Millions falling short of decent standard of living amid cost of living crisis

·Finance Reporter, Yahoo Finance UK
·3 min read
cost of living crisis People walk on London Bridge, the day after a national rail strike, during six days of travel disruption, in London, Britain, June 22, 2022. REUTERS/Peter Cziborra
Cost of living crisis: Annual income survey finds national minimum wage will often fail to cover most expenses. Photo: Peter Cziborra/Reuters

Millions of people risk falling short of a decent standard of living amid the cost of living crisis as a charity warns that someone on minimum wage needs an extra £7000 to cover even a "no frills" lifestyle.

The government is being urged to increase the legal minimum wage of £18,600 after a study by anti-poverty charity The Joseph Rowntree Foundation revealed that a single person needs £25,500 a year to live an acceptable life.

For a couple with two children, this Minimum Income Standard (MIS) is £43,400 between them, to be able to live a dignified family life.

Currently, even if both parents work full-time on the national minimum wage, they will only earn £37,200, just 86% of what is needed to live to a decent standard.

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The annual MIS study is based on deliberations by groups of socially representative UK residents on what is needed to live a decent life, covering not only the basics of food, bills and rent, but also the things that make life "worth living" such as social connection, leisure and even Netflix (NFLX).

Abigail Davis of Loughborough University, a co-author of the study, said: “As prices continue to rise well ahead of incomes, the reality is that more and more people are going to be focused on survival — keeping a roof over their heads, putting food on the table, and keeping their homes warm — and will fall well short of reaching this minimum living standard.”

This year’s MIS calculation is the largest year on year increase across all households since the MIS research was first published in 2008. This is essentially because of surging inflation that has sent the price of many essentials skyrocketing.

Inflation is soaring
Inflation is soaring. Chart: Yahoo

A single adult faced the biggest rise in the minimum income standard — increasing by 27% to £392 per week.

For the average family with two children with both parents working full-time on the national living wage, the required amount to have a decent standard of living has risen 17% to £937 per week.

Peter Matejic, head of analysis at the Joseph Rowntree Foundation, said: “Stratospheric energy bills are hitting poorer families extremely hard. Families on low-incomes are facing the threat of stomachs they can’t fill, homes they cannot heat and energy bills they can’t pay.

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“The situation is dire for families already in extremely difficult circumstances. The government’s cost of living support will not plug the growing gap between incomes and the amount families require to meet their minimum needs.

“In order to move us closer to a society where fewer people fall below the Minimum Income Standard, the government must reform our social security system to ensure that everyone can afford the essentials and, more broadly, what the public think is needed to live in dignity.”

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