Last week, at Prime Minister’s Questions, Theresa May reinforced her commitment to “building a Britain fit for the future”. The upcoming Budget on Wednesday is an opportunity for the Government to lay the foundations for better living standards across the UK.
Recent research for the Joseph Rowntree Foundation (JRF) by Loughborough University shows that 19 million people, (30% of the UK population) have less than they need for an acceptable living standard, as defined by the public. These families are often getting by day to day but have tight budgets, meaning the smallest unexpected cost can knock them off course. The further they fall below this standard the more likely they are to experience poverty.
The Chancellor must use Wednesday’s Budget to prioritise those who are struggling to make ends meet.
Supporting family incomes
The Institute for Fiscal Studies expects poverty to rise in the coming years. The freeze on most working age benefits is the single biggest policy driver behind this increase, hitting family budgets hard at a time when the cost of essentials is rising. JRF research estimates half a million additional people - 85% of whom are in a working family - are likely to be living in poverty in 2020 as a result of the freeze. The Budget should end the freeze, to help people’s incomes keep up with prices.
But with the majority of people experiencing poverty living in a working household, people also need to be able to keep more of their earnings. The Government has said it will raise the Personal Tax Allowance, but only £1 in every £6 spent on this policy goes to people in the bottom half of the income distribution. It would be far more effective for the Government to focus its limited resources on restoring the original work allowances in Universal Credit – the amount someone can earn before benefits begin to be withdrawn. This help would go directly into the pockets of low income households.
Genuinely affordable housing
The Prime Minister has made it her personal mission to solve the UK’s housing crisis. Ultimately, the only sustainable way to do this is to build more genuinely affordable homes – and not simply to focus on first time buyers.
With 4.7 million people in the private rented sector living in poverty, the housing crisis is having a significant impact on living standards. JRF is calling for the Government to build the 80,000 new homes that England needs every year and to let half of them at a Living Rent. This would be a rent linked to the lower end of local earnings, making it easier for everyone to afford a home in their local area.
Ahead of the Budget the Government is expected to publish its Industrial Strategy. It is essential that this gives places the tools they need to grow their local economies and ensure economic growth works for all. Together with the Industrial Strategy, Wednesday’s Budget is an opportunity to improve the living standards of low income families.
In a time of limited resources, it is essential that support is targeted at those that need it the most. The Budget is an opportunity for the Government to show that they really are on the side of the just about managing.