At least eight million living ‘on inadequate incomes’

By The Press Association19th January 2015News EnglandAusterity, Families, News England, Poverty / Austerity

Almost two out of five families with children are struggling to make ends meet and do not have enough money for a socially acceptable standard of living, according to a new report.

The Joseph Rowntree Foundation (JRF) estimated that at least eight million parents and children are living on incomes below what was needed to cover a minimum household budget.

There has been a widening gap in income “inadequacy” since the recession, an analysis found, with lone parents and single breadwinner families facing particular pressure.

Around 71% of lone parents live on inadequate incomes, up from 65% since the 2008/9 recession, said JRF.

Cuts to benefits and tax credits and a real-term fall in wages were behind the growing gap between the incomes of families with children and the income they need, said the study.

The research group called for changes to Universal Credit, more employers to pay the Living Wage and reforms to make sure people on low incomes don’t pay more for essential goods and services than better-off households.

Katie Schmuecker, policy and research manager at JRF, said: “There has been a turnaround in who is suffering most as a result of the economic crisis and government measures to reduce the deficit. While last year’s monitoring report showed a sharp rise in young single people struggling to make ends meet, this year’s report shows a rapid widening of the gap between the incomes and costs of families with children.

“Stagnant wages, cuts to in and out-of-work benefits and sharp rises in the cost of essential items over several years have taken their toll upon the ability of families with children to secure a decent living standard.

“Without action by the Government and employers to address this group as part of a wider anti-poverty strategy, this trend is likely to have serious consequences for the next generation.”

Donald Hirsch from the University of Loughborough, co-author of the report, said: “Our tracking of what has happened to people on the lowest incomes shows just how much ground they need to make up in order to restore pre-recession living standards.

“Nearly four in 10 families with children now have incomes that are not high enough to afford a minimum basket of essentials according to our research into what the general public define as adequate.

“A pause in inflation, influenced by the drop in oil prices will make it easier to reverse recent trends, but it will take several years of rising real wages, while maintaining support through tax credits and Universal Credit, to reduce decisively the number of families with inadequate incomes.”

Alan Milburn, who chairs the Social Mobility and Child Poverty Commission, said: “The Joseph Rowntree Foundation’s research is further evidence of the impact stagnating wages and fiscal consolidation is having on living standards of poor families.

“Despite very strong employment growth and record low worklessness, the number of people in families with children who are unable to attain what the public believe to be a minimum standard of living has increased by 2.2 million – more than a third – since the start of the recession, with the majority of the increase in working households.

“Tackling this will require the next administration to take action to recouple earnings growth with economic growth, forging a new settlement to make Britain a Living Wage country by 2025 and ensuring that the working poor are protected from the impact of continued austerity in the next parliament.”

A Government spokesman said: “As acknowledged by the Joseph Rowntree Foundation themselves, the Minimum Income Standard is not a measure of poverty.

“Items which are considered to be a basic requirement change as people’s expectations change over the years and include takeaways, a salary of £27,000 per person and money for taxi hire.

“The reality is that since 2010, 300,000 fewer children live in relative poverty and the number of children growing up in workless families is at a record low.

“The Government’s long term economic plan is working, with more people in work than ever before and wages now rising faster than inflation. UK income inequality is now lower than when this Government came into office and the recovery is being felt across the country.”

Mike Kelly, head of Living Wage at KPMG, said: “Childless working households are the worst affected when it comes to low pay – and for them it’s getting worse, not better.

“For far too long, low-income households have been struggling to make ends meet and for young people who are trapped in low-paid jobs, with little prospects, it’s an even bleaker situation.

“The fact remains that more than five million people are earning less than they need to live on.

“Too many families still struggle to afford the basics, meaning we face a scenario that, in 2015, should have long been consigned to the footnotes of history.”

The chief executive of single parent support charity Gingerbread, Fiona Weir, said: “Cuts have seen the UK’s two million single parent families lose more from tax and benefit changes than any other household type and, as this research finds, the strain is showing.

“Working poverty among single parent families is on the rise and child poverty is predicted to grow.

“Bringing forward much needed support with childcare costs would help families struggling to make ends meet, as would ensuring in and out of work benefits keep pace with the cost of essentials.”