A new forecast from the Joseph Rowntree Foundation (JRF) suggests that living standards for UK families could decline by 2030, with the lowest-income households experiencing the most significant impacts.
According to The Independent, this warning comes as Chancellor Rachel Reeves is set to announce new spending cuts, raising concerns about the future financial wellbeing of ordinary families.
The forecast has sparked debate about the government’s fiscal policies and their potential consequences on the broader population.
Potential Impact on Families
Potential Impact on Families
The JRF’s analysis highlights a concerning trend, where average disposable incomes for families could drop by £1,400 by 2030, marking a 3% fall. Families with the lowest incomes will suffer even more, with a 6% reduction in disposable income, equating to £900 a year.
These losses come after years of economic strain, with the lingering effects of the Covid-19 pandemic and rising inflation still making their mark on household finances. The charity also points out that average disposable incomes are expected to remain £400 lower in April 2025 than in 2020.
The JRF has raised the alarm that under Sir Keir Starmer’s government, the UK could miss a crucial milestone: an increase in living standards during this parliament.
This would be the first time since records began in 1955 that the country could experience a decline in living standards under a Labour government. The charity points out that previous governments, irrespective of party, have been able to achieve this target, but current trends suggest otherwise.
The Role of Government Policies
As Chancellor Rachel Reeves faces significant fiscal pressures, the JRF warns against using spending cuts, especially in welfare, as a means to balance the budget.
Alfie Stirling, director of insight and policy at JRF, argues that tax reforms targeting the wealthiest could be a more effective solution.
There is no doubt the government is facing an unenviable list of economic pressures and uncertainties, ranging from the domestic to the international. But how you manage these risks is a matter of political choice – said Mr. Stirling.
It is wrong, and ultimately counterproductive, to try and rebuild the public finances through cuts to disability benefits. Instead, government should be addressing hardship and raising living standards directly, as part of their strategy for growth.
Fiscal pressures should be met through tax reform. There are a number of options to raise revenue from those with the broadest shoulders, while also supporting growth by removing perverse incentives in the tax system and staying within the government’s manifesto commitments – he added.
However, in a recent interview with the BBC, Ms. Reeves insisted that higher taxes were not the solution, stating:
We can’t tax and spend our way to higher living standards and better public services,” while she faces pressure to fill a £20bn hole in the public finances.
The Office for Budget Responsibility (OBR) has revised its economic growth forecast, lowering its projections from 2% to 1% for this year. Public sector borrowing has also increased, with the government reporting £10.7 billion in February, £4.2 billion more than originally expected.
