UK households are increasingly ‘living beyond their means’ as outgoings surpass income for the first time in thirty years according to figures produced by the Office for National Statistics (ONS).
This comes at the same time as a report by the Treasury select committee reveals the worrying state of household finances, with a growing number lacking a ‘rainy day' fund from which to meet unexpected expenses.
On average UK households spent £900 more than they received in 2017, amounting to £25billion, a quarter of the cost of running the NHS. The last time outgoings surpassed earnings was in 1988 then the shortfall was £0.3billion.
Chair of the Treasury select committee Nicky Morgan said “many households are facing challenges that are putting pressure on the health and sustainability of their finances “.
The pressures placed on family budgets by the rising cost of food and housing have contributed to households across the country increasingly relying on borrowing to make ends meet. In 2017 borrowing reached £80billion, with savings falling to £37billion.
The ONS figures show that the poorest 10% of households spend two and a half times their disposable income on basic living expenses, the richest 10% spend less than half theirs on the same outgoings.
Although praising the FCA for putting a cap on the interest rates charged by payday lenders the committee used their report to criticize government attempts to encourage saving.
Policies like giving tax relief on pensions and ISA's, they claim, do not provide a big enough incentive for people to save. They suggest using cash bonuses and direct matching schemes instead.
Responding to the ONS figures shadow chancellor John McDonnell, speaking to the Morning Star, said they were a “stark example of how brutal Tory pay restraint and austerity had led to living costs outstripping earnings for families “.
Also speaking to the Morning Star Phil Andrew, chief executive of debt charity Step change said it was “unfortunate “that the ONS talked about people ‘living beyond their means’, since it implied people had a choice “when too many people do not”.
He added that “the reality is that too many households, here in Britain, in 2018, simply cannot make ends meet, however hard they try”.
Tom Selby, a research analyst at financial adviser AJ Bell told the Guardian the ONS figures presented the government with a major challenge as they try to “build financial resilience in the UK”.
The burden of debt they carry is limiting the ability of families across the country to plan for the future and their ability to withstand any potential shocks such as a lengthy Brexit induced recession.
Attempts by the government to make it easier and more attractive to save have, so far, underperformed, creating a situation where, as Tom Selby told the Guardian “for people having to borrow to make ends meet, saving for the future might feel like a luxury they simply cannot afford”.
Monday 30 July 2018
Wednesday 25 July 2018
Campaign group launches charter for ownership.
If there were more employee owned businesses would the UK have a fairer economy than it does now?
The Equality Trust, a group that campaigns on issues related to economic equality and social justice think it would. They have launched an ‘Ownership Charter’ to promote the creation of a new economy, marked by lower levels of inequality and a broader based prosperity.
Economic inequality is shown in differences in income and wealth and is influenced by factors such as gender, ethnicity and disability.
Graded using the Gini Coefficient, a measure of inequality across the whole of society the UK scores 0.35, making it an unequal society, although less so than the United States with a score of 0.38. More egalitarian countries such as Denmark score in the range of 0.25, the average for OECD countries is 0.32.
In the UK inequality has risen steadily since 1979, reaching a peak in 1990 and then plateauing for the next decade, since the crisis of 2008 levels have started to rise again.
In 2010 the top 10% of earners received 31% of the country’s wealth, the poorest 10% by contrast held just 1% of both wealth and income.
The Equality Trust claims that employee owned businesses have ‘stronger roots' in the community, are more democratic and are better employers.
Their ten-point charter calls on parties from across the political spectrum to, amongst other things, commit to growing the number of democratic employee owned companies, establishing a bank to support employee buy outs and reviewing legislation to make it easier for employees to buy out the companies they work for.
Commenting on the rising level of inequality in the UK Dr Wanda Wyporska, the executive director of the Equality Trust said, “the UK's appalling wealth inequality is a gross injustice and a dire threat to our economy.”
She added a warning that it could threaten social cohesion, saying that if wealth continues to “gush upwards”, it could be a “recipe for resentment, division and potentially disaster.”
Read more about the Ownership Charter and sign the Equality Trust petition by following this link: https://equalitytrust.eaction.org.uk/petition/ownershipcharter
The Equality Trust, a group that campaigns on issues related to economic equality and social justice think it would. They have launched an ‘Ownership Charter’ to promote the creation of a new economy, marked by lower levels of inequality and a broader based prosperity.
Economic inequality is shown in differences in income and wealth and is influenced by factors such as gender, ethnicity and disability.
