Which people will be better and worse off by 2020?
Joseph Rowntree Foundation report looks at the big winners and losers of 2015 summer Budget changes.
Couples without children and pensioners will have more than they need each week for a decent standard of living by 2020 thanks to forthcoming changes announced in the summer Budget.
That’s according to new analysis from the Joseph Rowntree Foundation (JRF).
It’s figured out who will have the most and least comfortable standard of living once changes including the introduction of a new National Living Wage (NLW), a freeze in working-age benefits and Child Tax Credit cuts come into force.
The study makes use of the foundation's ‘Minimum Income Standard’ (MIS), to see how living standards of various types of households will change.
This benchmark is based on people's perception of how much money they need to live on and varies according to how many people live in a household.
The biggest winners
The biggest winners according to the report will be couples with no children that work full time. They will be able to achieve 145% of what they need to live comfortably by 2020, which equates to £137 more than they need each week by 2020, compared to £34 today.
Pensioner couples also fare well getting 106% of what they need in order to get by in 2020. This will give them a £15 surplus each week, compared with being £9 a week short today.
Single working people aged over 25 will also benefit. They will be able to achieve 97% of what they need to get by in 2020. This will leave them just £6 shy of their ideal income each week, compared with being £54 short today.
In addition families with two full-time working parents and two children will fare better, achieving 93% of their ideal income. This will close the income gap for them from £75 a week short today to £34 short in 2020.
The biggest losers
One of the biggest losers according to the JRF report will be non-working single people who claim out-of-work benefits. They will get just 35% of what they need to get by on in 2020. This means they will find themselves £118 a week short compared to £110 today.
Out-of-work couples with children that claim benefits also fare badly. Those with one child will achieve 50% of what they need to get by 2020, those with two 52% and those the three just 44%. These households are likely to see a £136-£317 weekly shortfall by 2020 compared to a £118-£240 one today.
Out-of-work single parents are also predicted to suffer. Those with just one child will see the gap in sufficient income grow to £136 a week in 2020 compared to £118 today.
Lone parents working full time on the National Living Wage will also big losers according to the report.
Those with one to three children will only be able to achieve between 66% and 81% of what they need to get by. Those with one infant child will be £80 short compared to £39 short today.
Those with two children in pre-school or primary will be £70 short in 2020 compared to £47 today. While those with three children will have a £160 shortfall compared to a £71 one today.
Policies having the most impact
The report shows low-income households will see the most change.
Families on out-of-work benefits will typically only get half the income they need by 2020.
But for working household the National Living Wage, which will push up the minimum wage to £9 per hour for workers aged over 25 by 2020, will bring substantial gains, especially for those without children and full-time working couples.
However, most working families will be net losers from the changes. Single working parents in particular will suffer from a big gap in income and what they need to live.
The report also warns that should costs rise faster than forecast, disposable income will be further eroded for all households getting working-age benefits, as these are being frozen from 2016 to 2019.
The report concludes that without a link between state support and rising prices, inflation is likely to wipe out any gains from wage rises.
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JRF. The very same group that has funded the apologisers of the so-called 'Jihadi-John' amongst other mindbogglingly ill judged causes they dump cash into. Given that this is their political slant on analysis they should not be taken seriously on much, if anything. If you want a more objective, independent financial view then IFS is one of the better ones out there.
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I have not only met people with more money than they need. At various times in my life I have been one of them. It's just that some people can't distinguish between the meanings of "need" and "want".
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Unfortunately the welfare "benefits" system has long been broken with payments being increased over the past couple of decades to a comfort level far beyond the basic support needed. There is no way the country's taxpayers can produce sufficient funding to meet all that recipients desire and a steady reduction in all "benefits" other than the State Retirement Pension must be made. Payments to those within the working age brackets must not expect the same level of life comfort as those that work and provide for themselves but must accept a degree of hardship,"benefits" must never be sufficient to enable recipients to take holidays (from what?) or buy a car etc. Single parents, working or not, will have a father, working or not, for the offspring, both parents and not the taxpayer being responsible for family upkeep. Non workers must be required to take a job whether they like it or not.
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11 September 2015