Families face ‘a decade of falling living standards’

Many families are set to face a decade of shrinking disposable incomes, new research suggests.

According to the Joseph Rowntree Foundation (JRF), disposable incomes fell by 0.5% in the first five years of the 2020s.

But worryingly, this trend looks set to continue.

Estimates suggest that by 2029, the average family will be around £550 worse off each year compared with 2024. 

That would make it the worst record on living standards for any parliament since records began in 1961.

Why are living standards falling?

The report points to three key reasons behind a fall in living standards:

• housing costs rising faster than inflation
• falling net earnings
• working-age families receiving less income from social security

Households who already have little to no savings to fall back on look set to be particularly hard hit.

Families in the bottom third of incomes could see their disposable income fall by £1,110 (6.2%) per year.

That compares with £380 (1.1%) per year for middle-income households and £970 (1.3%) per year for high-income families.

JRF figures also suggest that couples with children will be worse off by £1,580 (2.8%) per year by 2029, and that lone parents could see a drop of £1,510 (5.6%) per year.

What can the government do?

The JRF believes there are many reforms the government could introduce straight away that would improve people’s living standards, such as:

• setting a new minimum floor in universal credit, so no one falls below a basic level of support
• removing the two-child limit in universal credit
• unfreezing the local housing allowance (LHA) permanently, to better reflect real rental costs
• extending energy bill support for low-income households
• reforming the rules that prevent some families with “no recourse to public funds” from getting help

“A decade that leaves families worse off isn’t inevitable,” said Chris Belfield, chief economist and principal policy adviser at JRF.

“The government has recognised the gravity of the situation by committing to delivering higher living standards. 

“It must introduce targeted policies like investment in social security, and interventions in key markets like housing and energy which affect people's financial security, if they are to stand by their commitment.”

What can you do if you’re struggling?

If you’re finding it hard to keep up your day-to-day expenses, then help is available.

Check your benefits

You might be entitled to financial support from the government, so use our benefits calculator to see what help you could get. 

Create a household budget

Keep a close eye on how much money you have coming in and where it’s going.

You’ll then be able to see where you can make savings and free up cash for vital expenses, such as rent, mortgage payments and household bills.

Check our guide on how to create a budget to get started.

Tackle problem debts

If you’re struggling with debt, then get in touch for confidential, practical and impartial debt advice, and we can discuss what options are open to you.