Tories presided over the largest setback in records since beginning
If the Conservatives are in power, the Institute of Fiscal Studies has warned that middle- and high-income households in Britain will experience the biggest decline in living standards since the 1960s.
Middle- and high-income households experienced a 1.6% decline in incomes from 2019-20 to 2022-23, according to an analysis by an official think tank.
The living standard of people will be at its lowest level since 1961 by the end of this Parliament.
The IFS said the government raised taxes to record levels and the standard of living has dropped since the last elections.
The poorest third in Britain saw their incomes fall by 0.1% during this period, which is one of the worst decreases ever recorded.
The IFS believes that the decrease in inequality was caused by the low performance of incomes at all income levels.
The analysis shows that middle and high income families are worse off because of frozen tax brackets and inflation.
Income decline across households
Low-income households have been somewhat helped by government assistance like cost-of-living payments, despite the increasing cost of living.
The IFS pointed out that these data do not reflect “the true rise in poverty” during the crisis. Millions more are struggling to pay for food and heat.
In the four years covered, the number of people experiencing food insecurity increased by over two million. This brings the total to 7.3 m.
Additionally, there are 4.3 million people who do not have sufficient heating in their homes, making the total number 7.2 million.
The figures show that 200,000 people more have fallen into poverty among those who had to accept record rent increases following the pandemic.
The pinch is felt by households who fall below a certain level of income after housing costs. A childless couple will find it difficult to survive on less than £15.600 per year.
Sam Ray-Chaudhuri is an economist with IFS and the author of the report. He said: “The Cost-of-Living Crisis has seen alarming increases in the number of households experiencing food insecurity or being unable to heat their homes adequately. The next government will face a major challenge in improving living standards, given the poor forecast for income growth and an unenviable financial position.
A Treasury spokesperson said that “the last few years were not easy”, but added that the economy has “turned a corner”.
He said: “We’re in a new moment of economic growth, and we must stick to our plan so that we can provide a better future for Britain. We will also improve opportunities for all.”