Budget 2024: working families to be £1,900-a-year worse off in 2029 compared with 2021, think tank says

This week’s Budget risks keeping the UK’s economy on a course which would see working families almost £2,000 a year worse off in 2029 compared with the start of the decade, a leading think tank has warned.

The Joseph Rowntree Foundation said that without charting a new course, the 2020s could become a “second lost decade” with the gulf between political rhetoric and household reality widening. 

According to microsimulation analysis, by 2029 real household earnings from work after tax will be £1,900-a-year lower on average than they were in 2021. 

Today, those earnings are a whopping £2,400 lower. The JRF research found a continual squeeze on cost of living standards, with the cost of essentials going up while household benefit income will drop by £540 over the decade. At the same time, the average family will have to spend £1,700 more in real terms on housing.

Alfie Stirling, chief economist at the JRF, said: “Unless policy makers intervene, the 2020s are set to see an unprecedented second lost decade of living standards in a row. As an economy, as a society and as a country, we simply can’t afford this to happen.

“This analysis is a unique and vital way of connecting big, long term trends in the economy with the real lives of individual families, and shines a light on which of these issues the public are most worried about and the extent to which they hold government responsible. The findings should trouble us all, and the priority now must be to make sure it does not come to pass.”

The think tank projects that by 2028/29, real terms spending per head on public services outside the NHS is projected to be £260 a year lower than in 2022/23. Jeremy Hunt is expected to cut departmental budgets even further on Wednesday, to try and find room for tax cuts.

However, the JRF called on the Chancellor to prioritise public spending, which polls say is more popular than tax cuts. It’s backing foodbank provider the Trussell Trust’s call for an essentials guarantee, which would guarantee Universal Credit is always at a level to cover food, utilities and vital goods. 

Stirling said: “With the Budget just days away, renewed political energy and policy bravery is needed urgently to avert a second period of unthinkable decline. Politicians from all parties need to chart a course for a sustained recovery in living standards for people who need it most, and to rebuild the kind of lasting economic security in the UK that can prevent such levels of suffering from ever happening again. 

“Anything short of this on the 6 March should be considered a failure.” The JRF is calling on Hunt to extend the Household Support Fund, which is due to end on 31 March. Started in 2021, the HSF has provided £2.5 billion of welfare support via local authorities to help vulnerable people with food, water and energy bills.

Almost 90 parliamentarians from across the political spectrum have written to the Chancellor  asking him to extend it. In their letter, MPs and Lords said: “Keeping the HSF will help to offset the cost of living crisis that still so many families are facing. It is simultaneously the right thing to do and the fiscally prudent choice.

“We believe that removing the HSF will push more people into poverty and destitution at this time and worsen their health and their children’s.”

The signatories include Labour former ministers Sir Stephen Timms, David Blunkett and Peter Hain, Conservative MP Rehman Chishti, former Tory chief whip George Young, Liberal Democrat deputy leader Daisy Cooper and Green MP Caroline Lucas.

Ralph Blackburn is NationalWorld’s politics editor based in Westminster, where he gets special access to Parliament, MPs and government briefings. If you liked this article you can follow Ralph on X (Twitter) here and sign up to his free weekly newsletter Politics Uncovered, which brings you the latest analysis and gossip from Westminster every Sunday morning.