So says a report from uSwitch:
In 1997, when Labour came to power, people were left with 34.5 per cent of their gross income once they had paid taxes, national insurance, mortgage or rent. Now they are left with 32.6 per cent, says a report by uSwitch, a price comparison website.
It is the latest survey to highlight how millions of households have failed to benefit from the strong economy because of rising taxes and escalating bills. Ernst & Young, the accountants, calculated this year that the average family had £838 left to spend each month, compared to £899 four years ago.
There\’s three things to say about this.
While the average household gross income has climbed over the past decade from £34,796 to £53,835, people have far less of that money to spend each month after they have paid essential bills.
That gross income looks very high indeed for the average household. Might they be talking about the mean rather than the median? Rolling around the back of my mind I have the idea that the median US household income is somewhere in the $40-$50k a year range and I really don\’t think that the UK is richer than the US, nor that (as an alternative explanation) the average UK household is more than twice the size of the average American one.
The second is that they\’re rather confusing two things:
Increases have hit four key areas in the past 10 years. Petrol — often the biggest cost for a family after their housing — has increased by 55 per cent and phone and internet bills have risen 77 per cent as millions more use broadband and mobile phones.
So there\’s a change in the composition of "essential spending" as well as a change in the prices.
Finally, the Treasury is probably correct here:
He said: "As a result of tax and benefit measures introduced by the Government, this year all households will be on average £1,000 a year better off in real terms and families with children will be on average £1,550 a year better off in real terms, compared to 1997."
For the original calculations don\’t seem to (although as I can\’t find the report I can\’t check) include benefits, only tax. But this is untrue:
A Treasury spokesman denied that Government tax policies had eaten into incomes.
Of course the tax policies have eaten into incomes. It\’s the benefit policies that might have amended this, but tax per se must eat into incomes.
But I think the biggest fault is in their headline figure for average household incomes. I really don\’t believe that that is the median. Median individual earnings are £26 k a year aren\’t they? And it is most certainly not true that the average household has two incomes at that median now, is it?