New evidence the safety net is not up to scratch as the worst-off are hardest hit by recession

By Donald Hirsch

What does someone need as a minimum to live on at an acceptable level in Britain today? A year ago when the Joseph Rowntree Foundation first published an answer to this question, it was still largely in the context of how the least well-off could keep pace with rising living standards, in order to participate in a prosperous society. Today, with the first annual update of this standard, there are very different reasons for wanting to ensure that people don’t fall below a minimum. With thousands losing their jobs, middle Britain is finally waking up to the fact that what passes for a social safety net leaves many people far short of meeting their needs.

First calculated in 2008, the Minimum Income Standard (MIS) is based on what members of the public thought people needed to achieve a socially acceptable standard of living. The 2009 results have just been published.

There’s also a nifty calculator that allows you to work out what the social minimum is for a family of your type, and to make some adjustments – for example if you live in a part of the country where housing costs are high.

Key findings of the new research are:

* The minimum cost of living is rising at twice the rate of inflation, making it harder to live on a low income this year than last year. This is because a minimum budget has a concentration of items like food and electricity whose prices are much higher than a year ago.

* A single adult with no children now needs to earn at least £13,900 a year before tax to reach the minimum standard. This is a £500 rise from 2008; nearly half of this extra income is needed for the rising cost of food.

* About one in four people are living below the minimum income standard for Britain, and this is increasing as unemployment rises.

* The minimum cost of living has risen by 5%, contrasting with official inflation figures of 2½% (CPI) and -1% (RPI). A low-paid worker whose earnings were linked to the retail prices index could be 6% worse off this year, relative to the minimum cost of living.

* Job loss can leave you with less than half the income that you actually need to live: basic out-of-work benefits for a people without children are less than 50% of the minimum required.

* The original focus groups believed that a car was not an essential item for everyone in Britain, and so it is not part of a minimum acceptable budget. However, while the cost of running a car has gone down this year, the cost of public transport has gone up.

In other words, the worst-off people in Britain are continuing to be hit hard by inflation, and we need to be cautious about using the main index to set things like benefits and wages. Now that everyone feels more vulnerable, maybe we’ll start thinking more carefully about how to move towards a minimum level of protection that genuinely reflects people’s needs.