How we are coping with hard times

The Observer

20 July 2008

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The anecdotal evidence has been building up as fast as the prices of energy, petrol and food have soared. But now hard statistics are backing what credit crunch Britain already knows - the pinch is being felt across the wealth and social divides and people are increasingly being forced into radical changes in their lives.

Dumped cars, chickens roaming inner-city patios, empty restaurants, charities running out of cash, middle-class families filling living rooms with lodgers. Whether it sounds like an eco-living idyll or the stuff of nightmares, the credit crunch and rocketing prices mean Britain faces a thrifty short-term future.

The 'waste not, want not' slogan of decades past is being taken to heart - ownership of chickens is soaring so much that there are waiting lists for people who want to give a home in their garden to a hen rescued from a battery farm. Allotments are in fierce demand and flower seeds are being outsold by vegetable seeds as 'grow your own' becomes the alternative to expensive organic boxes.

Applications to the Social Fund, which gives small interest-free loans to low-income people facing an unexpected emergency, rose by 44 per cent across the country and by 82 per cent in the South East, according to statistics obtained by the Liberal Democrats. Those on benefits have been hardest hit by utility, food and fuel bills, while the last year has seen problems with administration of tax credits and benefits.

Pensioners are another vulnerable group. Neil Duncan-Jordan, of the pressure group National Pensioners Convention, said: 'Because pensioners spend a high proportion of their income on these goods that are rising the fastest in price - food and fuel - they are being hit the hardest. At a time when the state pension is the worst in Europe, it's going to be a difficult winter. The government has promised extra payments for heating bills, but that's not until November and it's now that pensioners need help.'

Nancy Gilbride, 69, a widow from south Wales, said: 'For the first time in my life I wasn't over worrying about money. My husband had paid off the mortgage on the flat we'd bought from the council and things weren't too bad. But now it's not just feeling the pinch but worrying about what's round the corner.'

A non-driver, petrol costs didn't affect her, but the cost of food and electricity has. 'I'm worrying about the cost of heating this winter. I am trying to put away a few pounds for that and of course you worry about having to buy a coat or shoes'.

She is giving up her bowling club membership and meeting up with her friends. 'I used to go out to a teashop with some of the bowling club ladies every Wednesday but that has stopped for the time being. It's worse for people I know who have come to rely on their cars for getting around though, they really are feeling like prisoners.'

A survey for The Observer showed that cutting back donations to charity is a favourite route to save money. At the country's biggest animal sanctuary, Pact in Norfolk, donations are down 25 per cent this year. George Rockingham, administrator at the centre, said: 'At the same time the number of phone calls we receive from people asking them to take their animals because they can no longer afford to keep them has doubled. We keep in touch with quite a few charities and they're all having problems.'

A report from thinktank NFP Synergy suggests the biggest impact is still to come. Analysis of the financial history of 56 charities shows a direct correlation between the health of the economy and charity income since 1980; the growth in individual donations tends to fall 10 months after the start of an economic downturn. But the top sacrifice of those who took part in The Observer poll was eating out - twice as many people have given up restaurants than holidays or gym membership.

There is mounting evidence that the more affluent are giving up on luxury food items by switching from Sainsbury's and Waitrose to budget supermarkets like Lidl and Aldi. More are likely to follow suit after figures last week showed inflation had hit a new record of 3.8 per cent as prices continue to rise.

A study by the insurance company Direct Line found that paid-for TV, such as Sky subscriptions, followed by mobile phones were first in line to be dumped. Beauty parlours are also losing out as treatments become luxuries.

Petrol prices remain key, adding to the cost of running a car which, according to Combined Insurance, has risen from an average £55 to £83 a month in two years. 'I heard that if you drive slower you can make your petrol go further, so I've been doing that,' said Lindsay Wilson, 28, a trainee chartered surveyor.

The price of getting fuel to the remote village of Applecross in the Scottish Highlands is so high the area's only filling station has run dry, giving drivers a round trip of 150 miles to get fuel. Lying at the top of the highest mountain pass in Britain, the Bealach na Ba, a car here is a necessity. 'The cost of transporting the fuel to the pumps is sky-high,' said Archie McLellan of the Applecross Trust. 'The whole structure of society is changing.'

Across Britain, the decade that was booming when it began eight years ago is threatening to end with, if not bust, then certainly a population feeling the pinch.

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