Household incomes up only 7% since 2010 – Resolution Foundation – BBC News

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  • Author, Faarea Masud and Lucy Hooker
  • Role, Business reporters, BBC News

Slow economic growth and three major economic shocks have meant that household disposable income has grown very slowly since 2010, a think tank report has found.

Average household incomes rose by just £140 a year, new analysis from the Resolution Foundation found.

That’s a total increase over a fourteen-year period of just 7% – or an average of half a percent per year – in the amount people had left to spend after paying taxes.

In contrast, disposable income rose by 38% in the 14 years to 2010, the think tank focused on poverty reduction wrote.

However, poorer households had seen stronger income growth than richer ones, the report said.

The Resolution Foundation said the 2008 financial crisis, the Covid pandemic and high inflation had all contributed to the slowdown, but that growth overall had also been “sluggish”.

That led to income increases slowing “to a snail’s pace,” the report said, hampering progress in reducing poverty.

The state of the economy, and in particular the pressure on ordinary families from the cost of living crisis, is a central issue in the general election, with the Conservatives defending their record in government since 2010.

The think tank’s analysis found that poorer households had seen the strongest growth in their disposable income over the period, partly thanks to the strong UK labor market.

The report looks at the poorest fifth of households and indicates that one-off living payments also contributed to a bigger increase in income last year.

But these gains were largely offset by the impact of what the report calls ‘regressive tax and benefit policy decisions’, which resulted in an overall 13% increase in disposable income over the period.

The richest households, meanwhile, saw just 2% income growth over a 14-year period, the report said.

The think tank said Eurostat data, covering a similar but not identical period between 2007 and 2022, suggested Britain had fared worse when it came to disposable income growth than several other leading European countries, including the Netherlands, France and Germany.

“While global economic shocks have been an important factor, Britain’s recent record is poor compared to both its own history and that of many of our European neighbours,” said Lalitha Try, economist at the Resolution Foundation.

“The little income growth Britain has experienced over the past 14 years has been largely due to rising employment, which has benefited poorer households the most,” she said.

The report, titled Hard Times, was funded by the Nuffield Foundation, a charity, and used data from the Department of Work and Pensions, along with information on jobs, salaries and housing costs.

It found that absolute poverty had fallen by 3.6 percentage points since 2010, but by 14 percentage points in the 13 years before 2010.

Relative poverty rates have remained largely stable over the past fourteen years, but the number of children in large families living in poverty has increased, while the number of children in small families living in poverty has decreased.

The BBC has approached all major political parties for comment.

A Liberal Democrat spokesperson said: “People are struggling with higher mortgages, higher food prices and higher taxes thanks to this government’s inexcusable mismanagement.”

Scottish National Party candidate for Glasgow North, Alison Thewliss, said the report showed “the devastating impact that 14 years of Tory rule has had on the lives of people in Scotland”.

Carla Denyer, co-leader of the Green Party, said the report shows “why we need a new generation of Green MPs to push a timid Labour government to be bolder and braver in tackling the cost of living crisis”.

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