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How many more people do not have enough income?

April 25, 2013

New Report: Households below a minimum income standard, 2008/09-2010/11 

The recession and public spending cutbacks have hit us all in some way. But what share of the pain should be felt by the worst-off? Ideally none: people with the broadest shoulders are best equipped to cut back. In practice, pruning the deficit is bound to hit people on low incomes because they depend most on the state. But the government can still try to minimise the impact on people whose incomes prevent them from reaching a minimum acceptable standard of living as defined by the general public.

There’s now some solid evidence on how hard times have affected people’s ability to reach this benchmark. It shows some trends in the early part of the recession that are not all what you might expect. As job opportunities dried up, young single people become much more likely to have very low incomes, some with only half what they would need for a minimum acceptable living standard. But for families with children, things were different: they became no more likely to be below a minimum standard. This was a period when tax credit support for families was still rising, but in addition, the number of families with no work was surprisingly stable. It seems that most families managed to hang onto at least some paid work, even if hours have been reduced and/or one partner lost their job.

But these income stats are always published with a lag, and since 2010/11 when these latest data come from, things will have got worse for families. Child benefit has been frozen, tax credits raised more slowly and support for childcare cut. Future reports will show the extent to which the tide has turned against families.

The other striking finding of this report is the growing link between having a very low disposable income and renting privately. We’ve been so used to identifying poverty with living on large public housing estates that this phenomenon has crept up on us. Our calculations estimate that 770,000 households have less than half what they need to live on. Over 340,000 of these are private renters, compared to 160,000 renting from councils or housing associations and 250,000 home owners.  Housing benefit cuts could make this even worse. High rent, in other words, is once again becoming a key driver of abject poverty.

 

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