Thirty million people in the UK will be unable to afford what the public considers to be a decent standard of living by the time the current parliament ends in 2024, according to a study.
The New Economics Foundation, a left-leaning thinktank, said rising prices, below-inflation increases in earnings and projected increases in unemployment would result in 43% of households lacking the resources to put food on the table, buy new clothes or treat themselves and their families – a 12 percentage point rise compared with 2019.
The NEF said its calculation that by 2024 almost 90% of single parents and 50% of workers with children would fall below a minimum income standard showed the need for a radical overhaul of the welfare system.
The thinktank called for universal credit to be scrapped and replaced by a national living income, a minimum below which no one could fall whether they were in or out of work. Under its proposal, more than two-thirds of the population would see their disposable incomes rise, with increases of more than 50% – or £500 a month – for the poorest households.
The £70bn-a-year plan would be funded by a more progressive tax system, it said, including the harmonisation of tax rates for income and wealth, extending national insurance to investment income, and abolishing the upper earnings limit for NICs.
Sam Tims, economist at the New Economics Foundation, said: “A decade of cuts, freezes, caps and haphazard migration between systems has left the UK with one of the weakest safety nets among developed countries.
“Millions of families were already living in avoidable deprivation and hardship but as we enter the greatest living standards crisis on modern records, the day-to-day experience of low-income families is set to become even more desperate.”
“We need a bold new way of providing income support that will help all people deal with the challenges presented by the fast-changing world we’re living in. A national living income would set an income floor that is enough to meet life’s essentials, which no one can fall below whether they are in or out of work.”
Official figures show that 22% of people in the UK are living below the poverty line because they are getting by on less than 60% of median household income.
The NEF definition of a decent living standard is based on work by another thinktank, the Joseph Rowntree Foundation, which asks people what they consider to be an acceptable minimum. The list covers eight categories: housing, domestic fuel, food and drink, clothing, household goods and services, health and personal care, transport and travel, and social and cultural participation.
The ”minimum income standard” varies depending on household type, but the average shortfall will have risen from £6,200 a year as of December 2019 to £10,000 by December 2024, the NEF said. It added that the MIS was used to calculate the so-called real living wage paid by companies like Ikea and KPMG, and football clubs like West Ham, Liverpool and Chelsea.
A government spokesperson said: “Universal credit offers a vital safety net to millions of people, enabling them to support themselves and their families while moving towards financial independence through employment.
“But we recognise that people are struggling with rising prices which is why we are protecting millions of those most in need with at least £1,200 of direct help this year, including £400 towards energy costs. Our immediate support for families also includes our energy price guarantee, saving around £900 for a typical household over winter.”
