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Thirty million people in the UK will not be able to afford what they consider a decent standard of living by the time the current Parliament ends in 2024, according to a study.
The New Economics Foundation, which is left-leaning, said that 43% of households would lack the resources to put food on the table, buy new clothes or get medical treatment as a result of rising prices, rising earnings from low inflation and a projected increase in unemployment. Their families – an increase of 12 percentage points compared to 2019.
The NEF said in its calculations that by 2024 nearly 90% of single parents and 50% of workers with children will fall below the minimum income standard, indicating the need for radical change in the welfare system.
The thinktank called for universal credit to be scrapped and replaced by a national living income, which at least cannot fall below whether a person is in or out of work. Under its proposal, more than two-thirds of the population would see their disposable income rise, with a 50% increase – or £500 a month – for the poorest households.
The £70bn-a-year plan will be funded by a more progressive tax system, including harmonizing tax rates for income and wealth, extending National Insurance to investment income and scrapping the upper earnings limit for NICs.
Sam Timms, economist at the New Economics Foundation, said: “A decade of cuts, freezes, caps and indiscriminate migration between systems has left the UK with one of the weakest safety nets in the developed world.
“Millions of families were already living in avoidable deprivation and hardship but as we enter the biggest crisis in living standards on modern records, the everyday experience of low-income families is set to become even more dire.”
“We need a bold new way of providing income support that will help all people meet the challenges presented by the rapidly changing world we live in. The National Living Income will set an income framework that is sufficient to meet the necessities of life, leaving no one below cannot come, whether in work or out.”
Official figures show that 22% of people in the UK live below the poverty line as they earn less than 60% of the average household income.
The NEF definition of a decent standard of living is based on the work of another think tank, the Joseph Rowntree Foundation, which asks people what they consider an acceptable minimum. The list covers eight categories: housing, domestic fuel, food, clothing, household goods and services, health and personal care, transport and travel, and social and cultural participation.
The “minimum income standard” varies by household type, but the average shortfall will rise from £6,200 a year by December 2019 to £10,000 by December 2024, the NEF said. It added that MIS was used to calculate so-called real life wages paid by companies such as Ikea and KPMG and football clubs such as West Ham, Liverpool and Chelsea.
A government spokesman said: “Universal Credit provides an important safety net for millions of people, enabling them to support themselves and their families while moving towards financial independence through employment.
“But we know people are struggling with rising prices which is why we are protecting millions of people with at least £1,200 in direct help this year, including £400 towards energy costs. Our urgent support for families is our An energy price guarantee is also included, saving the average household around £900 over the winter.”
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