Put cost of living at heart of Budget for growth and fairness

Next week the Chancellor will present what she described earlier this month as a ‘Budget for growth with fairness at its heart’ to ‘deliver strong foundations for our economy’. Households are the foundations of our economy, and ensuring they can afford the basic essentials of daily life is right, fair, and vital to keep our economy strong. A family that is hungry, unable to heat their home or afford essential journeys, can’t be at their most productive in the workplace or make their most active contribution to society.

However, this is the reality facing millions of households across the country, with new evidence from JRF finding that 7.1 million low-income households have gone without essentials in the last 6 months. The depth of hardship is particularly severe for families with 3 or more children, with around 7 in 10 having skipped meals or gone hungry in the last 30 days.

7 million households still can’t afford essentials

JRF has been tracking the impact of the cost of living crisis on low-income households for the last 4 years, through a large-scale, twice-yearly bespoke survey of at least 4,000 households in the bottom 40% of incomes, carried out by Savanta.

Our latest survey, carried out 17 October - 7 November 2025, finds 60% of low-income households went without essentials in the last 6 months. That is equivalent to 7.1 million households across the UK, 1 in 4 of all households. On average either your household, or the families next door, are unable to afford essentials or going hungry.

7 million households were unable to afford essentials when we last ran the survey in spring 2025, and autumn and spring 2024. The number has been 7 million or higher for four consecutive years. The persistence of this hardship is concerning but not surprising.

The rate of inflation has come down from eye-wateringly high rates in 2022, but prices remain far higher than before the pandemic. Meanwhile, with very low wage growth and benefit levels bearing no resemblance to what people need to get by (Universal Credit is set to rise, but not by enough), income from work and benefits falls short of what people need to live with dignity.

Two-child limit exacerbating hardship in large families

The two-child limit takes away the support provided by Universal Credit from third and subsequent children. This leads to losses of over £3,500 per year for every third and subsequent child born after April 2017.

The direct result of this policy is increased levels of hardship amongst affected families.

The latest data shows that more than 4 in 5 low-income households with 3 or more children have gone without essentials in the last 6 months (83%), while around 7 in 10 (69%) have skipped meals or gone hungry in the last 30 days. The proportion of all low-income households skipping meals or going hungry is 46%.

Hardship not inevitable

As the Chancellor herself has said, the past does not have to determine the future. The Government can deliver the change that is needed, if they make the necessary investments in our welfare system and public services.

Removing the two-child limit is a vital first step. Doing so would lift 300,000 children out of poverty by the end of this parliament and significantly reduce hardship.

But many of these families also have their support curtailed by the benefit cap. Introducing a ‘protected minimum floor’ in the Universal Credit system, which limits the maximum deductions resulting from the benefit cap to 15% of the basic rate of entitlement, would create a safety net below which no one should fall. Combined with removing the two-child limit this would be a lifeline to help a further 200,000 children out of poverty.

Beyond this, the Government needs a bold strategy to improve living standards over the longer term. This should focus on:

• increasing targeted support on energy bills for low-income households
• committing to an Essentials Guarantee in Universal Credit, to ensure the protected minimum amount of support in Universal Credit is enough to afford life’s essentials
• focusing employment services on helping people into the right type of work rather than on monitoring and compliance
• and reforming our care infrastructure so that parents can access the right kind of childcare to allow them to work.

It is essential the Government takes immediate action at next week’s Budget to introduce the measures that are key to reducing hardship, and which will deliver growth with fairness at its heart, starting with the removal of the two-child limit alongside introducing a Protected Minimum Floor in Universal Credit.

A full analysis of the results of this survey will be released in the coming months.