Today, the Department for Work and
Pensions released the latest official statistics on household
incomes, covering the period from April 2023 to March 2024. These
show that real median household income fell by 2.0% compared to
the previous year (2022–23) – leaving it 3.6% below its level in
2019–20 and implying no growth in median incomes since 2016–17.
The statistics show that between 2022–23 and 2023–24 household
incomes fell for households of all income levels, with the
largest declines among the poorest households. This is despite
lower inflation, a recovery in the labour market, real term rises
to benefits in April 2023 (undoing previous falls) and the
continuation of some temporary ‘cost of living' support
measures.
However, there is some reason to
suspect these figures may not be telling us the full story. The
household income data released today shows both weaker growth in
employee earnings and a lower number of employees than recorded
in tax data. There has also been a decline in the share of people
responding to the survey – from 49% in 2019–20 to 31% in 2023–24.
This may be reducing the survey's representativeness, mirroring
now well-publicised difficulties faced by the Labour Force
Survey. Uncertainty about household incomes, if it persists, will
make it very difficult for the government to know whether they
are on track to meet their child poverty
targets.
Sam Ray-Chaudhuri, a research
economist at IFS and an author of the briefing,
said:
"Today's new data on household incomes
are at first sight extremely concerning. They suggest that last
year saw the biggest year-on-year fall in household incomes since
2011–12. But digging into the data suggests these estimates might
not be reliable. A key driver of the fall – a reduction in
earnings from employment, is not corroborated by more reliable
data from tax records. Policymakers are once again left in the
dark as they try to navigate an increasingly unreliable
statistical landscape, and this can only hinder effective
policymaking. For example, as the government develops its child
poverty strategy, unreliable poverty estimates make it harder to
precisely understand the nature of child poverty in the UK, and
to set targets against which the success of its policies can be
reliably measured."
ENDS
New data suggest dramatic decline
in living standards, but it may just be the quality of the data
that has declined is an IFS briefing by
Sam Ray-Chaudhuri and
Tom Wernham.
You can read the briefing on the IFS website
here
