Joseph Rowntree report highlights that Labour are failing to meet minimum income standards

While Labour claims to be “making Britain work for working people”, the reality is very different when it comes to quality of life. A new study from Loughborough University’s Centre for Research in Social Policy (CRSP) on behalf of the Joseph Rowntree Foundation has come up with a new set of ‘real’ minimum income standards (MIS) that accurately represent how much people are struggling to afford to live, despite working full-time.

What are minimum income standards?

The minimum income standards are a yearly report which looks at the cost of food, housing, bills and all other outgoings. Importantly, it also includes things that allow people to have a “dignified life” such as a holiday once a year, hobbies, and nice toiletries. From this, they build a budget and contrast it with how much people actually earn across different household groups.

The study found that to “participate in society”:

• A single person now needs to earn £30,500 a year.
• A working-age couple without children needs to earn £43,000 (£21,500 each) a year.
• A single parent with two children, aged between 2-4 and 5-11, needs £61,000 a year.
• A couple with two children needs to earn £74,000 a year between them.
• Single pensioners need £17,400 if they are receiving pension credit, but those who are on a state pension need £19,000.
• A pensioner couple on pension credit needs £29,000 a year, and those who only get state pension need £29,200.

The report says

For many in the UK, the gap between what they have and what they need for a decent standard of living has not reduced.

It continues

Many households in the UK do not have the income they need to reach a minimum socially acceptable standard of living, whether they are in work or not.

So how does this compare to what people are actually getting? Well, it’s not looking good. The report points out that over a year into the current Labour government, not much has changed in terms of living standards.

Work doesn’t pay, actually, Rachel Reeves

The report points out that whether people are in work or relying on Universal Credit, they’re still falling short of their basic needs. Of course, these costs are much more keenly felt by those on benefits. One thing to point out here is that this is a report based on earnings. That means personal independent payments (PIP) aren’t included, as that is not a means-tested benefit. Single people with no children on out-of-work benefits are reaching just 27% of the MIS, while couple households with no kids, where at least one person is on out-of-work benefits, are hitting 26%.

Working does raise the standard of living, but not enough. A single person working full-time still only has 75% of what they need to reach the MIS. Meanwhile, a couple where one works part-time and the other full-time still only reaches 83%. However, if they’re both full-time time it exceeds the MIS by a whole 13%.

The report estimates that a working-aged single adult needs to make £30,500 a year to have enough for a good life. Couples need £43,000, or £21,500 each. However, in reality a full-time job on the national living wage only pays £23,875 a year. Such a wage leaves single people seven grand short of what they need to reach MIS per year.

Even harder for parents

Single parents on out-of-work benefits get just 44% of what’s needed to have a “dignified” standard of living. After housing costs, they fall short by around £362. Whilst working does increase a single parent’s disposable income, it still only gets them to 69% of the MIS.

However, due to Universal Credit (UC) tapering, parents won’t feel much difference if they move from part-time to full-time work. As their UC is tapered, their childcare costs for a child who is not yet in full-time education, will also increase if they move into full-time work as they won’t receive as much support.

A single parent with 2 children would need a huge £61,000 a year to have a good quality of life for them and their children. And, that’s gone up from £57,000 in 2024.

A couple with two children who are on out-of-work benefits reach just 37% of the MIS. Under these projections, their weekly income would fall over £500 below what is needed to have a good life. Whereas couples without children who worked full time exceeded the MIS, couples with children who work full time on the national living wage still only reach 82%. To be able to fully meet their needs and their children’s needs, they would need to earn a humongous £74,000 a year between them.

Pensioners fare better, but it’s still not enough. Pensioners reach 90% of MIS regardless of whether they have their pensions topped up. Single pensioners need £17,400 a year, but if they get a full state pension, they need £19,000. This is partly down to the fact that other benefits, such as housing benefit and council tax support, are tapered as income increases and that those on a state pension don’t get the winter fuel allowance.

We all deserve a good life, but that’s not happening

The report concludes:

These findings come in a year when work has been prioritised as a key element of the new Labour government’s plans for economic growth, and a focus on ‘making work pay’ has underpinned its strategy for labour market reform.

However, households where at least one person is in work make up an increasing proportion of those with incomes below MIS.

It is apparent that for many households, paid employment is not enough on its own to provide a minimum living standard, despite substantial increases in the NLW [national living wage] over recent years.

The report highlights more than anything that, despite Labour pushing the agenda that “work pays”, this is clearly not true. Those who do work still do not have enough disposable income to live a good and meaningful life, instead of just about scraping by.

If Labour truly want people to live a good life, they need to prove it. They need to actually increase living standards.  Bills must come down through allowing companies to charge through the roof for basic utilities. Everyone deserves to live in a society where we thrive, not just survive.

Featured image via Unsplash/Christina Radevich