Brits facing ‘severe drop’ in living standards

A "sustained and unprecedented" fall in living standards has seen more working families fall below the poverty line. 

The annual Monitoring Poverty and Social Exclusion 2013 study, published by the Joseph Rowntree Foundation (JRF), shows for the first time in the report's history, there are more people with jobs (6.7 million) struggling financially than workless and retired families (6.3 million).

Despite the fact around 13 million are in poverty, the study discovered the range of advice and options open to them is getting increasingly "threadbare". 

So severe has the fall in median income been over the last two years that all of the gains made in the previous decade have been wiped out. For example, one on six have claimed Jobseekers' Allowance at some stage in the last 24 months. 

Working age adults without dependent children are suffering more than any other group. The proportion of low-paid jobs increased in 2012 – three-fifths are being done by the over 30s – and over five million are being paid below the Living Wage. 

Young adult unemployment has peaked at 21 per cent, despite the fact unemployment among the whole population is actually falling. 

Poverty line

Julia Unwin, chief executive of JRF, said: "This research shows millions of people are moving in and out of work but rarely out of poverty. Hard work is not working. We have a labour market that lacks pay and protection, with jobs offering precious little security and paltry wages that are insufficient to make ends meet.

"While a recovery may be gathering momentum in the statistics and official forecasts, for those at the bottom, improving pay and prospects remain a mirage. Recent economic improvements do not outweigh the damage inflicted during the downturn to the incomes of the poorest people across the country."

She is calling on the government to do more to reduce the effects of poverty, as it is not only damaging to individuals, but also threatens the economic prospects of the country as well. 

Household pressure

Peter Kenway, director of the New Policy Institute, which wrote the report, stated that poor households have never had it so bad since the formation of the welfare state. With benefits on a "downward spiral", he does not expect this situation to change anytime soon. 

According to the study, around 400,000 have suffered as a result of the under-occupation penalty – commonly known as the bedroom tax. Two-thirds of these families were already in poverty and so cannot afford to lose more money. 

This demonstrates just how important it is for people to stay on top of their finances. However, if consumers cannot keep up with their repayments, a debt management solution could be ideal for them.

The arrangement allows them to restructure their unsecured debts, reducing monthly repayments in the process. Typically, creditors will also agree to a freeze on any further interest, which will offer people vital breathing space. 

By Amy White