Workers 25% Worse Off than 2008

The basic cost of living has soared by 25% since the economic slump began in 2008.

According to social policy think-tank the Joseph Rowntree Foundation (JRF) families are facing an "unprecedented erosion of household living standards" because of rising inflation and flat-lining wages. The JRF report notes that while the Coalition has moved to take more people out of tax by raising the level of the personal allowance to £9440 in April, this has been more than cancelled out by the cuts to benefits and tax credits as well as the rising cost of essentials.

Katie Schmuecker, the foundation's policy and research manager, said: "Our research shows the spiralling cost of essentials is hurting low-income families and damaging living standards. The public have told us their everyday costs have soared above wage levels, driving up the amount they need to make ends meet."

Peter Kelly, chairman of the Poverty Alliance, said : "Combined with cuts in benefits and frozen pay for many, it is little wonder so many Scots are turning to food banks or payday lenders. Such a situation is both unacceptable and unnecessary. When the Chancellor turns the screw on those living on benefits or working in low-paid jobs he is doing nothing to help them or the economy.”

Katherine Trebeck, policy and advocacy manager at Oxfam, said: "The combination of spiralling prices – for essentials like food, fuel, housing, and childcare – alongside stagnant incomes, is pushing many people into even deeper poverty."

In 2008, a single person earning £13,000 would have reached the minimum living standard. If their wage had risen in line with average wage increases, they would today earn £14,000 – well short of the £17,000 salary needed to cover today's higher living costs. In 2013, to reach an adequate standard of living a single person needed to earn £16,850, a working couple with two children needed to earn £19,400 each and a lone parent needed earnings of £25,600.

 Childcare costs have risen over twice as fast as inflation at 37%, rent in social housing by 26%, food costs by 24%, energy costs by 39%, and public transport by 30%. The report explains how the freeze in child benefit, the decision to uprate tax credits by just 1% and the cost of essentials rising faster than inflation means a working couple with two children will be £230 worse off a year, a working lone parent £223 a year and a single person £49 per year.

Donald Hirsch, from Loughborough University, said that for the first time since the 1930s benefits were being cut in real terms by not being linked to inflation. He said: "This combined with falling real wages means the next election is likely to be the first since 1931 when living standards are lower than at the last one."