Business

A third of UK lives on inadequate income, says think tank

  • 15 February 2017
  • From the section Business
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Nearly a third of the population of Britain is living on an "inadequate" income, according to research by the Joseph Rowntree Foundation (JRF).

In 2014-15, it said that 19 million people were living on less than the Minimum Income Standard (MIS).

It said the problem was that household costs have been rising, while incomes have stagnated.

The government has already promised to tackle the issue, after Theresa May identified those "just about managing".

It said it was taking "targeted action" to raise incomes.

The MIS is set by experts at Loughborough University, and is based on what members of the public think is a reasonable income to live on.

Although the precise level depends on individual circumstances, a single person renting a flat outside London is said to need to earn at least £17,300 a year to reach the MIS.

For a working couple with two children, living in social housing, each of the individuals needs to earn £18,900 a year.

In other words a couple could be earning £37,000 jointly, and still count as being below the MIS threshold.

Poverty

Among the 19 million said to be below the MIS are six million children, representing 45% of all children in Britain.

There are also 1.8 million pensioners, representing 14.6% of the age group.

The figures are up from 15 million, or 25% of the population, six years previously.


The report warns that many of the families that are just about managing are in danger of falling into poverty.

That is despite record levels of employment.


'Money is always in the background'

Lynn Williams and her husband Derek live in Glasgow. They class themselves as "just about managing".

They receive some disability benefits, a small income from a works pension, and Lynn works part-time.

But they only survive by dipping in to savings.

"We do worry about money constantly; it's always in the background," says Lynn.

"There's only so often your savings can be dipped in to. But we are lucky. Other people can't even afford to put their tumble driers on."


The JRF said that the price of a minimum basket of goods had risen by up to 30% since 2008, while average earnings had risen by half that amount.

However, more recent figures suggest that wages have been rising faster than inflation for more than two years.

Average weekly earnings have risen faster than CPI inflation every month since October 2014, according to the Office for National Statistics.

But many expect wages to fall below inflation again in the months ahead.

"This could be a very difficult time for just-managing families as rising inflation begins to bite into finely-balanced budgets," said Campbell Robb, the new chief executive of the JRF.

"The high cost of living has already helped push four million more people below an adequate income, and if the cost of essentials such as food, energy and housing rise further, we need to take action to ease the strain," he said.


Minimum Income Calculator

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Click here to see what the Minimum Income Standard is for your type of household.


Wage growth

However the government said it was taking "targeted action" to raise incomes.

It said that last year the lowest paid saw wages rise by 5.6% in real terms, the biggest increase since records began in 1997.

And it pointed out that the National Living Wage would go up to £7.50 an hour from April.

"We're determined to build an economy that works for everyone and we are taking decisive action to help with the cost of living," said a government spokesperson.

"A million workers have had a pay rise thanks to our National Living Wage, and we have delivered the fastest wage growth for the lowest paid in 20 years, taken millions of people out of tax altogether and frozen fuel duty for seven years in a row."

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