It’s unacceptable that so many people in our country are locked out of the opportunity to reach a decent standard of living, says Ilona Haslewood.
For the last 10 years, JRF has worked with Loughborough University to ask members of the public what you need to have a decent standard of living, including taking part in society.
The things members of the public say are required for a decent living standard have remained largely similar over the past decade. What’s changed is that households on low incomes are now facing larger barriers to affording them.
What barriers are holding people back?
Budgets needed to pay for the minimum income standard have increased faster than inflation, but real incomes have stagnated. The way our economy and markets work – and political choices – are making it harder for families to make ends meet. The 2018 update of the Minimum Income Standard (MIS) shows clearly why we have a shared responsibility to make changes, so everyone in our country has the chance to a decent living standard.
MIS budgets on average have increased about a third in the last ten years, in contrast with the Consumer Price Index, which has increased about a quarter. This is mainly because the content of MIS baskets has been weighted towards key items such as energy, public transport and food, all of which have increased in price faster than CPI overall. Within this general trend, MIS budgets for some household groups have seen larger rises. For example, the cost of bus travel has increased by 65% since 2008, which has contributed to the near-doubling of transport costs in MIS budgets for working-age households (to around 20% of a budget), but not for pensioners, who travel for free.
Struggling to make ends meet
The further households fall below the MIS budget, the more they struggle to make ends meet. We know that this is both stressful and time consuming.
Just being able to go shopping and not stress. You know my big dream at the moment… and it is the smallest thing, just not having to calculate every single thing and how much it's all adding up to.
Public policy choices have negatively affected a large number of people on low incomes. Policies on taxation, social security, the minimum wage, support with childcare, and the availability and cost of social housing and public transport all make a difference to whether low-income households will have enough to reach a minimum decent standard.
Very few household types working on the minimum wage or receiving minimum benefits can now better afford MIS than in 2008. It is apparent, however, that some groups, such as pensioner couples, are still much closer to reaching MIS level than others, most notably single working-age households receiving minimum benefits. The introduction of the National Living Wage (NLW) for over-25s in 2016 significantly improved the earnings of working-age households, but not enough to push them above the MIS level. By its nature, the positive effect of the NLW has been largest for households who work more hours and have fewer children. On the other hand, freezing working-age benefits and cutting the Work Allowance in Universal Credit have negatively affected the earnings and incomes of many households, both in and out of work.
What the public say is part of a minimum decent living standard
MIS gives us continuing insight into the social norms of what people think is a necessity today.
Unsurprisingly, members of the public think that keeping up with technology is a necessity, without which we are likely to find it harder to do everyday activities and pay more for things. Over the years, people have identified the points at which norms gradually changed. In 2008, MIS budgets only included low-cost pay-as-you-go mobile phones and landlines for all households (computers only for families with school-age children to do homework); by 2018 cheap smartphones and laptops with internet connection were deemed essential for all households. People also thought that you should take advantage of this technology to make price comparisons when purchasing services such as gas and electricity, to get better deals. Similarly, working age couples without children recognised that, while not requiring a car, they could do the weekly grocery shopping online to save time and effort, and this also allows larger and more economical purchases to be transported.
Transport is a notable example of changing public perceptions of the availability of public services: cars were deemed unnecessary for all household types in 2008, but for families with children a second-hand car was thought to be a need by 2012. However, in 2018 even those households for which public transport remains the norm have a weekly allowance of £10 for trips by taxi, driven by the view that public transport is not always an option.
Changes in MIS budgets also show that new priorities can emerge in the public view, taking on board advice from government and other authoritative sources. For example, pensioners’ budgets, which started off smaller in 2008, have gradually approached working-age households’ over the years, in part due to people assigning a higher amount for social participation. They reasoned in 2018 that it was important for pensioners' mental health and well-being to be able to get out and about, socialise (including eating out) and to have a break from their everyday environment.
You get depressed and everything else, and you’re locked in your own environment and then you become an introvert then, because you don’t go out and everything else.
Similarly, in 2016 parents added the option of nursery care to budgets instead of only a childminder, despite the greater and increasing cost. This was done on the grounds that nursery is an important early education opportunity that every family should have access to where it is appropriate in supporting a child's development.
I think it is what you feel is right for your child… and what suits your child best as well because every child has different needs… it is not just about always what is the cheapest, it is what you feel…
What can be done?
Despite these shifts in social norms, the main reason why many families on low incomes cannot afford the necessities is because the cost of these has grown faster than their income.
As a first step, the Government can put things right for struggling families by restoring the Work Allowance under Universal Credit to their pre-2016 level. This would allow parents to keep more of their earnings and ease the constraints the cost of living is placing on families’ ability to build a better life and reach a decent standard of living.
- JRF, in partnership with the Centre for Research in Social Policy at Loughborough University, has published annual updates of the Minimum Income Standard (MIS) research since 2008.
- Our online Minimum Income Calculator allows the public to calculate the annual earnings they need to reach MIS, tailored to their own household circumstances.