Living standards

People in general have become much better off in the last 35 years, says a think-tank analysis, with household incomes more than doubling. But although this extra wealth has been shared among all family types, it has been accompanied by a very big increase in inequality.

Researchers at the Institute for Fiscal Studies marked the Diamond Jubilee by looking at changes in incomes and spending since 1977 – the year of the Silver Jubilee.

A trade union analysis has found that the cost of living has been going up faster for poorer than for richer households.

The Trades Union Congress says consumer price index inflation for the poorest 10 per cent of households in February 2012 was 4.1 per cent – compared with 3.6 per cent for middle-income households, and 3.3 per cent for the richest 10 per cent. The poorest households spend a larger proportion of their income on food and utility bills – the prices of which have been rising faster than headline inflation. For example, they spend 17 per cent of their income on food and non-alcoholic beverages, the prices of which rose by 3.7 per cent in February 2012. By contrast, the richest households spend just 10 per cent of their income on food and are therefore less exposed to these rising costs.

Source: Press release 10 May 2012, Trades Union Congress

Current government policy on social justice hinges on the claim that there are 120,000 ‘troubled’ families in Britain but this is deeply flawed, argues Professor Ruth Levitas in There may be ‘Trouble’ Ahead: What We Know About Those 120,000 ‘Troubled’ Families (PSE: UK, policy working paper 3). The government programme defines ‘troubled families’ as ‘characterised by there being no adult in the family working, children not being in school, and family members being involved in crime and anti-social behaviour’. But the 120,000 figure derives from households experiencing multiple deprivations, with no evidence that they are involved in crime or anti-social behaviour. Levitas, a member of the PSE: UK research team, comments:

Households on low-to-middle incomes would not see their disposable income approach pre-recession levels until 2020 at the earliest, concludes the Resolution Foundation in their report, Squeezed Britain: The Annual Audit of Low-to-middle Income Households. The report examined the experiences of working-age adults with low-to-middle incomes across the themes of incomes, work, budgets and housing. The report finds that there are 10.1 million working-age adults with low-to-middle incomes in the UK, living in 5.8 million households, located in deciles 2–5 of the working-age income distribution. These households are primarily working, and therefore largely independent of means-tested state support. The report finds that the living standards of low-to-middle income Britain have been faltering: