Cost of minimum income standard up by a quarter

The cost of a minimum acceptable standard of living has risen by a quarter since the start of the economic downturn, according to a new analysis from the Joseph Rowntree Foundation.

The report provides the 2013 update of the minimum income standard (MIS) for the United Kingdom, based on what members of the public think people need for an acceptable minimum standard of living. The MIS was first calculated in 2008.

Key points

  • Families are facing an unprecedented erosion of living standards, due to rapid inflation and stagnant wages.
  • MIS budgets went up by 3-4 per cent in 2012-13, compared with a 2.4 per cent rise in the consumer prices index This difference, as in previous years, was due to large rises in the cost of things such as food, council tax and public transport – on which people on minimum incomes spend a greater-than-average proportion of their household budgets.
  • Earnings continue to rise much more slowly than prices, meaning that many people on low incomes are finding it substantially harder to make ends meet than a year ago.
  • A single person (for example) earning £13,000 a year in 2008 would have reached the minimum standard: but if their wages had risen since then in line with the average, in 2013 they would be earning £14,000 – well short of the £17,000 needed to cover higher living costs.
  • For non-working households, benefits continue to fall well short of providing a minimum acceptable income, although pensioners claiming pension credit get just enough to meet the MIS. With working-age benefits rising by just 1 per cent in 2013, compared with 3-4 per cent rises in the MIS, the adequacy of benefits declined.
  • The MIS remains above the official poverty line of 60 per cent of median income, except for pensioner couples. For example, a couple with two children required 77 per cent of median income, adjusted for household size, to reach a minimum acceptable living standard in 2010-11: this has risen from 73 per cent in 2008-09.

Source: Donald Hirsch, A Minimum Income Standard for the UK in 2013, Joseph Rowntree Foundation
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Publication date: 
Jun 28 2013