New JRF modelling shows bleakest parliament on record for living standards but less pain for worst off

New modelling from the Joseph Rowntree Foundation (JRF) finds that living standards are still set to fall across the rest of the parliament (November 2029) but that actions at the Budget have made the decline less painful for low-income households.

Lifting the two-child limit more than halves the decline in living standards for the poorest third of households.

The research shows a similar forecasted overall decline in living standards compared to before the Budget, but with low-income households seeing a smaller reduction in their incomes compared to middle- and higher-income households.

The average household will be £850 worse off (2.0%) in 2029/30 than 2024/25 but higher-income households will now bear the brunt of the decline. 

• Those in the highest income third will be the worst off over this parliament, seeing their income fall by £2,230 (2.9%)
• For those in the lower- and middle-income third the fall is lower at £140 (0.8%) and £300 (0.9%) respectively.
• If the two-child limit had not been scrapped, the decline in living standards for the lowest income third would have been greater, with their incomes now set to fall by 0.8% over the parliament (compared to 1.9%).

A higher projected employment rate, as well as government investment in social security through scrapping the two-child limit, mitigates some of the fall in living standards for lower-income households.

The modelling reveals the scale of the living standards challenge still facing families and the government, with an unprecedented 2% fall in incomes after housing costs on average by the end of the parliament. This is due to projected weak real earnings growth and rising housing costs.

The OBR also report on livings standards, through their measure of Real Household Disposable Income (RHDI). This also shows a bleak outlook, with no growth in incomes per adult across the parliament. The RHDI measure does not take into account housing costs which are projected to rise faster than inflation and cause disposable income to fall.