Poor families' living standards set to fall, research finds


Low-income families with one main breadwinner, single parents and out-of-work couples with children are likely to see their living standards stagnate or fall in the coming five years, according to research.

The Joseph Rowntree Foundation (JRF), which looked at how changes announced in the summer Budget will affect people's ability to afford a decent standard of living by 2020, also found that families with two parents in full-time work, workers without children and pensioners will typically be better off.

Pensioners will have £15 more than they need every week for a decent standard of living in 2020, the report found. Meanwhile, an out-of-work couple with two children will fall £221 short of what they need - adding up to a shortfall of around £11,000 over a year.

The amount of money non-working families with children will have by 2020 will be around half the amount they need for an adequate standard of living, whereas in 2010 they had nearly two-thirds of what they needed, the research said.

The report - Will the 2015 Summer Budget improve living standards in 2020? - uses JRF's "minimum income standard" (MIS) to track how the living standards of households will change by 2020.

The MIS is based on what consumers believe is necessary for a minimum standard of living for people to reasonably get by, such as the ability to run a car, have access to the internet and buy a modest birthday present.

The introduction of the national living wage (NLW), which will raise the minimum wage to £9 per hour for workers aged over 25 by 2020, will drive an increase in living standards for low-paid workers without children, who by 2020 will typically have incomes close to or above what they need, it said.

Some of those who currently qualify only for small levels of support will be lifted out of the benefits system by a combination of higher wages and reduced entitlements. But most low-income families with children will see their living standards continue to stagnate or decline as reductions to in-work benefits, also announced in the summer Budget, outstrip wage rises, it said.

While most households with two parents working full-time on the NLW will be better off than they are on the national minimum wage (NMW) now, only 6% of low-income families with children have this working pattern. Families with one full-time and one part-time earner - a more common model of family life - will fall as far short of the minimum income standard in 2020 as they do now, the report found.

The JRF said that to have an adequate standard of living, parents on low incomes will both have to work full-time.

To support parents to do this, it said there should be more high quality, flexible, affordable childcare, action to create better paid, secure and flexible jobs which offer good career progression for people on low incomes, and a greater supply of affordable homes.

Julia Unwin, chief executive of the JRF, said: "The national living wage is a game-changer for some on low incomes as the new higher rate will make work pay for more people.

"But the wage rise comes hand-in-hand with changes to in and out-of-work benefits. Families will only be able to make ends meet if they have two parents in full-time work, but those who are able to find extra work will face a difficult juggling act as they try and make longer hours fit around family life."

A Treasury spokeswoman said: "Living standards are rising - over the last year, real earnings rose by 2.8%, the fastest rate of growth since September 2007.

"But there's more to be done. That's why we are introducing a new national living wage which the independent OBR (Office for Budget Responsibility) expect will benefit up to 2.7 million people directly, with up to six million seeing their pay rise as the knock-on effects are felt higher up the earnings scale.

"Together with the further increases to the personal allowance next year, this will mean people will keep more of the money they earn by paying less income tax.

"We're also taking action to support working families by freezing fuel duty, helping councils to freeze council tax bills and offering 30 hours of free childcare to all working parents, because evidence shows that the best route out of poverty is work, not benefits."