Graded using the Gini Coefficient, a measure of inequality across the whole of society the UK scores 0.35, making it an unequal society, although less so than the United States with a score of 0.38. More egalitarian countries such as Denmark score in the range of 0.25, the average for OECD countries is 0.32.
In the UK inequality has risen steadily since 1979, reaching a peak in 1990 and then plateauing for the next decade, since the crisis of 2008 levels have started to rise again.
In 2010 the top 10% of earners received 31% of the country’s wealth, the poorest 10% by contrast held just 1% of both wealth and income.
The Equality Trust claims that employee owned businesses have ‘stronger roots' in the community, are more democratic and are better employers.
Their ten-point charter calls on parties from across the political spectrum to, amongst other things, commit to growing the number of democratic employee owned companies, establishing a bank to support employee buy outs and reviewing legislation to make it easier for employees to buy out the companies they work for.
Commenting on the rising level of inequality in the UK Dr Wanda Wyporska, the executive director of the Equality Trust said, “the UK's appalling wealth inequality is a gross injustice and a dire threat to our economy.”
She added a warning that it could threaten social cohesion, saying that if wealth continues to “gush upwards”, it could be a “recipe for resentment, division and potentially disaster.”
Read more about the Ownership Charter and sign the Equality Trust petition by following this link: https://equalitytrust.eaction.org.uk/petition/ownershipcharter
Wednesday 18 July 2018
Cost of living rise means low income families need a third more income to make ends meet.
Low income families need a third more income than they did a decade ago just to get by according to a leading charity.
Research conducted for the Joseph Rowntree Foundation (JRF) by the Centre for Research in Social Policy at Loughborough University shows that rises in transport, energy and food costs are major causes.
Researchers used the Minimum Income Standard (MIS), a ‘barometer’ of living standards in the UK based on the level of income members of the public think necessary to achieve a decent standard of living. This is regularly updated to reflect changes in the economy.
They found that respondents beloved a single person needs an income of £18,400 a year to achieve MIS and a couple with two children needs £20,000, a lone parent needs £28,450.
These estimates do not match the sort of incomes on which many individuals and families have to try and make ends meet.
Since 2008 the cost of basic goods and services has risen by 35% for single adults, by 30% for a couple with two children and by 50% for a pensioner couple.
In 2018 a lone parent in work has an income 20% below MIS level, a couple where both partners are in work falls 11% short and a couple where just one partner works by 27%.
The rise in the cost of goods and services has been driven by factors including a 65% increase in the cost of using public transport, a 40% hike in energy costs and a 50% rise in childcare costs. All this in an environment of seemingly unending ‘austerity’ where government support for working families has failed to keep pace.
Joseph Rowntree Foundation chief executive Campbell Robb said the figure shows ‘just how precarious life can be for low income households’.
This despite record low levels of unemployment, 4.2% in March-May this year, the lowest level since 1975 according to research carried out for the Library of the House of Commons. At the same time wages have increased by just 2.5%, only a fraction ahead of the Consumer Price Index (CPI), which increased by 2.4% over the same period.
Professor Donald Hirsch of Loughborough University said the past decade had been ‘particularly difficulty’ for low income families because the costs they have to pay have risen faster than the consumer prices index, whilst the support they get from the state have lagged behind.
The JRF are calling on the government to allow low income families to keep more of their earnings by increasing the work allowance aspect of Universal Credit. This, they say, would help three million families reach the MIS.
It was time, said Campbell Robb, for the government to ‘put things right by allowing families to keep more of their earnings’.
Research conducted for the Joseph Rowntree Foundation (JRF) by the Centre for Research in Social Policy at Loughborough University shows that rises in transport, energy and food costs are major causes.
Researchers used the Minimum Income Standard (MIS), a ‘barometer’ of living standards in the UK based on the level of income members of the public think necessary to achieve a decent standard of living. This is regularly updated to reflect changes in the economy.
They found that respondents beloved a single person needs an income of £18,400 a year to achieve MIS and a couple with two children needs £20,000, a lone parent needs £28,450.
These estimates do not match the sort of incomes on which many individuals and families have to try and make ends meet.
Since 2008 the cost of basic goods and services has risen by 35% for single adults, by 30% for a couple with two children and by 50% for a pensioner couple.
In 2018 a lone parent in work has an income 20% below MIS level, a couple where both partners are in work falls 11% short and a couple where just one partner works by 27%.
