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The Ukraine conflict looks likely to push up energy prices even further than we’ve already seen this year, with knock-on effects into wider inflation – to over 8 per cent this spring.
The Resolution Foundation's analysis says that will cause typical household incomes across Britain to fall by 4 per cent in the coming financial year (2022-23), the sharpest fall since the mid-1970s.
And although the squeeze on living standards will be felt across the income distribution, rising energy bills and the sorts of goods whose prices will rocket up (transport, food) means the problem will particularly affect those on lower incomes.
Where do students figure in all that? Good question. As I’ve noted before on here, much of the analysis in government (and in this RF report) revolves around a dataset called Households Below Average Income that is looked after by the DWP.
HBAI uses something called the Family Resources Survey (FRS) to derive a measure of disposable household income, a survey that doesn’t pick anyone up in “institutional” settings – like individuals in nursing or retirement homes or students in halls of residence.
Much worse than that, where students are picked up in households outside of halls, HBAI treats the receipt of tuition fee loans by home undergraduates as… disposable income! As the Resolution Foundation notes, that means that our understanding of the financial situation of students is deeply flawed, because they look measurably better off than other individuals who don’t have £9,250 a year flowing “through” their books.
It also means an HMO full of students features nowhere near the bottom on household incomes because a 6 student household looks like it has £55k more coming in than it really does.
The alternative would be for the responsible department to be on top of this - DfE is principally responsible for student financial support rather than the DWP as education spending is devolved - but it hasn’t done anything meaningful to ascertain the financial situation of students since 2014’s Student Income and Expenditure Survey.
The RF report today refers to a “benefits rollercoaster” - basically, we uprate wider benefits in April by the previous September’s CPI which means that most benefits, including the state pension, are set to be uprated by 3.1 per cent in April 2022 at a time when the cost of living could be rising by more than 8 per cent. That’s an exceptionally deep cut in real terms , taking the core level of support in the benefit system to its lowest level in real-terms since 1983-84.
Then that cut in the value of benefits in 2022-23 is set to be largely undone in April 2023, when benefits could rise by 7 per cent or more. That will be the largest permanent nominal increase for most benefits since 1991-92, when benefits were uprated by 10.8 per cent.
Student maintenance support is like that - only much much worse. This coming September maintenance loans will be increased by the rate of “forecast inflation” of 2.3% - but the inflation measure used is RPI-X (Retail Price Index excluding mortgage interest payments), based on the OBR forecast RPI-X figure for the first quarter of the 2023 calendar year… published in November 2020!
The figure that will apply for September 2023 onwards in theory is the ONS RPI-X estimate published in October 2021 for Q1 2024 - 2.8 percent!
The idea - in the government equality analysis of its maintenance uprating regime - that this all "ensures that students do not suffer a real reduction in their income", and that this means "they should be able to make the same spending decisions as they did previously with regards accommodation, travel, food, entertainment and course related items such as books and equipment" would be laughable if it wasn't so miserable.
Add to that the fact that we continue to freeze in absolute terms the amount of household income over which we start to deduct maximum loan (£25,000 since the late 2000s) and we have a very nasty squeeze coming for students on low incomes.
It all makes the failure to even address student maintenance in the response to Augar even more outrageous. If help doesn't materialise in the Budget, we have a proper crisis on our hands here.