Almost a third of households in the UK have an annual income that is less than they need to afford a decent standard of living, according to new research from the Joseph Rowntree Foundation (JRF).
Analysis carried out by the Centre for Research in Social Policy at Loughborough University, on behalf of JRF, found the incomes of 30% of UK households (19 million people) fall below the Minimum Income Standard (MIS).
This essentially means they take home less in wages and state benefits than the public believe is needed to maintain a decent living standard. Researchers discovered that 75% of children from single parent households, 29% of working age adults, and 15% of older people now live below the MIS.
With wage growth still lagging behind inflation, the think tank warns that cuts to the benefits system will leave low-income families even more worse off, despite tax changes and the new ‘National Living Wage’ (NLW).
By 2022, families with only one adult in work will lose more from cuts to Universal Credit and other benefit changes than they gain from the NLW.
Overall, all UK adults on the NLW will still be earning significantly less in 2022 than the public say is needed to make ends-meet.
Key findings from the study include (as quoted):
- A single person without children will be £1,150 per year better off, but will still be £800 per year short of MIS.
- A family of four with two parents in full-time work will be £1,100 per year better off. They will still fall £450 short of MIS.
- A couple family with one parent in work will be £350 per year worse off, leaving them £4,500 away from what they need.
- A single parent working full-time will be £700 per year worse off, leaving them £3,350 away from MIS. They will be £1,450 worse off if they work part-time, and will fall £4,500 short of MIS.
- All households who are out of work will be worse off in 2022. Single people will be £7,300 short of MIS, up from £6,850 today. A couple with two children will be £11,000 short, up from £10,300 today and a lone parent will be £8,700 short, up from £8,000 today.
Campbell Robb, Chief Executive of the JRF, said: “People across the UK are struggling to afford a decent living standard, even if they have a job.
“Families with only one parent in work are facing particularly hard times, with changes to Universal Credit and other benefits meaning that they are in a worse position even after increases to the National Living Wage.
“Next week’s budget is an opportunity to help struggling families. By ending the benefit freeze and reversing cuts to the amount workers can earn before their benefits are reduced, the Government could make work pay for low-income households.
“Without this action, many low-paid families will find it impossible to improve their living standards for at least the next five years.”
Donald Hirsch, Director of the Centre for Research in Social Policy at Loughborough University, added: “These figures show that there are a wide range of losers from present policies, with some of the worst off families projected to have to live on barely half of what they need.
“A few families will gain enough from the higher National Living Wage to offset cuts in benefits and tax credits. These however are the families who have the smallest shortfalls in their income, because they have two working parents.
“In-work benefits were designed to protect family incomes against hard times, and many of those they have helped are those with fewer opportunities to earn, including lone parents who only have one wage coming in.
“As Universal Credit comes in, it will need to improve what it offers to such families if a steep rise in child poverty is to be avoided.”