Resolution Foundation’s nightmare prediction: By mid-2023, real wage gains from 2003 onwards will have essentially disappeared.
London, Thanasis Gavos
Major new think tank survey describes outlook for Britons’ living standards in coming years as ‘frankly terrifying’ Resolution Foundationwhich studies the living conditions of the weakest citizens.
According to the researchers, British households will face the greatest pressure on their living standards for a century.
Real disposable income is expected to fall by 10% this year and next, as real family income falls at the fastest rate since 1997. This means that by the middle of next year real wage increases from 2003 onwards will have essentially lost.
A 10% drop in disposable income is equivalent to £3,000 a year for a low-income household. This in turn implies an increase in the number of citizens on the poverty spectrum by three million to 14 million.
Relative child poverty, moreover, is predicted to rise to 33% in four years. The last time one in three children lived in poverty in the UK was in the 1990s.
Similar predictions for a dramatic increase in child poverty in the country are made with its own report by the aid organization Save the Children Scotland, calling on the governments of London and Edinburgh to immediately help the poorest families.
Save the Children’s policy director Fiona King said that “no one can overstate the simple fact that the coming months will be devastating for families and especially for children who will be left cold and hungry this winter unless emergency action is taken now.”
The Resolution Foundation’s report notes that to avoid the worst-case scenario, households would need to be helped with their exorbitant energy bills – either through a social charge, across-the-board bill reductions, a cap on increases or further targeted help.
The think tank also stresses the need to honor former Finance Minister and incumbent Rishi Sunak’s pledge to increase welfare benefits in line with inflation.
The Resolution Foundation researcher Lalitha Tray commented that with inflation remaining at unimaginable highs for most of the next year, the outlook for households in the country is “frankly scary”.
As he added, “No responsible government could accept such a prospect, so radical political action is required. We will need a support package for energy costs worth tens of billions of pounds, accompanied by increased benefits next year.”
Alongside this study, University College London’s Institute for Health Equity warns that the combination of high fuel costs, rising poverty and government inaction could lead to a “humanitarian crisis” in the UK, with millions of children developing is affected.
The authors of the report say they have no doubt that families’ inability to turn on the heating this winter will cost children their lives.
Speaking to Sky News from Washington, which is being visited by the Finance Minister of the outgoing government, Nadeem Zahawi, he promised more help for households, but reiterated that it is up to the next Prime Minister.
To a related question, he added that electricity or natural gas should not be cut off in any house due to inability to pay the bills.
Meanwhile, at the 12th and final pre-election event organized last night in London by the Conservative Party for the two potential successors of Boris Johnson, the dominant new leader of the country Liz Truss ruled out the possibility of having to impose restrictions on energy consumption, but also the possibility of new taxes.
On the contrary, her opponent Rishi Sunak commented that under the current circumstances no possibility should be ruled out.
Ms Truss has come under fire for not detailing what she plans to do as Prime Minister to reduce household energy costs, which will rise by more than £3,500 a year from October. The new or new Prime Minister of the country will be announced at noon on Monday.
On the perennial question of whether they would impose a new tax on the surplus profits of energy companies, Liz Truss also ruled it out, while Mr Sunak avoided giving a binding answer.
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