Tuesday, 10 July 2012

Joseph Rowntree grabs headlines

The JRF has been busy updating their survey of how poor all poor people are. 

 A cursory glance of their survey details that they needn’t have bothered since their headline grabbing rise in the minimum income standard is driven solely be the following;

“Over the period as a whole, the joint amount that a couple with two children needs to earn in order to make ends meet has risen by £5,000 a year, after inflation. Without the need for a car, this earnings requirement would have stayed about the same in real terms. However, this is the product of many different factors, some causing earnings requirements to rise, and others causing them to fall.”

The JRF have been busy in their little microcosm of life up in Loughborough a UK town renowned for being the home of nothing. They used many skills to try to communiate with local people and there are some admirable quotes which English speakers should be able to translate;
"Nowadays branded ain’t like when we were kids and it was all designer because T. K. Maxx sells all last season’s don’t it?
– Father, Loughborough"

They have even discovered that living on benefits one cannot meet the MIS. This is a terrible injustice as clearly anybody without a job should have certain rights and privileges. Things are especially tough if you are a loner:

“The substantial increase in the MIS budgets for families with children has caused an erosion in the adequacy of their benefits, especially for lone parents. A lone parent with one child gets 59 per cent of what the family needs through benefits, compared with 68 per cent in 2008. For a couple with two children, the fall has been smaller, from 63 to 60 per cent.”

However the real crux to my mind as Londoner is they set the whole survey in the East Midlands for council housing tenants. It is a well known fact that nobody lives in the East Midlands and nobody can expect to get a council house in the next century if they don’t already have one since the government has been gifting them away to voters for paltry sums for 25 years.

“Applying the low-cost category principle to rent, we have used an average of social rents for each appropriate property type in the East Midlands as a benchmark. While many people do not have the opportunity to live in council housing, a significant proportion of people, especially on low incomes, live in some form of social housing. Social rents in the East Midlands are below average for the country, but this is not the cheapest region.”

I’m continually astonished that these surveys decline to address the real cost issue for British people; housing and the lack thereof (and to a lesser extent childcare which is related in that women are all working to help pay off the mortgage). The chronic lack of housing particularly in the south east and the rise of buy-to-let has permanently raised the rent required for people to simply live under a roof. I hear people chirping about the globalization effects on wages and the price of food and fuel but all we need is a 20% cut in the price of all housing across the board to substantially raise living standards.  I’ll happily take a pay cut and become more competitive if I can waste less of my income handing it to the UK rentier class who produce no productive value at all (be it a bank getting its interest or a landlord his rent; same thing).

Id love to see the JRF MIS for a family with 2 children in London with no benefits/social housing due to their 'middle' income jobs. They might have to draw a new line for relative poverty as I suspect those in the East Midlands on the social are having a better time of it.

Let’s have a go using the national costs plus london rent and childcare (from p.46);

MIS ex rent/Childcare; Couple, 2 Children; £454 p.w (p.46)
Rent in Zone 4 (Finchley for 3 bed semi); £400 p.w
Childcare for London inner per the survey (p.25); £130 x 2 Children = £260
Zone 4 travel cards commuting: 2 x £41 = £82
Total MIS; £1,196 p.w = £62,192 p.a

Annual Middle Income Wages: 2x (Gross £30,000, after tax =  £22,762) = £45,524p.a which is £875 p.w.

Meeting the % of MIS; 875/1196 = 73%.

I could achieve 60% of the MIS doing FA sat on my backside in Derby.

In order to meet my London MIS you would need £62k after tax which requires each of the couple to be earning £42k p.a. That means you need 2 professional salaries (or two tube drivers) to achieve the MIS.

If a couple both working full time with 2 Children can live barely above the poverty line in London it seems pretty obvious where the bulk of the costs are coming from. The MIS decomposes as;

  • 33% Rent
  • 22% Childcare
  • 38% Other inc Car
  • 7% Public Transport
55% of all MIS is occuring in areas which add absolutely no economic value to the UK economy and demand for goods and services.

Note in real terms 46% of all income earned (£875 p/w) is being spent on rent and 30% on Childcare meaning this family has just 24% of its earnings or £210p/w to spend on food, fuel and everything else.

I suspect the only reason politicians harp on so much about food and fuel is this is what old folks (being the largest block that actually votes) moan about since they own their homes outright as they bought them for 10p in the 1970’s but now they are suffering ruin as their pensions can't support their need for ambient temperatures at home of 32’c.

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