The rise in the cost of goods and services has been driven by factors including a 65% increase in the cost of using public transport, a 40% hike in energy costs and a 50% rise in childcare costs. All this in an environment of seemingly unending ‘austerity’ where government support for working families has failed to keep pace.
Joseph Rowntree Foundation chief executive Campbell Robb said the figure shows ‘just how precarious life can be for low income households’.
This despite record low levels of unemployment, 4.2% in March-May this year, the lowest level since 1975 according to research carried out for the Library of the House of Commons. At the same time wages have increased by just 2.5%, only a fraction ahead of the Consumer Price Index (CPI), which increased by 2.4% over the same period.
Professor Donald Hirsch of Loughborough University said the past decade had been ‘particularly difficulty’ for low income families because the costs they have to pay have risen faster than the consumer prices index, whilst the support they get from the state have lagged behind.
The JRF are calling on the government to allow low income families to keep more of their earnings by increasing the work allowance aspect of Universal Credit. This, they say, would help three million families reach the MIS.
It was time, said Campbell Robb, for the government to ‘put things right by allowing families to keep more of their earnings’.
Thursday 5 July 2018
Changes to supported housing could put people with mental health problems on the streets.
People with mental health issues living in short-term housing could see the support they receive put in ‘jeopardy’ by the roll out of Universal Credit according to a leading charity.
RETHINK surveyed 117 members working in housing services, most of whom said they feared the service they offered would be forced to close by changes to funding.
Under Universal Credit funding for stays in supported housing of only a few weeks duration will be increasingly hard to find, forcing claimants to fall back on hard pressed council services.
As a result, people living with defined mental health problems may face longer stays in hospital as they wait for a placement and may end up on the streets if one cannot be found.
Sean Duggan, chief executive of the Mental Health Network, told Mental Health Today that supported housing plays ‘a crucial role in preventing homelessness for people with mental health issues'.
He added that under the proposals people living in short-term supported housing will have ‘no guarantee their housing costs will be met', forcing them to ‘live from day to say' without any security.
The legislation to introduce Universal Credit was passed in 2011 and the amalgamation of several separate benefits into a single payment was scheduled to be rolled out in 2017.
Its introduction has been delayed by IT problems and in those areas where Universal Credit has been implemented beset by concerns that the housing element is forcing vulnerable people into debt and the risk of becoming homeless.
Labour MP Frank Field, a long-term advocate of benefit reform, described Universal Credit as ‘a shambles; leaving a trail of destruction in its wake'.
Once full implementation has been achieved seven million claimants will be covered by Universal Credit and it will account for £63billion in government spending.
Commenting in Mental Health Today on the likely impact of the changes Danielle Hamm, assistant director for campaigns and policy at RETHINK said ‘supported housing is a lifeline for people living with mental illness’.
She called on the government to ‘reconsider this potentially disastrous funding model' and to treat ‘short-term’ tenancies ‘as just that, as weeks not years'
RETHINK surveyed 117 members working in housing services, most of whom said they feared the service they offered would be forced to close by changes to funding.
Under Universal Credit funding for stays in supported housing of only a few weeks duration will be increasingly hard to find, forcing claimants to fall back on hard pressed council services.
As a result, people living with defined mental health problems may face longer stays in hospital as they wait for a placement and may end up on the streets if one cannot be found.
Sean Duggan, chief executive of the Mental Health Network, told Mental Health Today that supported housing plays ‘a crucial role in preventing homelessness for people with mental health issues'.
He added that under the proposals people living in short-term supported housing will have ‘no guarantee their housing costs will be met', forcing them to ‘live from day to say' without any security.
The legislation to introduce Universal Credit was passed in 2011 and the amalgamation of several separate benefits into a single payment was scheduled to be rolled out in 2017.
Its introduction has been delayed by IT problems and in those areas where Universal Credit has been implemented beset by concerns that the housing element is forcing vulnerable people into debt and the risk of becoming homeless.
Labour MP Frank Field, a long-term advocate of benefit reform, described Universal Credit as ‘a shambles; leaving a trail of destruction in its wake'.
Once full implementation has been achieved seven million claimants will be covered by Universal Credit and it will account for £63billion in government spending.
Commenting in Mental Health Today on the likely impact of the changes Danielle Hamm, assistant director for campaigns and policy at RETHINK said ‘supported housing is a lifeline for people living with mental illness’.
She called on the government to ‘reconsider this potentially disastrous funding model' and to treat ‘short-term’ tenancies ‘as just that, as weeks not years'
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