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Number of households living on inadequate incomes soars

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Number of households living on inadequate incomes soars

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Published by Max Salsbury for 24dash.com in Communities and also in Finance

Coalition 'making same mistakes as Labour' on poverty - JRF Coalition 'making same mistakes as Labour' on poverty - JRF

The number of households living on incomes below the level needed to afford an adequate standard of living has increased by a fifth in just three years, new research has revealed.

The Joseph Rowntree Foundation's study found the number of homes falling short of the minimum earnings needed to sustain a decent standard of life has risen by 900,000 since 2008/9 - from 3.8 million to 4.7 million.

Income adequacy is measured by the minimum income standard (MIS) - which is what the public think we all need for a minimum socially acceptable standard of living in the UK.

The report, carried out by the Centre for Research in Social Policy (CRSP) at Loughborough University, found that families with children are the most likely to be living below an adequate standard, especially lone parents. However, working age people without dependent children have seen the biggest rise, especially under-35s living alone.

The JRF says the deterioration in their fortunes is explained by growing unemployment, falling benefit levels and a sharp increase in the numbers privately renting their homes, where disposable income is eaten up by high rents.

The report found:

  • 4.7 million people in couple households with between 1 and 4 children (28%) lacked the income required for an adequate standard of living in 2011/12, up from 3.8 million (24%) in 2008/9.
  • 480,000 people under 35 living alone (42%) couldn’t afford a decent living standard in 2011/2, up from 310,000 (29% in 2008/9). They also had a greater risk of living on an extremely low income (less than half of what they need for MIS), rising from 9% to 25%.
  • 2.1 million people living in lone parent households with between 1 and 3 children (67%) lacked the income required for an adequate standard of living in 2011/2, a similar number but slightly higher percentage than in 2008/9 (65%).
  • 800,000 people in pensioner households (9%) lacked the income required for an adequate standard of living in 2011/12, up from 650,000 (7%) in 2008/9.
  • 1.5 million single working-age households (36%) lacked the income required for an adequate standard of living in 2011/12, up from 1.1 million (29%) in 2008/9.
  • 1.1 million members of working-age couples without children (13%) lacked the income required for an adequate standard of living in 2011/12, up from 790,000 (10%) in 2008/9.

Katie Schmuecker, policy and research manager at JRF, said: “Many people have seen downward pressure on their living standards, but for those on low and modest incomes more are having to make tough choices about what essentials to go without. The number living on less than what fellow members of the public think is needed for an acceptable standard of living has gone up by a fifth since 2008/9. As growth re-emerges it is vital the recovery helps improve the living standards of those in greatest need.

“In the early part of the recession, families with children were protected by increases in tax credits. But a turning point was reached in 2011 when major cuts in support for childcare costs contributed to an increase in the risk of being below MIS. In the case of lone parents, the increase was from 60 to 67% between 2010/11 and 2011/12 – in one year alone. Families who have seen their income shrink in a downturn will want to see improvements in the upturn - and it is up to the parties to offer much-needed help.”

Donald Hirsch, co-author of the report, added: “Young people, single people and people in private rented housing have done particularly badly relative to the Minimum Income Standard during the downturn. A whole generation of young adults are noticeably worse off as a result of the deterioration in their job prospects, a worsening of housing options and falls in real wages and benefits, making it harder for young people to be independent. Our figures show that those under-35s who do live on their own are much more likely than in the past to have far less income than they need for a minimum standard of living.”

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