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10 July 2012 | PR 12/134

We need a third more earnings to make ends meet, say working families

Working families with children are being dealt a damaging triple financial blow in the recession, according to a new report by Loughborough University, which has been published by the Joseph Rowntree Foundation (JRF).

Since 2008, JRF’s Minimum Income Standard for the UK (MIS) has tracked what members of the public think people need to have a socially acceptable standard of living, and how much money this means different households (working age people with and without children and pensioners) need to reach this standard.

Soaring childcare and transport costs have combined with cuts to tax credits to hit families hardest. The minimum that a couple with two children now needs to earn for an acceptable standard of living is £36,800 – this figure has risen by nearly a third since 2008, twice the rate of inflation.

This latest report finds that couples with two children have been hit in three areas:

A couple with two children now needs to earn £36,800 a year (£18,400 each) to achieve the minimum income standard, £5,000 more than in 2008, corrected for inflation.

Single people need to earn £16,400 a year to reach an adequate standard of living, while the figure for a lone parent with one child is £23,900. Pensioner couples need £231.48 a week, which is attainable providing they claim all the support they are entitled to. The research has found a quarter of the UK’s population live below MIS - 3 million more than in 2008.

Despite the squeeze, the public have not fundamentally changed their views of what is necessary to have an adequate standard of living.  However, the research shows that people are being thrifty. For example, people said households can cut back on exchanging gifts and shopping around for deals and vouchers when eating out, and still achieve an acceptable minimum.

Julia Unwin, Chief Executive of the JRF, said: “Families have a monumental task trying to earn enough to get by. Parents facing low wages and pressure on their working time have little prospect of finding the extra money they need to meet growing household expenses.

“This year’s research shows that a dangerous cocktail of service cuts and stagnating incomes are being keenly felt by parents. Many working people face the risk of sliding into poverty. It illustrates how anti-poverty measures are needed to address not just people’s incomes but also the costs that they face.”

Donald Hirsch from Loughborough University’s Centre for Research in Social Policy, who co-authored the report, added: “People are being more modest in terms of what they think needs to be spent on participating in society, but this thrift has been outweighed by rising costs. Parents have not changed their view of most needs, including a nutritious diet and participation by children in activities vital for social inclusion. What has changed is the ability of many families to afford such essentials.”

The research also points out that the level of Universal Credit in 2013 will strongly influence the ability of households to reach MIS.

Chris Goulden, Programme Manager for Poverty at JRF, said: “Work is vital for families to achieve a minimum acceptable standard of living. However, the National Minimum Wage combined with in-work benefits leave families well short of reaching this standard. It is harder to make ends meet because of the rapid rate benefits and tax credits are reduced as earnings rise. Addressing this will need a major effort both to improve wages and to ensure that in-work benefits do not trap families below an adequate living standard.”


For all media enquiries contact:

Danny Wright
JRF Media Relations
T: 01904 615958
M: 07929 363024
E: daniel.wright@jrf.org.uk

Notes for editors:

  1. The full report and findings: A minimum income standard for the UK in 2012 by a team at the Centre for Research in Social Policy at Loughborough University is available to download for free from www.jrf.org.uk/mis
  2. A minimum income standard for Britain was first calculated in 2008 following discussions with ordinary people (on a range of incomes) about what they felt was needed to achieve an acceptable standard of living today. Budgets for families with children, originally researched in 2008, have been researched again from scratch for the first time.
  3. Twenty-one detailed focus groups with ordinary people from different kinds of household (such as families with children, pensioners and single people) had detailed discussions about the necessary elements of a household budget for each family type. Experts looked at these budgets to ensure that they provided an adequate diet and met basic needs like keeping a home warm.
  4. On this basis the weekly minimum budget:
  • For a couple with two children is £454.52 (benefits provide 60% of this amount)
  • For a pensioner couple is £231.48, provided entirely by Pension Credit
  • For a lone parent with one child is £275.59 (benefits provide 60% of this amount)
  • For a single working-age person is £192.59 (benefits provide 40% of this amount)
  1. Hourly wages needed for a minimum income standard: £8.38 for a single person, £9.39 for a couple with two children and £12.20 for a lone parent with one child.
  2. The annual earnings requirements given above are what families would need to earn gross, in order to have net incomes sufficient to meet these budgets. The net income is calculated by deducting from gross earnings the amounts paid in income tax, national insurance contributions, rent and childcare costs, and adding on any benefits and tax credits.
  • An interactive visual lets you explore what goods MIS can buy you, as decided by members of the public: http://mis.jrf.org.uk. A minimum income calculator is also available, which lets people find out how their income measures up to the MIS: http://www.minimumincome.org.uk
  • JRF is an endowed foundation funding a UK-wide research and development programme. JRHT is a registered housing association and provider of care services, with over 2,500 homes in York and north-east England. The two have a commitment to reduce poverty, and if possible, end it. JRF and JRHT work together to help achieve social justice for people and places in poverty by:
  • searching out the underlying causes of poverty and disadvantage, and identify solutions – through research and learning from experience.
  • demonstrating solutions – developing and running services, managing land and buildings, and supporting innovation.
  • influencing positive and lasting change – publishing and promoting evidence, and bringing people together to share ideas.
  • JRF is on Twitter. Keep up to date with news and comments at www.twitter.com/jrf_uk
  • The Joseph Rowntree Foundation and the Joseph Rowntree Housing Trust are completely separate from the other two Trusts set up by Joseph Rowntree in 1904; the Joseph Rowntree Charitable Trust (JRCT) and the Joseph Rowntree Reform Trust Ltd (JRRT). Further information about each organisation can be found at www.josephrowntree.org.

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