The Bank of England runs an extensive outreach programme throughout the year. This programme provides a way for members of the public to share their experiences of the economy and hold the Bank to account for the decisions it has taken.
This report provides a summary of the discussions that took place from February 2022 to February 2023. It focuses on the impact of higher inflation, and people’s responses to it.
The report includes information gathered at citizens’ forum sessions, including in-person panels for people living in specific regions and nations and UK-wide virtual events. It also draws on research undertaken by the Bank’s youth forum, and intelligence gathered from community forum events run in partnership with a range of charities and community groups.
It has been compiled on behalf of the chairs of the citizens’ forum panels who play an important role in the delivery of these outreach events for the Bank.
Introduction from the panel chairs
We are volunteers who help the Bank of England to have direct conversations with people from all parts of the UK. We do it because we believe the work the Bank does to listen to people’s views and experiences is vital.
This report is a summary of those conversations and the impact they had.
Some of the main ways these conversations take place are through the Bank of England’s:
- citizens’ forum (including regional panel events and online Economy Hub)
- community forums
- youth forum
We are the independent chairs of the 12 panels covering the UK’s regions and nations that make up the citizens’ forum. This forum has around 4,000 members. Our role is to make sure everyone who takes part in the panel meetings has their voice heard.
There are also community forum events for charities and the people they support. And a youth forum that is specifically for people who are aged 16 to 25.
This report covers the period from February 2022 to February 2023. Over the year, many people used these forums to share their experiences about the sharp rise in the cost of living and the impact it had on them.
Many of the issues we see in our own work in local communities are reflected in this report. Many of us are deeply involved with charities or community groups that are grappling with the challenges caused by high inflation. We know first-hand the difficulties people face.
One of the ways the Bank uses the information it gathers at the forums is to track how sentiment changes over time. This is particularly helpful at times of high economic uncertainty when the other data it uses (including key economic indicators) are more volatile or less reliable than usual. They are often also less timely.
In this report, you’ll see how the information gathered at these events is used to inform the important policy decisions the Bank of England makes.
We thank all the citizens’ forum members and those who have participated in outreach events and shared their views and experiences so openly.
We also thank them for constructively challenging the people who make decisions that affect everyone in the UK.
We look forward to having more conversations in the year ahead.
Denise Bentley, Chief Executive, First Love Foundation (Greater London) | Bridget Blow (West Midlands) |
Rae Brooke, Chief Executive, Community Foundations for Lancashire and Merseyside (North West) | Jonathan Cheshire (Central Southern) |
Sarah Green, Chief Executive, NewcastleGateshead Initiative (North East) | Kate Hainsworth, Chief Executive, Leeds Community Foundation and Give Bradford (Yorkshire and the Humber) |
Julie Hawker, Chief Executive, Cosmic (South West) | Ruth Marks, Chief Executive, Wales Council for Voluntary Action (Wales) |
Ross Martin, Chair, Forth Valley College (Scotland) | Josephine McCartney, Chief Executive, Kent Community Foundation (South East) |
John McMullan, Chief Executive, Bryson Charitable Group (Northern Ireland) | Dame Susan Rice, Chair, Financial Services Culture Board (Scotland) |
Caroline Taylor, Chief Executive, Essex Community Foundation (South East) | Martin Traynor (East Midlands) |
Romesh Vaitilingam, Editor-in-Chief, Economics Observatory (South West) |
Summary of discussion themes
The cost of living squeeze has affected everyone. But the impact has not been felt equally. Some people have been able to manage the effects of rising prices more easily than others.
In the early part of 2022, most of the people who took part in our forums were mainly concerned about the impact of rising inflation on those on lower incomes. For the more comfortably off, personal finances were less of a worry. Energy bills were rising following Russia’s invasion of Ukraine and the cost of the weekly shop was going up. But it felt manageable. Especially for those who had been able to build up savings during the pandemic.
As the year progressed, the picture began to change. A broader range of people told us how they were feeling the effects of higher inflation and had changed their spending habits. Some were cancelling subscription services, eating out less, or delaying (or even cancelling) big spending decisions. Many switched grocery brands to value ranges or other cheaper alternatives. Almost everyone said they were trying to keep energy costs down by, for example, not turning on the central heating for as long as possible.
Panel members who were on lower incomes said their already precarious financial situation was made worse by higher inflation.
People told us they were struggling to afford essentials such as food, energy, fuel, and housing. Those on low or fixed incomes such as Universal Credit or state pensions were particularly badly affected. As were people with healthcare issues, disabilities, and caring responsibilities.
