Retired Roy Davies lives with his wife Hazel and sons Mark, 26, and Adam, 11, in Olive Lane, Darwen.

He said that the credit crunch had hit his family hard.

Mr Davies, 61, who is a Blackburn with Darwen councillor and a former factory shift manager, said rising costs had made his family watch their budget more than ever before.

He said: “We always have a family holiday abroad to Spain or America but this year we went to a caravan in Cornwall.

“The normal treats like a weekend trip to seaside resorts Blackpool or Fleetwood have been stopped and we aren’t going out for meals like we did in the past.”

He said that the family’s weekly shop is now done at budget supermarkets such as Netto or Aldi in Blackburn.

He also said that to keep utility bills down he makes sure that no appliance in the house in ever left on standby.

Mr Davies added: “I am lucky because I own my own home but the rising costs of living have hit everyone hard.

"In my job as a councillor I meet so many people who are just struggling to make ends meet. It is such a worry for everyone.

“I think that the problems are likely to continue for 12 to 18 months and we will have to continue to tighten our belts for a while longer yet.”

Paul Rosson, director of financial services at Cassons chartered accountants and business advisers, Haslingden, warned that interest rates meant that many families’ mortgages would be expensive for some time to come.

He said: “At the moment the Bank of England base rate is 4.5 per cent but economists are predicting it could drop to between 2.5 per cent and 3 per cent over the next year which could mean significantly cheaper loans.

“I suspect, however, that fixed rate mortgages will be expensive for some time.

“Tracker mortgages will become cheaper, but banks and building societies are charging higher margins on new deals and will be very selective about who they lend to.”