than we needed to in order fund high-consumption lifestyles, and just generally been very wasteful.
Moreover, the global companies who have worked to bring us these products have extracted huge amounts of profit out of the country which is now sitting in tax havens, and, as a form of capital, is used by mainly the top 10% of global population, especially the top 1% to maintain their power and comfortable lifestyles, rather than being invested back into sustainable solutions for a sensible-consumption global future (more of that later).
A good example of how profit and capital has been used by the wealthy to benefit themselves rather than societies is the property boom in London – with billions of pounds being spent on investment properties to secure a nice lifestyle in a vibrant global city which has pushed the cost of housing up astronomically so that now even young professionals have to spend half their income just to rent a room in a shared house. And London isn’t the only city this has been happening in either.
Granted some of our wealth has gone to fund education, health and pensions, but these are creaking, and these could have been much better funded. (The average person in the UK is much better off in this regard than the average person in the U.S.)
So after several decades of (granted successful) development we’ve now got a super rich global elite who are sitting on piles of money, which is perversely contributing to rising prices itself (in the form of property price increases) and four decades of underinvestment in those technologies which could have if not averted the current cost of living crisis certainly helped to lessen its impact.
The Cost of Living Crises could Have been Avoided!
Just think what all of those trillions of extracted wealth could have done if invested in ultra-energy efficient infrastructure, local energy production (yes, sorry, solar and wind if combined with efficiency can go a LONG way to securing our energy needs!) and local sustainable food production – we’d be much more resilient to the kind of global market shocks we’ve seen since the Pandemic!
Final thoughts/ Disclaimers
NB this is just a working theory, but TLDR – we were always going to have a cost of living crisis in the U.K at some point!
P.S. also keep this in mind – the top 10% of people in the UK are in a much better position to weather this current cost of living crisis, the top 1% won’t even feel it at all!
P.P.S when thinking about policy solutions to the Cost of Living Crisis – remember this – the Tory party (especially Rishi Sunak whose wife is the daughter of the CEO of one of India’s largest tech companies) have a global perspective – gleaming extreme teeth-whitened smile aside, good old Rish is probably NOT thinking primarily about the well-being of the average British-bound person in the U.K. – he is more likely to be thinking about what’s good for him and his extensive network of global elite colleagues (the top 0.01% in his case).
From the perspective of the global elite, an increasing cost of living in the UK is not necessarily bad for them because they are globally mobile – they can base themselves in different countries to avoid the worst excesses of economic crises as they move around the globe, while the average UK citizen is ‘doomed to be local’ and suffer at the hands of Rishi’s piecemeal policies, which IMO are just about enough to give him a chance of being voted back into power in a few years, good old Rish!
Signposting and sources
This is an overdue personal rant relevant to the Global Development option, part of the A-level in Sociology specification
The cost of living crisis is a social problem in Britain in 2022. It is when the cost of basic goods such as gas, electricity and food increase rapidly and faster than average wages, pushing more people into poverty. This post explores what items have increased in price, and who is affected the most.
The cost of living crisis is a situation in which the cost of basic, essential items such as food and energy bills have increased rapidly in a short period of time, and much faster than average household wages.
This means that millions of people in the UK suddenly find themselves struggling to pay for basic items such as gas and electricity, rent, fuel for the car and food because these are a lot more expensive in Autumn 2022 than they were In Autumn 2021, while most people’s wages have not increased anywhere near as quickly.
The Increasing Cost of Living in the UK in 2022
The Cost of Living in the UK increased by 10.1 in the year to August 2022.
The UK government measures this increase in the cost of living (known as ‘inflation’) using the Consumer Price Index (CPI) , which monitors the prices of over 800 goods and services and uses the average changes in price to provide an average inflation figure over the year.
According to the CPI to this the inflation rate was 10.1% in the UK between August 2021 and August 2022…
That means that if it cost you £1000 a month for rent, transport, food and stuff in August 2021 it would have cost you £1100 to buy the same goods and services in August 2022
If this average rate of inflation continues into 2023, which is likely, then it will cost you £1210 to buy the same products in August next year.
What items have increased in price and how rapidly?
You can actually see from the graph above that the main drivers of the increasing cost of living are:
Household costs including services – which mainly means gas and electricity
Fuel costs – the cost of filling the car or van with petrol or diesel
Food costs.
Electricity and gas prices have seen the most dramatic increase in recent months.
10 year trend in domestic electricity prices UK. Source: Nimblefins
Between 2010 and 2021 Electricity prices increased at around an average of less than 10% a year, and some years prices even went down compared to previous years. However prices increased very rapidly between 2021 and 2022 and are set to increase even more rapidly to 2023.
The average price for electricity was 19.6 pence per Kilowatt hour in 2021, but this is set to increase to 34 pence per Kilowatt hour by early 2023, meaning the cost of elecriticty has DOUBLED in less that three years.
The Office for National Statistics prefers to use a baseline index method to show the relative increase of both electricity and gas prices, setting the base index of 100 and showing the same trend as above: that domestic energy prices have doubled in just a couple of years:
In it’s September 2022 research briefing the government noted that the cost of gas had risen 96% in the year to August 2022 while the cost of electricity had risen by 54%.
