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A Minimum Income Standard for the UK in 2013

The decline in the real value of people’s incomes is widely reported and discussed, but how does this match up to what households really need; at what point does a fall in income mean that people cannot live at a level that is the socially acceptable minimum?

In 2008, the first Minimum Income Standard (MIS) for Britain produced income standards based on detailed research into what ordinary people thought should go into a minimum household budget. This was supported by expert knowledge on certain physical living requirements, including nutrition (Bradshaw et al., 2008; see also ‘What does it include?’ in Box 1, page 8). As part of that project, there was a commitment to keep MIS up to date, in order to reflect changes in the cost of living and in the social norms that determine the items included in the calculation of a minimum budget. Annual updates alternate between those based on new research (in even-numbered years) and those based only on estimates of price rises (in odd-numbered years). The 2013 report is thus based on price increases only, which are estimated by applying changes in the relevant components of the Retail Prices Index (RPI) to the categories of goods and services included in MIS budgets. Following the 2008 research, each budget is fully rebased (calculated from scratch) every four years on an alternating basis: for families with children in 2012 and next in 2016, and for households without children starting in 2014. The full schedule for carrying out this updating work is shown in Figure 1. The Joseph Rowntree Foundation (JRF) has agreed to fund these updates until at least 2016.

Using data from the RPI, Section 2 of this report estimates the increase in the cost of MIS budgets between April 2012 and April 2013, and comments on longer-term effects of inflation. Section 3 summarises the revised set of budgets, looking at the incomes that are needed to afford them (and comparing these to benefits and to the poverty line). Section 4 looks at the earnings required for MIS, and comments on factors that are making it easier or harder for households to earn enough to achieve a minimum standard of living. Section 5 updates budgets and income comparisons for rural areas.