UK Lower-Income Families Face 137-Year Wait for Living Standards to Double
According to a stark new analysis from the Resolution Foundation, lower-income families in the United Kingdom face a staggering 137-year wait for their living standards to double at the current rate of growth. The thinktank attributes this bleak outlook to a two-decade stagnation in disposable incomes, which has created a pervasive mood of unease across the nation and risks fuelling further political disruption.
The Dramatic Slowdown Since 2005
The report highlights a dramatic reversal in fortunes. In the four decades leading up to 2005, the typical disposable income for working-age families in the poorest half of the population doubled, growing at an average annual rate of 1.8% after inflation. The final decade of that period saw even stronger growth of 4% per year, putting living standards on track to double again within just 18 years.
However, since 2005, progress has ground to a near halt. Growth in disposable incomes—measured after taxes and housing costs—has crawled at just 0.5% annually for lower-income families. If this glacial pace continues, a further doubling would take over 130 years, a timeline the Foundation describes as a profound failure for millions of households.
Who Are 'Unsung Britain'?
The Resolution Foundation defines lower-income families as working-age households with disposable incomes below the national median and no members above the state pension age. This group, which it terms unsung Britain, comprises approximately 13 million families.
Despite their increased participation in the workforce since the 1990s and a greater burden of unpaid care for disabled adults, these households have seen little reward in terms of higher incomes or improved living standards. Ruth Curtice, the chief executive of the Resolution Foundation, stated that the figures demonstrate work is no longer a guaranteed route out of poverty.
Key Drivers of the Income Slowdown
The thinktank identifies several critical factors behind this huge income slowdown:
- Drying Up of Pay Rises: Average gross annual earnings for someone in a lower-income family have risen by £7,700 since the mid-1990s to £18,000 today. Crucially, nearly three-quarters of that increase occurred before 2005, with pay growth evaporating in the subsequent years.
- Steep Cuts to Benefits: Significant reductions to working-age benefits have directly eroded the living standards of poorer households.
- Disproportionate Burdens: Almost one in three working-age adults in lower-income families has a disability, compared to fewer than one in five in better-off households. Furthermore, about 1 million people in this group provide at least 35 hours per week of unpaid care to adult relatives or friends.
Taxation and the Council Tax Anomaly
While stagnant incomes have also affected better-off families, the tax burden reveals a stark inequality. Taxes account for just 12% of poorer households' budgets, compared to 31% for wealthier families. However, council tax presents a notable exception, with the poorest households spending four times as much as a share of their income on this tax compared to the richest.
The Resolution Foundation's analysis serves as a powerful warning: without a significant acceleration in pay growth, the UK risks entrenching deep economic divides and facing ongoing political instability driven by the financial struggles of millions.
