Dlignite. It is fundamental to who we are and our place in society. One way to deprive people of the possibility of leading a dignified life is to deprive them of the means to provide for their material needs. He is unworthy of having to turn to food banks to feed his children; wear two coats indoors against the cold; argue against eviction due to inability to pay rent; deny children a birthday party because of the cost. The poorest people in the UK are about to experience a new wave of such indignities. To these psychosocial aggressions will be added the physical misdeeds of poverty.

My life’s work has been to study the relationship between social conditions and health inequalities. In the UK, a decade of austerity has damaged public health and worsened health equity. But the cost of living crisis – and the Chancellor’s failure to address it – is unprecedented, with its threats to the nation’s health and well-being. A 54% increase in the energy price cap will now mean that an average household will pay £1,971 a year for gas and electricity, along with council tax, water bills and the car tax is all going up. In October, a further rise bringing the annual energy bill to £2,300 is expected.

According to the Resolution Foundation, the typical working-age household will see a 4% drop in income, or £1,100, in 2022-23. Surely, one might think, 4% is barely noticeable, barely a matter of life or death? That’s if you’re on the fringes.

The Resolution Foundation gives the example of a single parent, with one child, working 20 hours a week at a low to average wage. In September 2021, this person could have had an income of £18,265. The hasty removal of the Universal Credit increase will have reduced income by £1,040. The increased cost of living until September 2022 will result in a further reduction of £1,198 in earnings. With the Chancellor’s changes to taxes and benefits and pay rises, this person’s income in September 2022 will be £17,681 – £584 less than it was a year earlier. (In contrast, a couple working full time, both at the median wage, will see their net income fall by 1% to £392.)

Inflation of more than 8% and the government’s inability to deal with the crisis in the cost of living of the poorest – a single unemployed person will see his income drop by 15% – will cause an additional 1.3 million people to fall, including 500,000 children. the threshold of poverty.

When considering the health and well-being effects of this decline in income, there are at least three important considerations: the incremental effects of losses versus gains; relative and absolute poverty; and the value brought to people by social assistance and public services.

If adding £500 to annual household income improves well-being, as the evidence shows, what is the point of removing £500? According to influential research by Daniel Kahneman and Amos Tversky, the negative effect of a loss, in general, is twice as great as the positive effect of a similar gain. It is of fleeting intellectual interest whether taking a few houses and yachts away from an oligarch hurts his health and well-being more than giving him a billion or two improves him. What is far more concerning is what scrapping £584 a year does to the life of someone struggling to get by. An extra £10 a week might help a bit – save for a few weeks and buy your child a new pair of trainers. Taking £10 off a week can mean not just having to choose between heating and eating, but going without both. And it will be bad both physically and psychologically.

A key insight is the amount of intellectual energy involved in being poor. Scarcity – in the words of Sendhil Mullainathan and Eldar Shafir’s book, Why Have Too Little Means So Much – reduces intellectual bandwidth. If you have to worry about whether you have food for dinner that night and for rent on Friday, you have little space to think about anything else. Such stress can permanently affect the development of your children. A related concept is that it is not bad choices that lead people to be poor, it is poverty that leads to “bad” choices.

An ongoing scientific and practical question is the importance to health of absolute poverty – not having enough money to meet basic needs – versus relative poverty – being poor relative to others. The easy answer is that both are essential for health. In our various reports, one of our six recommendations was that everyone should have enough income to lead a healthy life. Income was not our only recommendation, but it is intertwined with many of the others: child development; adequate food and nutrition; and decent housing. Food Foundation figures show that for households in the bottom 10% of household income to follow healthy eating advice, they would need to spend 74% of their income on food. It is not ignorance or the inability to cook that is the problem. It is poverty.

But relative income is also important. According to Amartya Sen, relative inequalities of income refer to absolute inequalities of ability. An idea that goes back to Adam Smith is that the essentials of life include everything necessary to take your place in public without shame. It’s about having agency, a sense of self-worth, and participating in networks of family and friends. Lack of income threatens these fundamental components of life in society and damages mental and physical health.

The third issue is captured by the movement for universal basic services. If public transport were free at the point of use, social housing was available and affordable, home heating affordable, nutritious food available at no extra cost, then the relative lack of individual income would be less harmful to health. In the UK, public services have been cut dramatically, and regressively, by a decade of austerity. The failure of utility allowances to rise in line with inflation in the recent spring statement will mean further pressure on public sector wages and the delivery of public services.

In the decade before the pandemic, health improvements in the UK slowed dramatically, inequality grew and the health of the poorest people deteriorated. All of this has been amplified by the pandemic. If we do not address the inability of people to meet their basic needs, with adequate income and services, we risk inflicting a humanitarian calamity on one of the richest countries in the world.