FAMILIES are struggling to deal with an “unprecedented” spike in household expenses, a report has claimed.
The price of a minimum standard of living has risen by a quarter over the past five years – driven by spiralling expenses including childcare, energy, rent and food costs, according to an investigation by the Joseph Rowntree Foundation (JRF).
This is a much faster rate compared with a 17 per cent increase in the standard measure of inflation recorded by the consumer prices index (CPI) – and has outstripped the majority of wage rises.
The research found that families are having to deal with an “unprecedented erosion of household living standards” as the gap widens between what they feel they need to live comfortably on and their actual income.
A working couple with two children now need to earn £19,400 each just to maintain adequate living standards, the report found, while a single parent would need earnings of around £25,600. The figures compare to just £13,000 needed by a single person in 2008 – when the JRF carried out its first piece of equivalent research.
However, even if the £13,000 wage had risen in line with the official level of inflation, the single worker would still take home a pre-tax wage of just £14,000 – around £3,000 short of the £16,850 salary needed to cover higher living costs in 2013, according to the report.
The problem has been compounded by real-terms cuts in benefits and tax credits, the report said, arguing that the cuts had been offset “to only a small degree” by increases in tax allowances enabling households to keep more of what they earn.
“Cuts to benefits and tax credits – especially cuts to support for childcare – combined with stagnant wages and the rising cost of essentials is resulting in an unprecedented erosion of living standards,” said Katie Schmuecker, policy and research manager at JRF. “The government has introduced measures like raising the personal tax allowance to try and help, but any positive effect is more than cancelled out.
“If the Government wants to help these struggling families, they have to make sure that different policies join up rather than contradict each other.”
One of the biggest financial pressures over the last five years has been the rise in childcare costs, which have soared over twice as fast as inflation at 37 per cent, the report said.
Energy costs have increased by 39 per cent over the five-year period and public transport has become almost one-third more expensive.
Citizens Advice Scotland (CAB) chief executive Margaret Lynch said: “It’s not just the impact of the recession that has caused the problem.
“The UK government’s welfare reforms have hit the pockets of many people throughout Scotland – and those who have suffered most are those who are on the lowest incomes.”