Tuesday, 24 July 2012

What is the minimum income needed in harder times?

via JRF - Combined Feed (The Joseph Rowntree Foundation) by Abigail Davis

The Minimum Income Standard (MIS) research provides an interesting insight into recession-hit Britain. Look through that prism, and you see ordinary members of the public showing signs of thrift as they define what is needed to have a socially acceptable minimum standard of living.
How do we know this? We’ve been holding in-depth discussions with people on this subject since 2006 and this week’s report [dated 11 July; see below for details] provides an update on what has happened since 2008, when we published the first findings.

What’s really striking is that although people are aware that times are tougher – incomes for many of those in work are falling in real terms, tax credits have been reduced and prices have risen – how they think about this minimum has not fundamentally changed. What people think is needed to have a standard of living that is above survival but well below luxury has remained pretty much stable across the vast majority of items included.

However, there are some instances where people are clearly thinking hard about how they meet their needs in more economical ways.
  • Everyone agreed that it’s still important to be able to go out to eat once in a while, but you do that either less often or more cheaply. Pensioners told us that competition for customers among pubs and restaurants means that “early bird” and “2-for-1” deals are readily available everywhere, so they reduced the eating out budget accordingly. For families, instead of the £20 a month allocated for eating out or takeaways at home in 2008, groups now say a couple with two children need £30 to spend three times a year.
  • Similarly, groups still agreed that you need to be able to exchange Christmas and birthday presents with family but said that the gifts partners gave each other were more symbolic than ostentatious, and reduced the amount per present from £50 to £15.
  • Parents still think that children should be able to have access to a couple of activities on a regular basis. You should still be able to take your toddler for a swim, but now parents say once a month is ok, rather than once a week like they did in 2008. They also substituted a cheap, local “stay and play” session for the weekly trip to a soft play centre that was previously included.
One apparent exception to this is the inclusion in 2012 of a (second-hand) car for families with children, a distinct change from previous years where groups agreed public transport and taxis would meet transport needs. However, the perception of the groups held this year (borne out by independent research by government departments) is that public transport fares are rising and services are being reduced to the point where buses are no longer considered sufficiently flexible, affordable and available to meet the needs of parents and children to access work and leisure opportunities. Rather than increase the budget to include enough taxi fares to compensate for the decline in services, parents reached the conclusion, after much discussion, that it would be more cost-effective to own a second-hand car. Offset against the rise in fares, for a couple with two children this adds less than £30 to the weekly budget.

So these insights reflect a society in which people’s response to harder times is not an across-the-board reduction in what is needed for a minimum acceptable living standard, but where people are thinking carefully about how to meet some of those needs in slightly different ways.

A Minimum Income Standard for the UK in 2012 by Abigail Davis, Donald Hirsch, Noel Smith, Jacqueline Beckhelling and Matt Padley
Summary (PDF 4pp)
Full report (PDF 52 pp)

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