2022 set to be the ‘year of the squeeze’. How will dentistry be affected?
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- Published: Friday, 31 December 2021 13:03
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According to new research from the Resolution Foundation, 2022 is set to the ‘year of the squeeze’, with real wages set to be no higher next Christmas than today, and families face a typical income hit of around £1,200 a year from April as a result of tax rises and soaring energy bills. The question many practices are asking is how this will affect demand for dentistry, especially high-cost items provided in private practice.
The Resolution Foundation[i] has published its latest quarterly Labour Market Outlook, which looks ahead to how workers and families will be affected by the big economic shifts in 2022. It makes gloomy reading.
It says 2022 will be defined as the ‘year of the squeeze’ for family budgets, with inflation set to peak at 6% in Spring 2022 and pay packets stagnating as a result. Real wages are on course to be just 0.1 per cent higher at the end of 2022 than at the start.
Although the 6.6% rise in the National Living Wage next April should protect the lowest earners from shrinking pay packets, by the end of 2024, real wages are set to be £740 a year lower than had the UK’s pre-pandemic pay growth continued.
The peak of the squeeze will come in April, which the Resolution Foundation describes as being a cost of living ‘catastrophe’ as energy bills and taxes rise steeply overnight.
A typical energy bill rising by around £600 a year. This rise will fall disproportionately on low-income families as they spend far more of their income on energy.
Higher-income families will be disproportionately affected instead by rising tax bills in April. The average combined impact of the freeze to income tax thresholds and the 1.25% increase in personal National Insurance contributions is £600 per household. For families in the top half of the income distribution, the NI rise alone will raise tax bills by £750 on average.
Torsten Bell, Chief Executive of the Resolution Foundation, said: “2022 will begin with Omicron at the forefront of everyone’s minds. But while the economic impact of this new wave is uncertain, it should at least be short-lived. Instead, 2022 will be defined as the ‘year of the squeeze’, with prices surging and pay packets stagnating.
How will practices be affected by the ‘squeeze’?
Any squeeze on patients’ disposable incomes is bound to have an effect on their discretionary spending which would include much of private dentistry – implants, specialist services such as endodontics, adult orthodontics and treatments involving complex laboratory work.
On the other hand, people who can afford such treatments, may well be able to afford to pay a little extra in fuel costs and tax, with their salaries continuing to increase. What may be more significant would be an increase in other calls on their disposable income, such as overseas travel and foreign holidays, which have declined as a result of Covid, but which may recover.
At times like this in the past, many practices have sought refuge in NHS dentistry, but it is no longer a safe haven, even less so with the requirement to prioritise those needing urgent care. More NHS work does not mean more funding, rather less likelihood of clawback – and all at a time when there is a shortage of associates, staff having to isolate because of Covid and patients showing reluctance to attend practices for routine visits.
A report earlier in December from Healthwatch England[ii] said that lack of access to NHS dentistry had ‘exploded’ as an issue over the last 18 months, whilst pointing out that we are the only part of the NHS that receives a lower budget in cash terms than in 2010.
Whilst this situation remains, and it shows no signs of improving, demand for private dentistry will grow, ‘squeeze’ or no squeeze. The transition from NHS to private dentistry will continue, with practices reducing their reliance on the NHS and many handing back their contracts.
The move will not be so much towards the cosmetic, complex work, but an increased demand for affordable private family dentistry.
[i] The Resolution Foundation describes itself as ‘an independent think-tank focused on improving the living standards of those on low-to-middle incomes.’ www.resolutionfoundation.org
[ii] What people have told us about NHS dentistry – Healthwatch England – December 2021, www.healthwatch.co.uk
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