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HomeEconomyFamilies across the country are feeling the pinch

Families across the country are feeling the pinch

Graduates, nurses and minimum wage workers are making sacrifices for necessities such as weekly shops or changing London’s clothes and shoes, red and blue walls

Families are already struggling to afford necessities like household bills or visits to the dentist. This will get worse in the year ahead as income and Social Security payments fall short of rising prices and rents. New analysis by the New Economy Foundation (NEF) shows that by April next year, a wide range of working-age households in the UK – London minimum wage graduate couples, nurses and shop workers, as well as red and blue walls – are all Can’t afford living expenses.

The energy price freeze did not end the cost of living crisis. close to half Some of us are struggling to pay our energy bills Are 2.6 million children starving?. Rising even as energy price cap freezes food and rent Costs will hit those with lower incomes the hardestIt is unclear what the government plans to do after the price freeze ends, but households may face higher energy prices through bills and/or higher prices as businesses pass energy costs on to consumers.

Our Analytical Use Minimum Income Standard (MIS)the UK’s leading measure of living standards based on demand, is used to calculate the “real” living wage paid by companies such as IKEA and KPMG, as well as by football clubs such as West Ham, Liverpool and Everton.

With necessities such as rent and food rapidly increasing, the cost of meeting MIS is actually rising. We expect headline inflation to be just over 10.5% in April next year and rents to hit 7.5%. Figure 1 shows that MIS for singles will rise slightly faster by 11.3% in 2023/24, as both energy and food prices will rise faster than headline inflation in the coming year.

Figure 1: MIS has risen faster than prices in recent years
The real value of the cost of living for the four household types in the Red Wall as measured by MIS

Source: MIS annual budget data from CRSP. Inflation is estimated at 10.5% in 2023/24, with varying prices for food, energy and rent.

With incomes and Social Security projected to rise by only 5.5%, all households will actually be in a worse position to afford the necessities of life. We calculated how many households in London Local Authority (Haringey), the Red Wall constituency (Bolsover) and the Blue Wall constituency (North West Somerset) were below MIS.

Even the families of graduate students, whom we might consider comfortable, cannot afford MIS anywhere in the countries we study, and those on the minimum wage red wall face the greatest shortages. For a postgraduate couple with two children in London, Blue Wall and Red Wall are £200 (London) and £540 (Red Wall) a month less than MIS in 2022/23. Next year, the gap will rise to between £410 (London) and £740 (Red Wall).

A key reason why graduates can’t afford living is because they face higher marginal tax rates, with student loan repayments set at 9% on incomes over £27,295 in 2022/23. That threshold will drop to £25,000 in 2023/24, meaning an effective tax increase of around £200 a year, with a lower repayment threshold.

Figure 2: Graduate families cannot afford basic living standards
Illustrative net income of two graduates with two children in house prices in 2022/23 compared to their MIS before housing costs, by time and region

Source: MIS annual budget data from CRSP, based on gains from the ASHE dataset. Inflation is estimated at 10.5% in 2023/24, with varying prices for food, energy and rent.

Unsurprisingly, those in low-paying jobs struggled more. The minimum wage is nowhere near enough to ensure retail workers can afford necessities in any part of the country. Minimum wage single full-time workers £470 less per month than MIS in London; £380 for the red wall; and £400 for the blue wall this year. This will rise sharply this year to £580, £480 and £490 respectively.

Our analysis found that only single minimum wage workers in London received any support from social security in 2022/23.Minimum wage workers who do not receive any additional Social Security benefits for their children or disability are often earning too much to receive Universal Credit (UC) payments and Far from enough to afford a basic standard of living. Minimum wage workers in London previously received some UC grants for housing costs, but as of next year, rising nominal incomes and a freeze on housing rights mean they can’t even get it.

The government’s response to the cost of living crisis is to provide lump sum payments for those on means-tested benefits and payments to those on disability support. If the same policy lever In the coming year, none of the minimum-wage workers we study here will receive this additional support, despite the growing gap between their income and cost of living.

Figure 3: Minimum wage workers fall further below MIS
In 2022/23 prices, illustrative net income of workers’ national living wage net income compared to MIS before housing costs over time and region

Source: MIS annual budget data from CRSP, based on gains from the ASHE dataset. Inflation is estimated at 10.2% in 2023/24, with varying prices for food, energy and rent.

Of all the family types we looked at, nurses with two children were by far the least likely to meet MIS, with monthly income falling by £1,450 to £1,750 in 2023/24. The main reason is that the real income of nurses has decreased significantly over the past decade. Shocking 5% Salary Discount This year, wages for newly qualified level 5 nurses have fallen between £1,850 and £2,400 compared to 2008/09. If nurses’ wages rise by 5.5% next year, they will see real wages drop by £3,000 to £3,800 compared to 2008/09.

When nurses don’t earn enough to cover basic expenses, we and our loved ones become poorer and sicker.Poor wages for nurses lead to about 50,000 Nursing vacancies in England while we’re going through Recording NHS waiting lists And add delays to A&E. When we don’t have access to the health care we need, it reduces our productivity and reduces our long-term prosperity.

Figure 4: Nurse shortage in MIS over £1,450 per month next year
Illustrative net income of single nurses with two children by time and region in 2022/23 compared to their minimum income before housing costs

Source: MIS annual budget data from CRSP, based on gains from the ASHE dataset. Inflation is estimated at 10.2% in 2023/24, with varying prices for food, energy and rent.

The only household types we studied that achieved MIS were single pensioners with no housing costs (ie, they owned their home outright). This is typical for pensioners – about 75% of pensioners Fully own their own home, and the other 5% need to pay off their mortgage.

Figure 5: Pensioners without housing costs can afford a basic standard of living
Illustrative net income for single pensioners in 2022/23 with price changes over time and region compared to MIS

Source: MIS annual budget data from CRSP, Income based on DWP Pensioner Income Series dataset, data for 2022/​23 and 2023/​24 using regional income growth. Inflation is estimated at 10.2% in 2023/24, with varying prices for food, energy and rent.
Note: This person is eligible for the disability element of the World Trade Center

Prime Minister’s Plan An end to the freeze on energy prices means households already feeling the pinch face the brink of a financial cliff next spring.At NEF, we call New cost of living support package Beginning in April 2023. This will include new free energy entitlements for all households, a temporary universal payment of £750 if energy prices remain high, and a permanent increase in means-tested benefits of £1,000.

But in the long run, we need to redesign our economy so that families feel the benefits of their hard work, rather than being overwhelmed by big bills and low incomes.This looks like a permanent income boost by £1,000 increase social security Paid by wealth tax; more comfortable, affordable housing so everyone has a safe place to call home; by investing in renewable energy and home insulation. We can end this cost of living scandal and make sure everyone can afford the necessities.


The calculated growth of MIS between 2022/​23 and 2023/​24 assumes a headline inflation rate of 10.5%. We then adjusted the components of the CPI index to account for a 27% increase in energy costs, a 20% increase in food costs, and a 7.5% increase in rent. Note that at the time of analysis, the Energy Price Guarantee is still government policy in April 2023.

Graduate earnings are calculated based on the average earnings of local authorities. The income of pensioners is calculated based on the average income of the area in which the constituency is located. Nurse earnings are for newly qualified level 5 nurses, with an uptick in London.

Illustrative example using 25 year old private rentalth Percentiles for London, Bolsover and North East Somerset. Changes in the housing portion of the MIS were used to obtain historical rent estimates for each household type. Graduate earnings are taken from the Annual Working Hours Survey and Earnings Regional Datasets.

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