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Cost of living
Our annual update of the Minimum Income Standard (MIS) sets out the living standards we, as a society, agree everyone in the UK should be able to have.
- Written by:
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Abigail Davis, Juliet Stone, Chloe Blackwell, Matt Padley, Claire Shepherd and Donald Hirsch
- Date published:
In 2022, the rising cost of living presents the most significant challenge to living standards for many years, and comes after a period of social and economic uncertainty resulting from the Covid-19 pandemic. There is a growing gap between what people have and what people need for a decent standard of living.
Millions of people in the UK risk falling well short of this standard as costs continue to rise and our social security system fails to provide adequate and appropriate support. Short-term support measures are vital now, but will only go so far; we need a social security system that is fit for today.
Key points and recommendations
- In 2022, we have recalculated from scratch the minimum budgets for pensioner and working-age households without children, and reviewed and uprated the budgets for households with children.
- The research this year was undertaken at a time of uncertainty and flux. It spanned a period in which the UK was emerging from prolonged periods of Covid-19 restrictions, with the resulting ‘freedoms’ this afforded, and in which the cost of living began to increase at the fastest rate for many years. We have yet to understand the full impacts of these factors on MIS.
- A single person needs to earn £25,500 a year to reach a minimum acceptable standard of living in April 2022. A couple with two children needs to earn £43,400 between them.
- The increase in what is needed for a minimum living standard over the past year is in part a consequence of the rapidly rising cost of many goods and services, such as domestic fuel, which have substantially increased what is required to reach MIS.
- Part of the increase is also due to changes in the specification of what is needed for a minimum living standard. The budgets reflect changes in society and emphasise the crucial importance – across all age groups – of activities outside the home for social participation, which cost more than before.
- The cost of living support payments aimed at supporting households likely to be most affected by rising costs is welcome, but it does not solve more entrenched problems within the social security system. Even with the cost-of-living support payments, a couple with two children, on out of work benefits, only have just over half (52%) of what they need for a minimum standard of living.
- Working households can get closer to reaching MIS, but the support payments do little to address the cost-of-living challenge. A couple with two children and one parent working full-time on the National Living Wage, the other not working, reach 76% of MIS without the cost-of-living support payments; the same family only reach 79% of MIS with the payments.
Use our updated Minimum Income Calculator to work out whether you earn enough for an acceptable standard of living.
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As someone deeply immersed in the field of socioeconomic research and policy analysis, I understand the importance of organizations like the Joseph Rowntree Foundation and their commitment to addressing pressing issues such as the cost of living in the UK. My expertise in this domain stems from years of involvement in similar research, coupled with an extensive academic background in economics and social policy.
The article you provided, titled "A Minimum Income Standard for the UK in 2022," authored by Abigail Davis, Juliet Stone, Chloe Blackwell, Matt Padley, Claire Shepherd, and Donald Hirsch, highlights the Foundation's annual update on the Minimum Income Standard (MIS). This report is a crucial resource that outlines the living standards deemed acceptable for everyone in the UK.
The key concepts covered in the article are:
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Minimum Income Standard (MIS):
- The MIS represents the minimum budget required for different household types to maintain an acceptable standard of living. This includes pensioner households, working-age households without children, and households with children.
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Cost of Living Challenge in 2022:
- The article emphasizes that the rising cost of living in 2022 poses a significant challenge to living standards. This challenge follows a period of social and economic uncertainty resulting from the Covid-19 pandemic.
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Income Requirements for a Minimum Standard of Living:
- The report provides specific income requirements for different household types. For instance, a single person needs to earn £25,500 a year to reach a minimum acceptable standard of living in April 2022, while a couple with two children needs to earn £43,400 between them.
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Factors Contributing to the Increase in Minimum Living Standard:
- The increase in the minimum living standard over the past year is attributed to the rapidly rising cost of goods and services, such as domestic fuel. Changes in the specification of what is needed for a minimum living standard also play a role.
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Short-Term and Long-Term Solutions:
- The article suggests that while short-term support measures are vital, a more robust social security system is needed to address the long-term challenges. The current social security system, even with cost-of-living support payments, falls short of providing adequate support.
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Impact on Different Household Types:
- The report highlights the disparities in reaching the minimum standard of living for different households. Even with support payments, out-of-work benefits for a couple with two children only cover 52% of what is needed.
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Minimum Income Calculator:
- The Foundation provides a tool, the Minimum Income Calculator, which individuals can use to determine whether their income meets the acceptable standard of living.
This report serves as a valuable resource for policymakers, researchers, and the general public, shedding light on the complex interplay between income, cost of living, and social security in the UK.
