Millions of 'just managing' families poorer than a decade ago - report

An unprecedented pay squeeze and rising housing costs have left "just managing" families poorer than they were a decade ago, according to a new report.

The study, by the Resolution Foundation, said there were six million families across Britain struggling to make ends meet.

It warned that many parents juggling work with bringing up children were left reliant on welfare payments to top up their income, leaving them "doubly exposed to Britain's earnings squeeze and cuts in welfare support".

Theresa May has sought to reach out to "just managing" families, appealing to them directly in her first speech as Prime Minister on the steps of Number 10.

The Foundation said its findings, which come ahead of the Conservative Party conference in Birmingham which begins later this week, showed Mrs May was right to prioritise these families.

Torsten Bell, Resolution Foundation director, said: "The Prime Minister is absolutely right to focus on the millions of families across Britain who are just managing to get by.

"Improving the jobs, housing and financial support for this group is the central task in persuading people that Britain works for them once again.

"But tackling the big living standards issues these families face will require serious and lasting focus for this government, given the huge competing demand of delivering Brexit. That task should start in Birmingham next week."

The report - called Hanging On: the stresses and strains of just managing families - found that rising house prices had pushed the dream of owning their own home beyond the reach of many families.

So-called just managing families were now more than twice as likely to rent privately rather than own their own home - a complete reversal of the situation 20 years ago - and spend a quarter (24%) of their income on housing, the report found.

And they have little or no money to put away at the end of the month. More than two-thirds of "just managing" families had less than a month's income worth of savings, the Foundation said.

The report found that on average a 28-year-old couple with a baby when one of the parents was working on low pay were £760 worse off in 2016 compared with 2008.

While a 35-year-old couple both working full-time on a median and low wage and with two children were £530 poorer, the report found.

David Finch, senior economic analyst at the Resolution Foundation, said: "Millions of 'just managing' households have seen their household finances stretched over the last decade.

"As well as experiencing an unprecedented squeeze on their earnings, many have found it near on impossible to get on the housing ladder.

"This switch from owning to renting means that 'just managing' families are now having to set aside a quarter of their income on housing. As a result they have suffered over a decade of lost income growth.

"Many of the problems families face - from falling home ownership and disappearing career ladders - are very deep rooted.

"Reversing these family misfortunes is a huge task, but the right one to focus on."

Shelter chief executive Campbell Robb said: "Every day at Shelter we speak to working parents, stretched to breaking point, barely scraping by from one pay cheque to the next and living in constant fear that a cut in hours could tip them into homelessness.

"Sky-high housing costs mean too many working families are constantly faced with impossibly tough choices on spending, with the majority of their pay-packets being eaten up simply in order to keep a roof over their heads.

"With millions of working families struggling and economic uncertainty ahead, the new Government can support families who fall on hard times by protecting and improving our welfare safety net, and building the genuinely affordable homes this country desperately needs."

A Treasury spokeswoman said: "Since 2010 we've made real progress in improving people's living standards: 2.7 million more people in our country have a job; we've given a pay rise to a million of the lowest paid with the national living wage; we've increased the personal allowance so that 1.3 million people will be taken out of income tax altogether by next year; and we've overhauled the welfare system so it pays to work.

"But there is still much more to do, not just for those on the margins of society, but for families up and down the country who are just getting by. As the Prime Minister has said, the Government is determined to build an economy that works for all, not just a privileged few."

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