The Joseph Rowntree Foundation has published its Minimum Income Standard for 2009, updating the JRF’s first report of this kind issued last year. It is worth reading the full report, available as a pdf – it isn’t very long and it contains interesting background on the researchers’ methodology and findings.
The aim of the exercise is not to try to redefine poverty, rather to reach some indication of what is considered a basic but acceptable standard of living in the UK today; one that offers a bit more than merely food and shelter, recognising that a few home comforts and social and cultural activities are important elements of a civilised life, however narrowly constrained. The original research involved asking 39 groups of people representing four basic demographic types (single person, lone parent, couple with two children, pensioners) to choose what was needed for their type. The exercise itself will probably have been of value to many of the participants – mainly those initially contacted last year, but also the groups reconvened this year to explore whether the recession had caused them to change their view of what was necessary.
The conclusions are these: a single person needs to earn £13,900 before tax to meet the Minimum Income Standard (“MIS”), and a couple with two children needs to earn £27,600. A comparison with out-of-work benefits and minimum wage levels shows that neither consistently gets very near the MIS: from 40% to 67% in the case of benefits; 40% to 92% in the case of minimum wage. Pensioners fare better, with the pension and benefits covering expenditure needs.
The social consequences in terms of nutrition and health, children’s education, happiness, and social exclusion, of having to make do with ‘unacceptable’ living standards, and the way that these can become ingrained within families and across segments of society, are clear.
The cost of the household budget on which these figures are based has increased by around 5% in the last year. This is about twice the rate of headline inflation. The reason is that goods whose prices went up on average formed a greater proportion of the MIS basket than of the basket used to compile the RPI – food, rent, travel, social & cultural participation. Items with low or negative inflation have generally a greater weighting in RPI than in MIS – mortgage, motoring (both zero in MIS), clothing, tobacco, and alcohol. So it appears that the way inflationary patterns have played out has hit poorer families harder than richer ones.
It’s interesting that a ‘re-pricing’ exercise – essentially an experiment to go and shop for the goods in the MIS basket – tended to come out with a higher cost increase than simply applying the price index for the relevant goods. Given the variations in the data, the researchers were cautious about what this might mean but suggested that possibly RPI is understated for certain kinds of real-world purchases (and it would not be surprising if poorer people for all sorts of reasons were less able always to secure the cheapest deal, even if they tended to shop for the cheapest goods).
The report also contains some interesting information on the kinds of things that are wanted and how these low-income consumers groups interact with marketing drives, product discounting, technology etc. There was also a sense that in a recession people realised that whilst they might be able to consume less of certain things, there were some parts of their budget it was not reasonable to give up without compromising the idea of a tolerable life and membership of society. For instance, a little holiday, doing some team sport, meeting friends over a barbecue, access to media, were not seen as dispensable luxuries.
There’s something very healthy, as well as humane, about a research effort that purposes not merely to find out what we need to stay alive, but what minimum – and for £13,900 it must be a low minimum – we require to remain meaningful participants in society. How far removed this is from the world that worries about whether Sir Fred’s pension should be £300,000 or twice that, about whether his successor should get £10 million or a tad less, about how wide a wide-screen television an MP really needs! And these are not cheap shots. The fact that so much time and coverage is given to these paltry subjects shows how little genuine sympathy and concern for others exists in our public life and how often the discussion takes place in a bubble of self-reference. The JRF’s work calls on us to question how meaningful everyone’s participation in society really is and, of course, what we might do to encourage those among us who are least well off.