Draconian welfare cuts are damaging the economic security of millions of working families, according to a damning new report published today.
New analysis published by the Joseph Rowntree Foundation (JRF), calculated by the Centre for Research in Social Policy at Loughborough University, found that six in ten families struggling to make ends meet have someone in work – equivalent to 2.6million households.
According to the research, benefit cuts have outweighed improved job prospects, despite record levels of employment, leaving millions of households below the Minimum Income Standard (MIS) – a minimum income level the public say is enough for an acceptable standard of living.
The research shows that the income of 11.6million individuals in 2013/14 was below the MIS, representing 28% of all people included in the study.
People with children have seen their chances of being below the MIS increase by a third, with four in ten now struggling to make ends meet.
The number of individuals without children below the MIS fell by 400,000 in 2013/14 on the previous year, after large increases at the beginning of the financial crisis in 2008/09.
Lone parents are at the greatest risk, with 41% below the MIS despite working full-time.
According to the analysis, pensioners are at a far lower risk than any other group at 8.5% – or 823,000 individuals.
Other findings include:
- Of the 2.6 million working households who are still below MIS, 600,000 have all adults working full-time.
- In single breadwinner families, there has been a growing risk of having a low-income, increasing from 38% in 2008/09 to 51 per cent in 2013/14. Of the 868,000 single breadwinner households, 441,000 households were below the MIS.
- 41% of lone parents working full-time still have incomes below MIS, up from 26% in 2008/9. Of 319,000 lone parent households where the lone parent is working full-time, 132,000 lacked the income needed for an adequate standard of living in 2013/14.
- For couple families where both parents work full-time, the risk has risen from five to 12 per cent. Of 1.19 million couple households where both parents work full-time, 143,000 lacked the income needed for an adequate standard of living in 2013/14 – up 88,000 on 2008/09.
The new National Living Wage will help some families, the JRF says (particularly those without children), but will not “take all of the strain”.
JRF says the Work Allowance under Universal Credit should be increased, allowing families to keep more of their income before benefits are reduced.
Katie Schmuecker, Policy and Research Manager at JRF, said: “Work is the best route to economic security and a better standard of living and we welcome record levels of employment.
“But as well as more jobs, we need better jobs so all families can benefit from economic growth. Despite working full-time hours, more families are still falling short of what they need to make ends meet. We need the state and businesses to ensure people in work can achieve economy security.
“The upcoming National Living Wage is an important step towards building a society with higher wages and a lower need for welfare, but it won’t take all of the strain.
“Alongside topping up the earnings of low-income families, more needs to be done to address skills shortages and encourage the creation of more productive jobs that can create prosperity for all.”
Matt Padley, author of the report and from Loughborough University, said: “For the first time, our data is showing the extent to which the more favourable economic conditions are helping households on low-income return to acceptable living standards.
“It is good news that things have stopped getting worse overall, although there remain many more people living on low incomes than in 2008.
“What is more troubling is that for families, even with more work and slightly better pay, the risk of falling below the minimum has continued to rise.
“Millions of low earners depend not just on wages but also on in-work benefits to make ends meet, and a decline in these benefits has made the most difference to the overall level of their incomes, relative to what they need.”
Labour’s Shadow Work and Pensions Secretary, Owen Smith MP, said: “This report shows the truth that millions of families already know.
“It’s getting harder and harder for working families to make ends meet, as under this Tory government we are seeing the lowest rate of pay growth for a century.
“Instead of doing anything to help Iain Duncan Smith is about to make things much worse. The Tory cuts to Universal Credit will leave more than two million low and middle paid working families £1,600 a year worse off.
“This report is yet more evidence that the Tories should listen to Labour’s demands to reverse the cuts to Universal Credit.”