Theresa May's 'just managing families' face falling incomes for the rest of the decade

A new report says that higher inflation and lower wage growth will drastically reduce the living standards of Britain's less well off households

Theresa May said on the steps of 10 Downing Street that she was on the side of "just managing" families (Rex)

The ‘just managing families’ that Theresa May spoke of on the steps of Downing Street face falling living standards for the duration of her Premiership, according to a new report.

New analysis by think tank the Resolution Foundation reveals that weak wage growth, rising inflation and £12bn of planned social security cuts will mean that for the poorest 50 per cent of households in the country, incomes will fall or remain flat until the end of the decade,

Rising employment and low inflation have led to strong income growth in recent years, but they are unlikely to be repeated between now and 2020.

The planned £12bn of welfare savings will also deeply affect families. Cuts to universal credit, which reduce the amount a person in work can claim could have drastic consequences.Aa working single parent could lose as much as £2,800 a year. Limiting in-work child benefit support to two children will save the government £1.6bn a year but could have severe consequences for the poorest families.

David Finch, Senior Economic Analyst at the Resolution Foundation, said: “The Prime Minister has rightly identified just managing families as a key priority for her new government. The first big test of this rhetoric comes in just a few weeks’ time when the Chancellor sets out the new government’s economic direction of travel in his Autumn Statement.

“The Chancellor inherits a tough legacy on living standards. The combination of long-term productivity failings, higher inflation, lower than expected wage growth and more immediate welfare cuts mean that millions of low and middle income households could face a parliament of flat or falling living standards.

“While making a success of Brexit goes well beyond the scope of the Autumn Statement, there is still plenty the Chancellor can do to make his mark on living standards. And by resetting fiscal policy he has created some crucial spending leeway that could be used to raise investment and boost household incomes.

“Reversing the damaging cuts to work allowances will boost incomes and increase work incentives, with women in particular benefiting from the extra returns to work. As millions of working families are set to move onto Universal Credit over the course of the parliament, this offers the best route to boosting the incomes and work incentives of just managing families.

“A new government gives the new Chancellor an opportunity to look ahead at the worrying prospect for just managing families’ living standards and do something about it by delivering a significant boost to living standards over the parliament.