New Report Highlights Significant Rise in the Cost of Living with Dignity in the UK

A single person needs to earn £29,500-a-year to reach a minimum acceptable standard of living in 2023 and a couple with two children need to earn £50,000 between them, according to the latest Minimum Income Standard (MIS) report.

Researchers at Loughborough University’s Centre for Research in Social Policy (CRSP) have published their annual figures which set out what households need to spend to reach an acceptable standard of living based on detailed discussions with members of the public.

Funded by the Joseph Rowntree Foundation, the latest MIS research shows that compared with last year the threshold for single people has gone up by £4,000 and for couples by £6,600.

The report explains that this increase has been driven by the rapidly rising cost of many goods and services. Rises in the cost of domestic fuel and food in particular have had a notable impact.

It also shows that cost-of-living payments offered to families on low incomes fall well short of bringing living standards in line with MIS.

A couple with two children, where one parent is working full-time on the National Living Wage, and the other is not working, reach 74% of MIS without the cost-of-living support payments.

The same family only reach 77% of MIS with the payments.

Professor Matt Padley, co-director of CRSP, said: “MIS continues to provide a unique and distinctive way through which to observe and track the impact of social, economic, political and cultural change on our shared vision for higher living standards where we can all live with dignity in the UK.

“The cost-of-living support payments intended to help those households most likely to be impacted by rising costs are welcome.

“But they do not begin to solve or resolve more deep-rooted problems with our social security system. Even with the additional cost-of-living support this year, a couple with two children, on out of work benefits, only have half of what they need for a minimum standard of living.

“Working households can get closer to reaching MIS, but high inflation continues to pose a substantial challenge.”

As well as highlighting out-of-work benefits, the latest report also shows that incomes for working households fail to meet MIS thresholds too.

For those households in work, there have been gains through a 9.7% increase in the National Living Wage (NLW) in April 2023 from £9.50 to £10.42.

Although this increase is above CPI inflation (8.7% in April 2023), it does not make up the gap between NLW and inflation resulting from a well below inflation increase in 2022.

Critically, it also doesn’t cover the increase in the cost of a minimum budget in the past year.

In April 2023, benefits were uprated by the relevant inflation rate of 10.1%, following a ten-year period in which the uprating of safety-net benefits had predominantly been below inflation, meaning these had lost their value relative to increases in the cost of living.

Although safety-net benefits have therefore seen a significant cash increase in 2023, as with the NLW, this is smaller than the increase in MIS budgets. Consequently, the adequacy of incomes on out-of-work benefits and the NLW relative to what is needed for a minimum has fallen.

The more comprehensive financial support provided to households during 2022-23 has ended, replaced by a cost-of-living payment totalling £900 in 2023-24 for low-income households in receipt of means-tested benefits. There is additional support for pensioner households and households in receipt of disability benefits.

Prof Padley said: “Things that have been taken for granted as core elements of living with dignity in the UK are no longer a given for lots of people.

“In the face of such protracted challenges, it is absolutely crucial that we re-build a social security system underpinned by a shared, long-term vision of a society in which everyone can live in dignity.

“A society in which parents don’t have to worry about whether or not they can send their children to school in the appropriate uniform; where pensioners don’t have to cut back on meals so that their pension will last the week; where those out of work are adequately supported to meet their essential needs.

“We need a social security system that does not depend on the existence of foodbanks and charities to catch those who have fallen though the growing holes in the safety net.

“Current cost-of-living support for the most vulnerable households is welcome, but it is a short-term response to a problem that needs long-term thinking.

“We need bolder ambition, and to find ways to collectively create a society in which fewer and fewer people fall below the Minimum Income Standard.

Until we do this, many people will continue to exist on incomes that do not meet their minimum needs. Dealing with this is critical to the nation’s economy and health, as well as people’s dignity.”