Poorest fifth of households have seen a fall in income

By agency reporter
March 27, 2020

The latest Households Below Average Income statistics released by the government on 26 March 2020 show that typical UK household incomes stagnated last year, and living standards for low income households are lower than they were in 2014-15.

Median incomes were unchanged in 2018-19 after housing costs are taken into account, leaving them below the level seen two years ago (in 2016-17), as a result of high inflation and weak pay growth. However, growth in incomes of the highest earners along with a drop in incomes for the poorest fifth of the population – the second annual fall in a row leaving them lower than they were in 2014-15 – has pushed overall inequality up slightly.

Levels of poverty after housing costs remain high, with 14.5 million individuals (22 per cent of the population) and 4.2 million children (30 per cent of all children) living in relative poverty in 2018-19.

The Resolution Foundation says that this fall in living standards for low to middle income households has happened despite record high employment rates. Instead, it has been driven by the freeze in the value of working-age benefits and other cuts, such as the two-child limit, slowly taking effect.

Adam Corlett, Senior Economist at the Resolution Foundation, said: “Typical households incomes remained lower in 2018 than they were in 2016, as a result of high inflation and weak pay growth. Additionally, it’s the second year running that incomes have fallen for low income families, and ongoing benefit cuts have left the poorest fifth of households worse off than in 2015.

“These figures show that the UK went into the coronavirus crisis with, at best, stagnant living standards for households on low or median incomes. This is the context showing we badly need increased support for the families who are facing very significant income hits as this crisis deepens.

“As the Chancellor sets out additional support for the self-employed, he should also ensure it is matched by support for those employees who have their hours scaled back or are made redundant during this crisis.”

* Read Households below average income: 1994/95 to 2018/19 here

* Resolution Foundation https://www.resolutionfoundation.org/

[Ekk/6]

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