New official household income statistics released today show that
the real incomes of the poorest third of households were roughly
the same in 2022-23 as in 2019-20, despite the Covid pandemic and
the cost of living crisis. But other measures of material
wellbeing released today, such as food security, and material
deprivation, tell a different story. The proportion of
individuals experiencing food insecurity rose by almost a half
between 2019-20 and 2022-23 (8% to 11%), and the share in
material deprivation rose from 15% to 19%.
Over the same period, the incomes of the top two-thirds of the
income distribution fell in real terms. This puts this parliament
firmly on course to be the worst for living standards since
comparable records began in 1961.
Alongside this new official data, the IFS has today launched its new living
standards page, featuring interactive data visualization
which showcases over 60 years of data on incomes, poverty and
inequality in the UK.
IFS analysis of the new
data, funded by the Joseph Rowntree Foundation and the abrdn
Financial Fairness Trust, shows:
-
Official income poverty rates are similar to
pre-pandemic levels, but do not account for the
sharper-than-average impact of the cost-of-living crisis on the
budgets of low-income households, or fully capture the
large increases in housing costs experienced by some
mortgagors. Therefore, other measures of financial hardship may
better reflect the living standards of poorer people than
traditional income poverty rates in 2022-23.
-
Alternative measures of financial hardship consistently
show a large deterioration over the same period. The
rate of food insecurity rose from 8% of individuals to 11%
(equivalent to a rise from 5.2m to 7.3m), the rate of material
deprivation from 15% to 19% (10 million to 13 million), and the
proportion unable to heat their home more than doubled from 4%
to 11% (from 2.9 million to 7.2 million).
-
Pensioners also saw large increases along these
measures. In particular, the share of pensioners
unable to adequately heat their home more than doubled (250,000
to 550,000), even as their headline poverty rate fell very
slightly.
Sam Ray-Chaudhuri, a Research Economist at IFS, and
author of the report, said,
“Given the double whammy of COVID and the cost-of-living crisis,
it may not come as a shock that this parliament is on course to
be one of the worst ever for growth in household incomes. Perhaps
more worrying is the evidence that official income statistics
have understated the true increase in deprivation during this
period. The cost-of-living crisis has seen alarming rises in the
share of households facing food insecurity, or unable to
adequately heat their home. With further poor income growth
forecast, and an unenviable fiscal position, bringing about a
substantial improvement in living standards will be a significant
challenge for the next government.”
ENDS
Notes to Editor
Living standards since the last election is a new report
by Sam Ray-Chaudhuri, Tom Waters and Thomas Wernham.
Read the report
here.