These trends were confirmed by charities and community groups at our community forum events. Many organisations providing services such as food and debt advice saw a big rise in demand. They also saw the profile of their service users change. For example, they began to include more people who were in employment.
Footnotes
- A member of the North West panel of our citizens’ forum at a meeting in Liverpool.
People often had to make difficult choices. For those unable to work from home because of the nature of their jobs, rising transport costs made decisions about whether to work or not more finely balanced. Some had decided to stop work, or to work fewer days. In contrast, others were working longer hours or taking second or third jobs to cover rising costs. Charities told us they were finding it hard to hold on to staff who could find easier work elsewhere for higher pay.
We heard concerns about the intergenerational effects of inflation. For example, older members felt an impact on their private pensions. Rising costs eroded their savings, leaving them to reduce the amount they drawback, or delay their retirement plans. Some had returned to work to bolster their incomes. That was made easier because of the high level of vacancies in some areas, although there were often complaints about the quality of work on offer, and rates of pay.
At the other end of the age spectrum, research by the youth forum and student attendees at panel events revealed the pressures on young people. More than half of those surveyed by the forum worried about their current earnings and future income prospects. Students, meanwhile, told us their loans were increasingly stretched even to cover just the basics. Some were taking on additional jobs or hours to supplement their incomes. Others were considering whether they could afford to continue their studies.
Footnotes
- Students share their experiences of the cost of living crisis at a citizens’ forum event at Leeds Trinity University.
Rising inflation led the Bank of England to raise interest rates throughout the year. The people we spoke to generally understood why raising rates would help to bring inflation down. But some questioned whether it would work given the main causes of inflation were higher energy prices and supply problems principally caused by Covid restrictions.
There was concern that households with mortgages would not be able to cope with rising interest rates. These worries increased significantly in the periods following the Government’s fiscal announcement in September 2022 and the reaction to it. This was especially the case for those approaching the end of fixed-term deals, which had often been set at very low rates.
Many attendees at citizens’ forum events wondered how younger mortgage holders who had not experienced rates at such levels before would be able to cope. And there were also concerns for the prospects of those hoping to get on the housing ladder for the first time. Unsurprisingly, the possibility of homeownership felt remote for many young people. In contrast, some older members had been able to pay off mortgages more quickly after building up savings during the pandemic. These people often felt relieved, or even lucky, but had sympathy for younger attendees, especially those not able to count on the support of the ‘bank of mum and dad’.
Those living in rented accommodation did not feel immune from the rises in interest rates. Many worried that rents would rise further as landlords faced higher mortgage servicing costs, or that their homes could be put up for sale if landlords decided to exit the buy-to-let market as it became less profitable.
As the year progressed, more participants were experiencing an income squeeze as prices continued to rise, and fixed-price energy deals expired. There was a general sense that people felt unable to control rising costs through their own actions. And this was increasing concerns about the future if prices of essentials such as fuel, food and housing costs continued to rise.
The rising cost of living has heightened members’ awareness of the state of the economy. Participants understood that the main drivers of inflation were higher energy prices resulting from Russia’s invasion of Ukraine and supply issues linked to Covid. But they also felt that Brexit had been a factor, along with businesses taking advantage of the inflationary environment to increase profit margins.
Footnotes
- The Bank’s Deputy Agent for Central Southern England Florence Hubert, right, talks to a citizens’ forum member at a panel event in Southampton.
They were very interested in what the Bank was doing to tackle rising inflation. Some people questioned the Bank’s earlier decisions, including on quantitative easing, which some felt might have contributed to rising inflation. Some members felt that interest rates had been kept too low for too long over a prolonged period since the global financial crisis of 2007–09. Others argued that the Bank should have acted sooner in the last couple of years when evidence was increasing that inflation was rising. Generally, however, people understood why the Bank took the actions it had. People recognised that low and stable inflation is vital for a healthy economy. And how high inflation can be particularly damaging if it becomes embedded and persists for a long time. In total, since December 2021, interest rates have risen from 0.1% to 4%. The Bank recognises that higher interest rates have a real impact on people’s lives. But raising interest rates will help to bring inflation down sooner, and make sure it stays low after that.
Impact of the rising cost of living on charities and community groups
Charities and community groups have been especially hard hit by the sharp rise in the cost of living. Many experienced an increased demand for their services. At the same time, their organisations faced rising costs. The combination of higher energy bills and pressure on staff costs has been so acute that some organisations told us they were fearful about their long-term future.
These organisations often provide lifeline services to the most vulnerable people in society. Over the past year the Bank met frequently with organisations across the UK providing services to those experiencing hunger, homelessness, unemployment, debt problems, mental health problems, and a variety of other challenges.
