Money, money, money

The UK has endured two decades of very sluggish progress on living standards, with a special squeeze on those we describe as Unsung Britain – working-age households, with incomes below the median. This briefing considers the components of income in the round over the last 30 years.

There is a positive side of the story, to do with rising employment and earnings, whose share in poorer households’ income is up by 5 percentage points over three decades. There is also a negative aspect, centred on squeezed social security. Cuts since 2010 have not only offset but overwhelmed previous extensions of family benefits during the New Labour era, leaving the poorest fifth typically receiving benefits worth £1,200 less in real terms than in 1994-95.

Outgoings shape living standards too, and housing costs are down by 3 percentage points of income on aggregate for low-to-middle income households, but this average conceals far more than it reveals, because they have evolved in entirely different ways for different parts of the population. Much clearer is the rise in local tax payments, which have soared across Unsung Britain, and particularly for the very poorest, whose Council Tax burden has roughly doubled to approach close to 5 per cent of income over the last 20 years.