OVER A THIRD (34 per cent) of households, 23.4 million people, will be unable to afford the cost of living by £8,600 on average by April 2022, according to new analysis by the New Economics Foundation (NEF).
This figure includes nearly half (48 per cent) of all children, almost all (96 per cent) of children living in families out of work, eight in 10 (77 per cent) in single-parent households, and four in 10 (43 per cent) in working families.
The research uses the Minimum Income Standard (MIS), which is the UK’s leading approach to measuring living standards based on need and is used to calculate the‘real’ Living Wage paid by companies like Ikea and KPMG, and football clubs like West Ham, Liverpool and Everton.
The analysis shows that the 23.4 million people in the UK projected to be living below the MIS threshold come April will include:
- 43 per cent of families in the north-east
- 41 per cent in Yorkshire and the Humber
- 39 per cent in the West Midlands
- 38 per cent in London
The research not only shows the number of people unable to afford the cost of living in each region, but also the extent to which their incomes are falling short. In the north-east, people are missing out on a good standard of living by £8,900 a year, and in the West Midlands and London by £10,100. Couples with children will miss out on a good standard of living by £9,600 a year and single parents by £8,700 on average. This leaves families having to make impossible choices between life’s essentials, like putting food on the table or replacing clothes and shoes.
NEF is calling for the creation of a new social security system, or ‘Living Income’, to set an ‘income floor’ based on the MIS, which no one can fall below whether they are in or out of work. The research sets out steps for how to achieve a Living Income:
- Auto-enrolling everyone in the UK on the universal credit system so that new payments start to be processed automatically as soon as anyone becomes eligible. This would ensure the 1.3 million people missing out on payments worth an average of £7,300 a year would receive the support they are entitled to.
- Restoring the £20 uplift for universal credit and extending to all other means-tested benefits to ensure the poorest are at least made no worse off on average by recent price rises
- Investing a further £7 – 8 billion in universal credit to lift families closer to the MIS.
- Uprating benefits by the latest level of inflation to ensure incomes rise alongside prices.
Sam Tims, Economist at the New Economics Foundation, said: “The cost of living is increasing faster than at any point in recent history. While all families are set to feel a squeeze come April, the lowest income households will be hit proportionately harder.
“But the cost of living is only a crisis when people cannot afford it and government support must be able to flexibly respond to this. There is little time left for the chancellor to take action to avert the worst real-terms incomes squeeze in 50 years.”
* Read the full analysis here.
* Source: New Economics Foundation