Footnotes
- David Roberts, Chair of Court of the Bank of England, talks to staff, volunteers and service users at the New Beginnings, Improving Lives community food store on Merseyside.
Many of these organisations relied on local authority funding and some had faced funding cuts. It became harder to raise donations as donors tightened their belts. And with more people working from home, raising funds this way became harder because workers were less likely to get together to raise money for charity. And there were fewer people in town and city centres to approach for support.
How we used the information we gathered
The information gathered from our outreach events directly feeds into policymakers. They use this information to inform the decisions they take on key policies such as setting interest rates.
Policymakers often attend events to hear these insights for themselves. Other Bank of England staff attending events share their reports and notes with teams around the Bank working in relevant policy areas. Ahead of every meeting of the Monetary Policy Committee, the network of Agents, who cover the regions and nations of the UK, present evidence gathered from their meetings with businesses. A summary of the findings from the outreach events is included in this.
A steering group chaired by the Bank’s Chief Economist Huw Pill, who sits on the Monetary Policy Committee, and Sarah Breeden, Executive Director for Financial Stability Strategy and Risk and a member of the Financial Policy Committee, oversees the citizens’ forum programme. A focus for the steering group is finding ways to ensure that the insights gathered from the outreach programmes are fed through to policymakers.
What our policymakers said
‘The citizens’ panels in Southampton, Edinburgh and Belfast that I participated in over the past year were invaluable in understanding how the cost of living crisis is affecting people’s daily lives. They helped me understand how the Bank’s policy response to above-target inflation is seen outside the ‘bubble’ of Threadneedle Street in which we work on a day-to-day basis. Not only did these forums give an insight into the impact of rises in the cost of living and interest rates increases, but they also developed our thinking about how the Bank can communicate more clearly and effectively to explain its decisions.’
Huw Pill, Chief Economist
Footnotes
- Chief Economist Huw Pill talking at a citizens forum panel event.
‘Understanding the economy and the financial system on the ground, as it affects people day to day, is always important. But it has been especially so this year, given increases in the cost of living and interest rates, and the stretch that brings for household finances. I find these events an invaluable way to dig behind data and headlines to understand people’s experiences in real time. I am extremely grateful to all who give their time to help us.’
Sarah Breeden, Executive Director for Financial Stability Strategy and Risk and member of the Financial Policy Committee
‘Taking part in events across the UK is critical to my role. The economic environment is changing quite quickly, and there have been a number of new challenges over the last few years – navigating a pandemic, supply-chain issues, rising interest rates, slowing growth and geopolitical risks, to name a few. It is therefore really important to hear a range of views across the country so that we can understand risks to financial stability. The Financial Policy Committee is very much focused on the pressures on households and businesses right now. The panel event in Bradford deepened my understanding of how the rising cost of living is affecting different types of households such as retirees, those working, parents or young adults who have just left education, as well as businesses, from small to large firms.’
Elisabeth Stheeman, member of the Financial Policy Committee
More information about our outreach programmes
The citizens’ forum allows the Bank to engage with members of the public across the UK. Anyone aged 16 and above is welcome to join the community, where they have access to events and the online Economy Hub. Panel events are hosted by the Bank’s Agent for the relevant region or nation, alongside a senior member of Bank staff. Since 2018, the Bank has hosted 66 events, and there are currently around 4,000 people in the citizens’ forum community.
Community forums allow Bank officials to hear from underrepresented and lesser-heard groups across the UK. Typically, the Bank works with a third sector organisation, such as a charity or community group, to hear from those who work in the sector as well as their beneficiaries and service users. Since 2017, the Bank has hosted more than 50 events where staff have met with around 1,000 charity workers and the people they support.
Footnotes
- Some of the members of the youth forum who worked with the Bank during 2022 on a visit to Threadneedle Street.
The youth forum was founded in 2019, and is delivered in partnership with the British Youth Council. It allows the Bank to hear from young people aged 16 to 25. The forum raises awareness about economic issues concerning young people. This year’s forum comprised of 25 representatives across the UK, who worked on projects related to monetary policy, climate change, digital currencies and financial education.
Panel events: what we heard across the UK
From February 2022 to February 2023, we held 10 in-person panel events in Belfast, Bradford, Bristol, Cardiff, Durham, Edinburgh, Falkirk, Liverpool, Manchester and Southampton, and two virtual events for members in Wales and Yorkshire. We also held three UK-wide virtual events and one in-person event for students at Leeds Trinity University.