Britain is in a crisis of living standards. Too many people cannot reliably obtain the resources they need and cannot meet the daily costs of maintaining a decent quality of life. This was true before Covid-19, but in the past 12 months, the pandemic and related economic recession have exacerbated the situation. The new forecasting model generated for this report shows that by the end of this year, under the circumstance of unchanged government policies, 32% of the UK population (21.4 million people) will live below the socially acceptable standard of living, and the minimum standard is used to measure income. (MIS). MIS is the only needs-based method for measuring living standards in the UK. It determines the needs that individuals must meet to thrive in the society in which they live.
The impact of the Covid-19 pandemic has occurred after ten years of stagnant growth in real income; housing costs for renters have risen; and working-age benefits have been frozen, cut, and restricted, especially for families with children. This helps reduce the living standards of the poorest people, while widening the inequality of the entire population, making the UK an international poverty outlier-the poorest households falling below the poverty line rank second among 37 members. Organization for Cooperation and Development (OECD). In the 20 years before 2020, the income of the poorest 10% of households after deducting housing costs only increased by 3%-six times slower than the average. Therefore, even before the pandemic began, nearly three in ten people lived in households with incomes lower than MIS.
But the epidemic has greatly accelerated this crisis of inequality and living standards. The extended blockade has prevented people from working for several months. Although the vacation plan supports a large number of jobs, it has caused significant losses in employment and income. As a result, the number of people relying on the social security system for their livelihoods has increased significantly, and the number of people applying for universal credit has more than doubled, from 2.8 million in January 2020 to an estimated 5.9 million in January 2021.
Although the main element of the universal credit of £20 a week has temporarily increased, more people will still be living under MIS in April 2021 compared to when the pandemic began. This is because the British social security system fails to provide a sufficient bottom line of income. From the international and historical standards, it is very weak. Among the 37 advanced economies of the OECD, the UK’s safety net has one of the lowest replacement rates, that is, the proportion of previous income from which unemployment benefits have been restored. Even with an increase of £20, the total income of welfare-dependent households will be £10.5 billion worse than the situation that still exists in the system in 2010-11.
The new model proposed in this report shows that there are two core problems: first, by the end of this year, the unprecedented number of people will be below the socially acceptable standard of living; second, the income gap of these families is very large. Under the main findings of nearly one-third of people in the UK living under MIS, we found the following:
- Raising the £20 to the main element of universal credit after September (this is not the current government policy) can prevent 600,000 people from falling below MIS-but even so, 20.8 million people still live below an acceptable standard of living. Even using the government’s main poverty measurement standards for relatively low-income households, we find that even with an increase, 14.9 million people are still in poverty.
- Nearly half (45%) of children live under MIS: eight in ten (82%) children live in unemployed households, and four in ten (40%) children live in working households.
- More than two-thirds of single parents (70%); more than half of renters (50% of private renters, 63% of social housing renters); in the Northeast (37%), West Midlands (37%) %) and London (35%), more than one third of all households live below the same threshold.
- The median income of families with two children below MIS is approximately £5,670 per year lower than the minimum socially acceptable income level. Considering only those who require universal credit or equivalent benefits, families with two children below MIS are about £6,220 below the socially acceptable minimum income level.
- A total of 12.5 million people live in households whose income is less than 75% of MIS and are therefore at a particularly high risk of poverty.
Evidence over time shows that more and more people are below the required level ‘Thrive”-on the contrary, living in them either ‘poor’, ‘Struggling’ or just ‘Survival[改編自約瑟夫·朗特里基金會定義的水平——對更廣泛的社會危害的四個方面做出貢獻。[adaptedfromlevelsasdefinedbytheJosephRowntreeFoundation–contributestofourdimensionsofwidersocietalharm
- General deprivation A large number of people are caught in a cycle of poverty.
- Lack of cohesion Leading to increasingly divided society.
- Macroeconomic stagnation Weak demand and weak productivity growth.
- Low economic flexibility Face greater risks of instability and recession.
In response, NEF called for the establishment of a new ‘The mission of living standards in the 2020s is to combine multiple areas of government policy as part of the new social security. As part of this agenda, we call for the establishment of a new social security system or living income, while at the same time formulating policies to support high-paying and safer work, and to expand the provision of public services.
This report is the first report in a new research plan. The plan will continue to study the goals and design of living income in the 2020s. The details will be formulated in cooperation with our partners and listed in subsequent reports. In essence, we believe that living income should be built around the principles of reducing poverty, reducing inequality, supporting economic stability, and enhancing resilience. At the core of this will be a new emphasis on adequacy, where the level of payment and support is calibrated according to the actual needs of people to have a decent quality of life. We anticipate that this will require expanding and strengthening universal payments in the system, as well as strengthening needs-based payments for childcare, unemployment and disability.