Rising Petrol and Diesel Prices…
Petrol has also increased in price over the last two years, increasing 30% from £1.20 a litre to £1.60 a litre at time of writing in October 2022, having spiked to a high of £1.90 a litre in August.
Rising food Prices…
Food and non-alcoholic drinks were 13.1% higher in August 2022 compared to August 2021.
These figures are only for food bought from shops (mainly supermarkets) which people prepare and eat at home, they exclude restaurant and takeaway food and drink.
The price of some food items have risen more than others – the Food Foundation notes that the prices of milk and dairy, meat and vegetables have risen more than other categories of food, for example.
There is considerable variation in the rate at which different food items have increased but there are many very basic items which have increased considerably, including low fat milk which is up 34%, pasta up 24.4% and even 15.7%.
What’s happened to average wages in 2022?
Inflation wouldn’t be as much of a problem if wages increased at the same rate as the increase in cost of living, but this has not been the case recently.
According to government figures Real regular pay was negative 2.8% in March to April 2022. This figure takes into account the increasing cost of living and the effects of taxes on wages.
There are differences too between private sector and public sector wages – private sector wages have increased a lot faster than public sector wages, so the real terms decrease in wages (compared to the increase in the cost of living) is much higher for public sector workers such as nurses, teachers and our police.
Who is Affected by the Cost of living Crisis?
While the cost of living is increasing for everyone in the UK, poorer households are affected more than richer households.
The main reason for this is because poorer households spend a higher proportion of their income on gas and electricity and it is these two services which are increasing the most – thus the poor face a higher relative increase than the rich.
It is also the case that the poor tend to pay more than the rich for the same goods and services – their houses, for example, are less likely to be insulated (because they are more likely to be rented) and so heating bills will be relatively higher to achieve the same level of warmth and food costs more because the poor are less able to get to value supermarkets because they don’t have cars, and they are more likely to have to buy from local shops which tend to me more expensive.
Even before the rapid inflation we have seen 2022 so far, millions of households were struggling with meeting bas costs, already having to choose between heating or eating in colder months…
According a recent Guardian Article an additional one million will be pushed into poverty in the winter of 2022/ 2023 because of rising costs of gas and electricity, even with the government’s recent fuel cap.
And another recent study by York University suggests that more than 75% of households will be pushed into fuel poverty by January 2023, which means they will be spending more than 10% of their disposable income on gas and electricity bills.
What are the Causes of the Increasing Cost of Living…?
Official government sources tend to identify the following causes:
The Covid-19 Pandemic
Supply chain problems (linked to above)
The war on Ukraine…
However more objective observers also point to:
The negative consequences of four decades of neoliberal economic policies (in particular)
Liz Truss’ recent hyper neoliberal policy agenda has just deepened the crisis even more.
The Capitalist model of global ‘development’ (in general)
For a more in-depth look at this very broad question please see this post (forthcoming) The Causes of the Cost of living Crisis.
The Cost of Living Crisis is a Social Problem
The mainstream media loves to present us with stories of how people are coping with the Cost of Living crisis – putting a personal touch on the crisis which supposedly makes it easier for us to relate to and understand.
I outlined some examples of this in my recent post: Surviving the Cost of Living Crisis: Case Studies.
However, while these stories of people’s financial struggles are private troubles, it is also very obvious that the cost of living crisis is also a public issue – it is a crisis rooted in social and changes and structural problems that individuals themselves have no control over.
For example, the government’s chosen response to Lockdown the country during the Pandemic effectively shutdown the economy and de-railed econo;mic growth.
Similarly governmental responses to covid-19 around the world created supply chain issues pushing up the costs o many basic goods and causing shortages which makes it harder for economic activity to pick back up again.
Brexit has also retarded the economy by making it harder for British businesses to continue trading with Europe.
And of course the much mentioned war in Ukraine means Russia has halted its gas supply to Europe, pushing up energy prices.
In fairness the government has recognised that this crisis is social in nature, because it has stepped in with some measures such as the energy price cap and direct payments to households to help deal with the increased costs.
BUT it doesn’t seem to be accepting the fact that there are deeper structural issues at work too – such as our lack of renewables (which would make us more energy independent) and our commitment to neoliberalism which has for years allowed the private sector to drain money from the public sector, reducing teh governments capacity to spend its way out of this crisis through a massive green-infrastructural development plan, for example,
Anyway, I’ll cover the structural elements of the causes of the crisis and some of the more radical potential solutions to in a couple of future posts. For now, just keep in mind that this event, this crisis needs to be addressed with a critical mind, and you should be looking for the deeper structural causes of it and for deeper more longer term solutions than just handing out packets of money to individual households and energy companies!
Signposting – Relevance to A-level Sociology
While the increasing cost of living is only directly relevant to the Wealth, Poverty and Welfare module, which few students study as an option, I personally think students should be directed to study this topic as the main contemporary event which is affecting all of us in the UK today in 2022.
To my mind the fact that the material reality of our lives is getting harder and that this is having real consequences challenges Postmodernism especially and I’d further suggest that Marxism becomes more relevant as huge amounts of people are being driven further into absolute and relative poverty as a result.
The Food Foundation – A charity which live tracks the price of a basket of food items regarded by the public to be a reasonable basket of items – they distinguish between a woman’s basket and a man’s basket – interestingly the man’s basket is £7 a week more expensive than the woman’s basket!
