Consumer incomes ‘a third too low’

Working families need their incomes to be a third larger than they actually are to achieve a decent standard of living, according to a new report.

Research by the Joseph Rowntree Foundation has concluded that the typical couple with two children needs £36,800 a year to make needs meet, £5,000 more than in 2008. For single people the figure is £16,400 and a lone parent £23,900. This is described as the Minimum Income Standard (MIS).

According to the study, a quarter of the UK population live below the MIS – three million more than in 2008.

Large cost increases facing families include not just general inflation in areas such as petrol and domestic fuel, but also some areas specifically affecting households with children, like childcare costs, which have risen by a third in the past four years.

In addition to this, cuts to child tax credits have lowered incomes and increased public transport costs have also had a negative impact.

Chief executive of the foundation Julia Unwin said: "Families have a monumental task trying to earn enough to get by. Parents facing low wages and pressure on their working time have little prospect of finding the extra money they need to meet growing household expenses."

And the organisation's programme manager for poverty Chris Goulden said: "The National Minimum Wage combined with in-work benefits leave families well short of reaching this [minimum] standard."

Families on incomes below what they need to make ends meet may find they struggle badly to pay off any debts they may have accumulated, with this likely to have grown as the economy has struggled and inflation has persisted.

Reflecting on the report, chief executive at Family Action Helen Dent said reaching the MIS is likely to become "an impossible dream for many families" as the recession continues and austerity cuts take their toll.

Posted by Paul Thacker