'Real risk' that lives could be lost due to cost of living crisis as almost half of Scottish families admit they were struggling before bill hikes
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Speaking on BBC Scotland’s Sunday Show, Mr Matheson said that the UK Government’s response to the crisis has been “wholly inadequate”, pointing to the Scottish Government’s £41 million winter funding package.
His comments came as UK Government business secretary Kwasi Kwarteng again ruled out the prospect of the government cutting VAT on energy bills. Last week, Ofgem announced a 54 per cent rise in the energy price cap, taking the price of an annual default tariff of £1,971 – up from £1,277.
Meanwhile, a study carried out for a coalition of charities found that 46 per cent of parents were already struggling to afford their bills, while a similar proportion admitted they were less able to save some cash for the future compared to the same time the previous year. Around one in five parents surveyed by Parenting across Scotland – a coalition whose members include Children in Scotland, One Parent Families Scotland, Scottish Adoption, and the Aberlour children’s charity – had experienced a reduction in earnings or working hours over the last 12 months.
The research was carried out before the Bank of England warned the UK is facing the biggest fall in living standards since comparable records began three decades ago.
Mr Matheson said: “There is a real crisis building here. It has been on the cards for some time now and action from the UK government is wholly inadequate to deal with it sufficiently.I think there’s a real risk that lives will be lost this year as a result of the financial crisis.”
He added: “There is a very serious risk that if fuel prices stay high over the course of the next couple of years, and that could be the case, it could actually end up forcing more homes into poverty because households are not only having to face high fuel prices but they are also having to face paying back the loan."
He said the “serious” rise in energy prices would be compounded by the National Insurance rise planned for April and the cut to the Universal Credit uplift late last year.
Mr Matheson’s comments come as the chairman of Tesco warned that food prices could rise by five per cent by spring, fuelling fears of poverty for many families already hit hard by spiralling energy bills.
Tesco chairman John Allan told the BBC's Sunday Morning programme: "I predicted last autumn that food prices by the spring might be rising about five per cent. I sincerely believe that it's not going to be any more than that, it might even be slightly less, but that's the sort of number we're talking about.
“But of course five per cent, if you're spending - as some of the least well-off families are spending - 15 per cent of your household income, is significant.”
He added: “It troubles us and I'm sure troubles many people that people may have to struggle to choose between heating their homes and feeding their families and that's clearly not a situation that any of us should tolerate.”
He said that fuel prices are "unlikely to come down very quickly".
Mr Kwarteng said that he believed any VAT cut would be a “regressive step”.
He said: “That's not something which the Conservative Party or the chancellor want to do, they want to have more progressive taxes so that people who need the money are the ones who get it."
Clare Simpson, director of Parenting across Scotland, demanded more be done by ministers at both Westminster and Holyrood to help those who are struggling to get by.
She said: “It is clear that the proposed actions to address the cost-of-living increases are totally inadequate. Both Scottish and UK governments must take immediate targeted action to ensure help reaches those who need it.”
She added: “It is really worrying that even before the soaring energy bills, high cost of living increases and rising energy prices we’re facing now, families were finding it difficult to manage financially.
“It is concerning how widespread this is and means that many families who were ‘just managing’ are likely to be plunged into poverty.”
Aberlour chief executive Sally Ann Kelly said applications to its urgent assistance fund had increased by more than 1,000 per cent during the pandemic.
She said: “Many families are at breaking point. They are desperate and in despair. Parents tell us they are stressed and worried about their finances and about plunging further into debt. They tell us their children don’t have adequate clothing, that they aren’t sure where the next meal is coming from, and they are afraid to put the heating on.
“The cost-of-living crisis is pushing already struggling families over the edge. Without action from both the Scottish and UK Governments it will be disastrous for Scotland’s poorest children.”
Chancellor Rishi Sunak has promised all households in England a £200 discount on power bills in October, that will have to be repaid over five years although this does not apply to Scotland directly, Barnett consequential funding has been passed to Holyrood.
A Treasury spokeswoman said: “We understand that people are concerned about pressures on household budgets, including rising energy bills which is why the Chancellor announced a £9 billion package to protect millions of households against the impact of rising global energy prices.
“On top of this, we’re providing support worth around £12 billion this financial year and next to help families with the cost of living. We’re cutting the Universal Credit taper to make sure work pays, freezing alcohol and fuel duties to keep costs down, and providing targeted support to help households with their energy bills.
“We’re also raising the National Living Wage to £9.50 per hour from April, meaning people working full time on the National Living Wage will see a £1,000 increase in their annual earnings.”
A Scottish Government spokesperson said: “These findings show how difficult some families are finding things already, with those in vulnerable circumstances most likely to suffer the greatest impact of ongoing price rises and energy costs.
“The Scottish Government has provided £25 million to local authorities to tackle financial insecurity and a further £6 million to third-sector partners to help low income families.
“We’ve also made £10 million available to help people struggling with their heating costs this winter – as well as introducing the Scottish Child Payment, which we are doubling in April.
“However, powers relating to the energy markets remain reserved and we have repeatedly called for the UK Government to urgently take further actions to support the more vulnerable – including a reduction in VAT, targeted support for those on low incomes and four-nations discussions to develop an effective response to energy bill increases.”