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“How much money do you need for an adequate standard of living?”
That is the question posed every year by the Joseph Rowntree Foundation – and every year the organisation calculates how much people have to earn – taking into account their family circumstances, the changing cost of these essentials and changes to the tax and benefit system – to reach this benchmark.
A lone parent with one child now needs to earn more than £27,100 per year – up from £12,000 in 2008. A couple with two children need to earn more than £20,200 each, compared to £13,900 each in 2008. Single working-age people must now earn more than £16,200, up from £13,500 in 2008;
Despite social and economic change, the list of goods and services different families need to live to an adequate level is very similar to that of the original study in 2008 – but people’s ability to afford them has declined. Overall the cost of a basket of essential items has risen by a massive 28 per cent over six years – much higher than the 19 per cent rise claimed by the official Consumer Price Index – while average wages have increased by just nine per cent and the minimum wage 14 per cent;
Increased tax allowances have eased the pressure somewhat for some households, but the freeze to child benefit and ongoing cuts in tax credits have outweighed this for low-earning families with children.
Out-of-work benefits have fallen further and now provide just 39 per cent of what single, working-age people need to reach a Minimum Income Standard.
On the other hand, pensioner couples who claim all their allowances receive 95 per cent of the amount required.
The bottom line is that the Conservative-led government has been hammering the working poor and people on benefits, while claiming to be helping them. The minimum income necessary for an adequate living standard, according to JRF research, is no less than two-and-a-half-times what people on benefits receive. That is an appalling disparity in the sixth-richest country in the world.
It also creates a danger that more people will look to loan suppliers like the government’s favourite (Wonga) for short-term help – at the cost of going into disastrous long-term debt.
Slow earnings growth and price increases have made all households worse off on average, relative to the MIS, the report has found.
The conclusion is a disaster for the Coalition’s “hardworking” people: “In the past six years the more important determinants of whether low-income households can afford the minimum budget have been the increasing cost of living relative to earnings and benefit cuts for households in and out of work.
“For working families with children, if these cuts continue, the opportunity to reach an acceptable living standard may not improve, even as wages start rising again in real terms.”
And the Conservatives have the cheek to use the slogan “For hardworking people”.
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