Life has become a whole lot harder for those families her government purported to serve. A couple with two children must now earn over £40,000 between them if they are to live comfortablyby Campbell Robb / July 10, 2017 / Leave a comment
Almost a year ago today Theresa May stood on the steps of No 10 and pledged to put her government at the service of families who are “just about managing”: “I know you’re working around the clock, I know you’re doing your best, and I know that sometimes life can be a struggle.”
Twelve months on, it’s worth reflecting on that promise and asking how the millions of families in this boat are faring. The answer is emphatic: just managing is just getting harder. A working couple with two kids need to earn £20,400 each (over £40,000 between them) to reach the Minimum Income Standard, an annual barometer on living standards.
Based on what members of the public think you need to enjoy a decent standard of living, it covers the essentials but also the things you need to participate in society. An occasional meal out, a small birthday gift for someone in the family, a short self-catering break to the seaside.
Our analysis shows working parents have found it ever harder to reach this standard. This is despite a 4 per cent rise in the National Living Wage (NLW) and tax cuts from a higher personal tax allowance. Economic headwinds have caused the most damage, driving up the cost of living.
“With the Bank of England forecasting inflation will rise to 3 per cent this year and the welfare freeze beginning to bite, life is set to get even harder”
But a significant part of the problem has been made in Downing Street—more precisely, the former occupants in Number 11. The decision to freeze working-age benefits and tax credits in George Osborne’s 2015 Summer Budget are beginning to bite in their first year following the return of inflation, costing a working couple with two children on the NLW £415. The freeze is in place until 2020. To compound the problem, the Treasury claws back the lion’s share of gains from higher wages. For every extra pound earned, around 75p is typically lost by low earning families in additional tax and National Insurance payments and reduced tax credits.
It means families’ ability to meet their day-to-day costs has deteriorated. As well as a struggle to cover the bills—finding the weekly supermarket shop…