It’s now impossible for the average worker to live decently in Britain

A person on the average income in the UK is already struggling to make ends meet. Anything that tips the balance against them now literally leaves them beyond their limits

The average worker in the UK has never been as well off as those in charge of UK economic policy imagine. The average household after-tax income was £31,383 in 2021 according to the Office for National Statistics.

HM Revenue & Customs, on the other hand, suggests that average earnings were £26,000 before tax and £23,500 after tax in 2019-20, but it forgets national insurance, which might reduce this by £2,000, and almost compulsory pension contributions that might deduct another £800 after tax relief, leaving £20,700 to really spend. What that means is that the average household requires two working adults to make it work. It also suggests that having average earnings in the UK means earning less than £15 an hour.

Can such a household now have a decent lifestyle on this level of income? Given that this household is very unlikely to be able to afford a mortgage, rents matter here – and average rents in the UK are now over £1,100 a month, or over £13,000 a year.

Council tax is on average around £2,000. Water bills are an average of around £400. Phones for a family may well cost up to £1,000 a year, and broadband adds to that cost at a likely £300 a year. And then there is energy, which is now nearly £2,000 a year, and about to go up.

Add to that a car, which will cost not less than £3,000 a year, and maybe more, and while you can feed a family on £100 a week, that is some achievement and still creates a shopping bill of £5,000 or so a year. Put that altogether and it comes to more than £26,000 a year, leaving (before energy and other price increases) a left-over income to spend for an average household of maybe only £5,000 a year.

Out of this however must come clothes, including school uniforms, maintaining a house, some nights out, a modest holiday, Christmas and a rainy-day fund, and there is likely to be nothing left before the additional £2,000 that might go on energy bills very soon.

What is obvious in all this is that a person on the average income in the UK is already struggling to make ends meet. Frankly, every person and household in this situation is likely to be in financial difficulty. They will already have to make difficult choices. Anything that tips the balance against them now literally leaves them beyond their limits.

That’s not least because these families rarely have any significant savings, precisely because their budgets are already stretched to their limits. Therefore, they have little chance to save for a deposit for their own home, while a provision for anything but the most basic pension is impossible. These two essentials that provided financial security for past generations are now unavailable to average households.

So too is something else beyond their reach that they might resent even more. If the average household once voted Tory, it was because they had aspirations for their children. They supported children with talent in sport, music or anything else. They helped those with coaching in subjects they struggled in. And they sent them on school trips, believing these were a key part of “getting on”.

All that is now beyond such families. The struggle to survive has tipped the balance for average-income households. Once they saw themselves, or their children, as being on the way to better things. This was the dream Thatcher and her successors sold them.

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It was this hope of a secure life that might get better that defined “decent living”. Those in the upper two income quintiles already had it. Those in the bottom two were told by the snubs sent in the direction of all those who were either on or faced the risk of being on benefits that this was not a hope they could or should share. But the average household was supposed to have a home, a pension, a Ford, a holiday in the sun and access to advancement for their children within their grasp. This was what defined living decently.

That aspiration is now but a faded memory. Instead, the desperate hope is that all the essential household bills might be paid and Christmas might be afforded, somehow. Lurking in the background is the realisation that none of this might be possible and that inability to pay, insolvency and the insecurity that results from them are all a real possibility.

The hope of a decent living has departed for the average household. Fear is all that remains for those who once had hope. Forty years after politics abandoned the post-war consensus, our economy now fails the majority in this country. The era of living decently on average pay is over.

Richard Murphy is professor of accounting practice at Sheffield University Management School, a chartered accountant and economic justice campaigner