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Abigail Davis
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As life becomes ever more expensive, experts from Loughborough’s Centre for Research in Social Policy and the University of York have enlisted the help of the general public to identify for the first time the level of income that people need to have an acceptable standard of living today.
We all love our cars. Whether they’re battered old bangers or brand new, top-spec models, we believe they give us freedom, flexibility and, for some, status. But as much as we love them, do we really need them? Well apparently not – and it’s not pressure groups, experts or even the Government who are telling us that. It’s members of the public, ordinary men and women, who say cars are a luxury that most of us can manage without.
Their revelation isn’t driven by environmental convictions, but comes instead from a two-year study, led by Loughborough’s Centre for Research in Social Policy (CRSP) and the University of York, to identify how much income people need to afford the essentials of modern life, and indeed what those essentials are. The outcome is the first-ever set of minimum income standard budgets for Britain, which were published in July by the Joseph Rowntree Foundation.
“All the key figures currently in use, like benefit and pension rates, aren’t determined in any way by how much people actually need. They were just decided politically without consideration for the standard of living that budget gives,” says Abby Davis, one of the CRSP researchers on the project. “That’s where the minimum income standard is different – it’s been developed in consultation with people who have real experience of what it’s like to live in the circumstances the budgets relate to.”
The minimum income standard study drew on two methodologies used previously to determine budget standards in the UK – the ‘consensual’ methodology, based on group discussions among members of the public, which was pioneered at CRSP, and the expert-led approach used by the University of York’s Family Budget Unit (FBU).
“The strength of the ‘consensual’ method is that it involves real people – pensioners talking about the lives of pensioners, lone parents talking about their experiences. But for this project we couldn’t use that methodology in isolation because it’s difficult for people to assess realistically, for example, whether the essential food list they’ve come up with is going to be nutritionally adequate,” explains Abby. “That’s where the FBU approach came in. It meant we could support the focus groups’ work by drawing on the knowledge of experts who could tell us whether the heating budget was sufficient not only to keep the occupants warm but also to maintain the fabric of the building, to make sure it wasn’t damp and so forth. The two methods shore each other up and the study becomes much more robust.”
One of the first challenges faced by the research team was to define the line between an acceptable and an unacceptable standard of living. “The study is about the amount of money people need to have a reasonable life. It had to include a degree of socialisation and cultural life. The people who took part in the research said that never having sufficient money to go out just isn’t acceptable in a country like ours; that everyone needed the wherewithal to have a nutritious diet, a warm home and the choices to participate in society,” Abby says.
The research involved more than 200 people, assembled into 39 groups. Each group was made up of individuals from the type of household under discussion, from a range of income backgrounds. Through in-depth conversations and day-long workshops, the groups then drew up detailed lists of what’s required by different household types, including food, clothes, fuel, household goods, transport, and social and cultural activities.
“Participants in the study were clear that a minimum living standard should provide for more than mere survival. As one woman put it, “Food and shelter keeps you alive, it doesn’t make you live”. But the groups were equally aware that this was about needs and not wants – essentials not luxuries,” Abby stresses.
“Working with the groups was fabulous. Once they took on board and understood what we were trying to do with the study, they became almost passionate about it. They got just as animated when talking about table cloths as they did about cars!”
So what did the groups decide were ‘must-haves’ and, crucially, which
items did they consider to be luxuries?
The panels agreed that families with secondary school age children needed home access to the internet, but for others it wasn’t essential as they could surf the web in libraries. A cheap pay as you go mobile was thought to be a cost effective way of keeping in touch and DVD players, being so cheap these days, also made the essential list. As did treats like a bottle of wine and a pint of beer. A Playstation, like a car, was considered to be a luxury though.
“There was a lot of discussion about cars,” smiles Abby. “But they kicked it about between them and in the end decided that unless you lived in a very remote or rural location, a car wasn’t essential in order to have this minimum acceptable standard of living and that actually a combination of public transport with the occasional taxi would mostly fit the bill.”
The lists of items were compiled into budgets for different household types, including single adults, couples with two children, lone parents with one child, and pensioner couples. From this the team were able to say that a single working-age adult would require £158 per week after tax, or a gross annual income of about £13,400. A couple with two children need £370 a week or £26,800 a year. A lone parent with a child requires £210 per week or £10,920 annually. And a couple of pensionable age need £201 a week or £10,000 a year.
These figures include indicative costs for a minimum acceptable standard of housing. “While the cost of food and clothes doesn’t differ much across Britain, housing costs are going to depend on where you live, whether you have a mortgage or pay rent, what sort of mortgage you have, whether it’s fixed or variable rate, endowment or repayment. The variation was too great for us to include one figure to suit all circumstances,” explains Abby.
There is now, however, a ‘ready reckoner’ available on the project web site, into which people can enter their own housing, fuel, insurance costs and so on to generate a minimum budget much more individually tailored to their own household.
So how do the minimum income standard figures compare with what the Government currently regards to be the minimum? The picture varies by household type, but it appears that most families with one person working full time at the minimum wage would be unable to reach the minimum acceptable standard of living defined by the study. The minimum wage is currently £5.52 an hour. For a single adult working fulltime to reach the minimum income it would need to rise to £6.88. A couple with children, where one parent is the single earner, would need to earn £13.76, well over double the national minimum wage, to reach the minimum standard.
Similarly, most people relying on basic out-of-work benefits don’t reach this standard – a single person on income support would get less than half this amount, and out of work families with children typically get two thirds. The basic state pension provides a retired couple with about three quarters of the minimum, but if they claim the means-tested Pension Credit their income is topped up to just above the minimum income standard.
Since its launch in the summer, the minimum income standard has attracted wide-spread interest and much debate, generating in three days more than 2,000 vox pop comments on the BBC web site. Abby believes the team’s research could have a far-reaching influence. “The findings from the study will be of relevance to a wide range of people, from those who measure poverty, to all those whose actions influence basic disposable incomes, such as the Chancellor of the Exchequer, trade unions, employers and judges who schedule the repayment of debts or fines by people with limited means.”
Although the minimum income standard project is now complete, Abby envisages it could well be the launch pad for further work. “Northern Ireland wasn’t included in the study as it has costs of living quite unlike the rest of the UK. But the ideal would definitely be a minimum income standard for the whole of the United Kingdom,” she says. “It would also be good to look in more detail at the additional costs faced by people living in remote rural communities.
“We’d also like to revisit some earlier work done by CRSP. This ‘consensual’ methodology has been used successfully in several previous projects, including one to develop budget standards for disabled adults in Britain. Back then we were able to say how much income people with disabilities needed but not what additional income they needed compared to non-disabled people.”
The CRSP team are also thinking further afield, with the methodology of the minimum income project having generated real interest at a recent conference in Europe. “Now we have this standard for Britain, I can see no reason why we couldn’t collaborate with colleagues in Europe to develop a similar system for other countries. After all,” says Abby, “the beauty of the minimum income standard is that people can relate it to their own lives. It’s not just some arbitrary figure without any transparency – it’s a budget made up of actual tangible items.”
