CommonSpace analyses a new report by Joseph Rowntree Foundation on the Minimum Income Standard, an assessment of what is needed to have an acceptable minimum standard of living in the UK
ARE things getting better? The Joseph Rowntree Foundation has published a report on minimum income standards from 2008-2018, and it shows that for those at the bottom and middle of the income pile seeking to have enough to live a decent life, the situation is no better than 10 years ago when the Great Recession began, and in many ways worse.
The report looks at what income is required for a person/family to have an acceptable minimum standard of living. We are talking about the basics here – having enough food, clothing, warmth and being able to access work and partake in cultural activity.
CommonSpace has analysed the report and picked out some key points which show just how tough it is for an increasing number of people in the UK to live a decent life and why this is happening.
Minimum income standards (MIS) are harder to meet on a median income – the middle point of all incomes in the UK – than 10 years ago, for every group other than couples with two children, who are just marginally in a better position to have a a minimum acceptable standard of living than a decade prior.
For the bottom third of income earners who fall significantly below the median household income – £27,300 – the ability to have a minimum acceptable standard of living quickly becomes unachievable. The majority of households below MIS have someone in work, while the proportion of working households with disposable incomes below MIS has risen since 2008, from 18 per cent to 23 per cent.
As the table above shows, life has got much harder for those on benefits in the past 10 years, with benefits providing just one-third of what is required for meeting the minimum income standard for a single person, and just 58 per cent for a couple with children and 60 per cent for a lone parent. The state pension previously provided enough to meet the MIS, but are now 10 per cent short of what is required. Austerity combined with rising living costs had its toll.
One area this has affected is the appeal for parents to work, with low wages and rising childcare costs meaning there is now no economic advantage for a low-waged parent to move from part-time to full-time – neither option raises sufficient income to meet the MIS (see graph below).
One of the problems with social security spending allocation is that it has been tied to CPI inflation, which has risen 25 per cent since 2008, while public transport public transport has risen 81 per cent, domestic fuel 45 per cent and food 27 per cent. Real inflation for those on low-incomes is therefore outstripping the government basis for assessment.
The old inflation indicator, RPI, is up 37 per cent since 2008, a sizeable difference, and JRF found that “it is not clear that CPI does give a superior estimate of price influences on minimum costs.”
One of those rises in cost stands out in particular – public transport. Specifically, the rise in the cost of bus travel, dominated by local and national private-sector monopolies, in the past decade has been enormous.
“Bus travel is 65 per cent more expensive in 2018 than in 2008, and households feel you can rely on it less, as services deteriorate,” JRF found, continuing: “Transport now comprises about 20% of a minimum household budget, compared to around 10% in 2008.”
The affect of this has been to change expectations about the importance of cars to meeting a minimum acceptable standard of living, with those, especially with children, saying cars are now essential due to rising public transport costs being the biggest change to JRF’s methodology. The taxi budget has also grown due to “the limitations of public transport services”.
As low-income families are increasingly priced out of public transport, the cost to the environment and to public infrastructure from more cars on the road grows.
Picture courtesy of Nick Rice