Read: Report calls for government-backed Rainy-Day Savings Scheme to protect from cost-of-living shocks

Employers should automatically enrol workers into a government-backed ‘rainy-day’ savings scheme to protect against future cost-of-living shocks, a report from a leading group of progressive businesses will recommend today. 

The Purpose Coalition’s Cost-of-Living Taskforce calls for the government to adapt the recently introduced workplace pensions scheme - which sees joint contributions from employer, employee and government - so workers can access cash at crisis points during their working lives, rather than their savings being locked up until they retire. 

The Cost-of-Living Action Plan’s author, former Labour MP and government adviser Lord Walney, said the recommendation to change the rules of automatic enrolment pensions scheme could significantly boost people’s resilience to a future cost-of-living squeeze by allowing workers, businesses, and government to contribute jointly to the crisis fund.

The Rainy-Day Savings Scheme is one of five ideas to tackle the cost of living crisis that focus on moving from immediate crisis support to building up longer-term resilience. The plan from the group, founded by former Conservative cabinet minister Rt Hon Justine Greening and made up of leading purpose-led businesses, universities, local authorities and health trusts, also recommends transforming access to cost-of-living support by overhauling the government’s inadequate information systems, tackling the mental health pressures that higher cost-of-living has inflicted on students, and more financial support for childcare.

The Action Plan also calls for a Royal Commission on Personal Energy Security which would be tasked with examining the consequences of giving households the right to an unbroken supply of gas and electricity, making it illegal to cut off someone’s supply. 

Crossbench peer Lord Walney, chair of the Purpose Coalition’s Cost-of-Living Taskforce, said: “Politicians have understandably been focused on how to give people immediate help in this cost-of-living crisis but we must also consider what businesses, government and individuals can do to build up resilience against future economic shocks.

“Building on the workplace pension scheme auto-enrolment mechanism so people can build up an additional savings pot alongside their pension to help at times of financial crisis could create a powerful tool to ease future crises, without households falling into hardship and the state taking on unsustainable debt.

“We are grateful for the support of all the members of the Purpose Coalition who have contributed to the ideas set out in our Cost-of-Living Action Plan.”

The former Labour MP and Downing Street adviser added: “The socially responsible businesses who make up the Purpose Coalition are working hard to improve conditions for their colleagues, customers and the communities they serve. We are proud to set out in our report examples of how they are making a difference and ideas for new partnerships that can harness the power of public and private sector innovation to protect people.”

Other recommendations propose that the Government create a centralised platform on the Government’s ‘Help for Households’ website to give users access to unique information on the cost-of-living support available to them; the exploration of ways to share learning and resources on mental health support for students, with businesses and other private sector organisations being encouraged to financially support university hardship funds for students; a reform of childcare with the Government making childcare costs tax deductible for children over 3 months old, alongside an increase in the ceiling for eligibility from £100K to £150K; and a large scale review into the personal energy resilience of households to consider long-term solutions to the deficiencies in the current prepayment meter installation system and the problem of voluntary disconnections. 

The report is being launched in Glasgow at the Wise Group, the UK’s leading relational mentoring social enterprise. The Wise Group Fuel Poverty Report 2023: Lifting People out of Fuel Poverty In the United Kingdom uncovered disturbing facts about the impact of fuel poverty, especially on vulnerable people, and it has contributed to the research in the Cost-of-Living Action Plan. Half of those eligible for fuel vouchers are visiting foodbanks, four in five single parents said their mental health had been impacted, double that of couples with children, over two thirds of people on prepayment meters said their physical health had been impacted and over 80% of disabled people said their physical health has deteriorated as a result of rising bills. 

Read the full report at costoflivingtaskforce.org.