by Gianluca Barbazza
Rising prices for both food and rent are hitting an all-time high, and people on the Holloway Road are beginning to worry about their future, especially young people supporting themselves for the first time and those on low incomes.
“Holloway’s rent prices, for commercial and residential purposes, have skyrocketed. The area is fairly dead, and has not recovered after Covid,” said E-Scooter Clinic owner Patryk Radek, 24, referring to the neighbourhood around Caledonian Road.
“Many businesses are closing down, due to the area not being profitable, but rents of both commercial and residential buildings have come up,” added the Holloway resident.
“The cost living crisis has hit London big time, and there does not seem to be light in the end of the tunnel.”
Pivotal times
2022 has been another pivotal year for the entire world, which after dealing with a global pandemic is now facing the war – and its ramifications – between Russia and Ukraine.
These tragic events have created a huge financial bubble, which we are only experiencing the first few implications of, and which is contributing to the skyrocketing cost of living.
The first victims of this unstable situation are the young and the poor, who are facing an uncertain future. How they will cope with these new challenges is still unknown, as no effective solution has been offered so far.
However, the way that Holloway’s young people are dealing with the increase in the cost of living in the capital is a manual of survival from which we all could learn.
Breaking records
“Pretty much everything is significantly more expensive than it was a year ago and there is every indication the situation is just going to get worse,” said Danni Hewson, a financial analyst for the investing platform AJ bell.
“Energy prices sky-rocketed too and though October’s price cap kept the worst of it in check for households, manufacturers and retailers, pretty much all businesses weren’t cushioned in the same way. Those prices are being passed on to the consumer leaving them with difficult choices to make.”
With inflation rising to a 30-year high, the energy bill cap surging by 54% and expected to increase even more by the end of the year, Londoners are going through a dramatic scenario, where cutting costs is a priority.
“Inflation is raising running costs to near breaking point for many businesses and despite the Governor’s pleas for companies to help to counter inflation by not awarding big pay rises or ramping up prices to ease the burden, many will find it impossible to comply,” said corporate restructuring firm Begbies Trainor partner, Julie Palmer.
In the midst of this unprecedented chaotic financial scenario, the Bank of England, which has recently made the news thanks to Governor Andrew Bailey’s claim on why workers should exercise “restraint” when asking for a pay raise, it is also expected to increase their interest rate to a 13-year high to combat inflation.
Bailey recently commented on the matter by saying that “bank is walking a ‘narrow path’ between growth and inflation”. He has also made quite clear that banks could take a rather different approach than the US Federal Reserve with its recent 0.5% spike.
Work, study, pay
Students and low-earning workers (which often are one and the same), are already being affected by the financial crisis.
“As a freshly graduated and self-employed, I can feel the difference of impact that this crisis is having on someone in my position,” said Holloway resident Theo Williams, 28.
Williams said that he feels lucky he’s finally found job continuity as otherwise he wouldn’t have been able to cope with the raising of general expenses.
“I’m not ashamed to say that I was considering asking my parents for help, because with all these expenses going at records-high, I was scared I wasn’t going to make it to the end of the month,” the freelance IT computer engineer said.
A higher cost of living also means more workers are asking for pay raises – reaching the London Living Wage at the least – to make ends meet.
A living wage is what has been calculated to be an hourly pay that anyone who lives in the London area should receive in order to have a ‘liveable life’.
At pre-inflation rates, London living wage was set at £11.05/h, while the annual-reviewed minimum wage, which is in line with the annual increase of the cost of living in the city, is currently at £9.50 for the over 23s.
With younger people getting paid between £2-3/h less than those over age 23, the gap in the living wage gets greater. This means that younger people will feel the squeeze more when prices go up.
Students are also in the midst of an important cut to their maintenance loans, as the UK Government is working on a plan to reduce the amount available to borrow starting immediately.
Senior research economist at the Institute for Fiscal Studies, Ben Waltman, says the Government seems determined to use high inflation as a hedge to reduce the cost of student loans for taxpayers. He added that “significant real-term reductions in maintenance loans could cause real hardship for students on tight budgets”.
Many students are relying enormously on maintenance loans to help them deal with the financial pressure that an expensive city like London brings to low-income people in particular.
With this move, the Government risks putting in jeopardy the imminent future of thousands of students all over the UK.
This could be the case of 20-year-old student and Holloway resident Megan Morgan, who said that without the help of a student loan, things would be much harder for her.
“Without this – student loan – I would find living here even on a wage of £13 an hour to be incredibly difficult and actually, impossible.”
She added that “the advantage of living on Holloway Road is that I have a variety of shops available to me in just walking distance, so I do not need to constantly rely on public transport, which has also gone up.”
While help from the Government seems to be taking its time to come, there is some hope in the form of the council tax energy rebate. The initiative consists of a reimbursement of £150, starting from April 2022 for households in council tax band A – D.
As stated on gov.uk: “This means 4 out of 5 households in England will benefit, including around 95% of rented properties.”
This move came right after energy prices skyrocketed due the slow recovery from the pandemic and, mainly, the sudden Russian-Ukrainian conflict.
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