Luxury on benefits, the next 6 years.

22 12 2012

I must point out before I go on that I am no economist or statistician, indeed I am dyscalculic so this could all be completely wrong! I haven’t applied fancy formula or academic theory to my calculations, just simple percentages based on the previous 6 years statistics where available. This is obviously a very simplistic approach to a somewhat complex issue but it filled a bored evening avoiding the Strictly Come Dancing Final… I should also point out I haven’t been keeping up with blogs to someone may have covered this already elsewhere.

When the government announced that there would only be a 1% rise to welfare benefits over the next 3 years, many were rightly quite disgusted, many weren’t and believe that those living on benefits already get too much. I was curious to know the impact of these changes compared to average spending. As it has now been suggested that the government will extend the length of time the yearly 1% benefits increase to 6 years or around 2018, I thought it interesting to highlight at its most basic, how this could pan out (disclaimer above not withstanding).

Currently a couple with a child on JobSeekers Allowance will receive £111.45 per week (not including child tax credits: £62.21pw 2012 – £66.04 in 2018 and child benefit: £20pw in 2012- £21.23 in 2018). Over 6 years with a 1% increase this will be £119.48 in 2018.

Housing Benefit is not available to people who have mortgages and the existence of capital held in a house can cause complications when claiming other benefits. If this hypothetical couple receiving JSA happened to fall on hard times after losing their jobs, things could be even more complex for them than listed below. As I stated this explanation is very simplistic.

According to DEFRA, the average weekly grocery shop for a small family in 2012 is £77 per week. This rose 37% in total since 2007 or  7.4% per year until 2012.  It is estimated that the average grocery bill will rise 4% year on year for the next 10 years.

Should we calculate figures based on the official estimate of 4%, the average weekly grocery bill will grow to £97.43. A difference of £20 over 6 years, accounting for 81.5% of the couple’s weekly income of £119.48 in 2018

If we use the previous average of 7.4% per year for the next 6 years, the average weekly grocery bill will grow to £118.72.  A difference of £41.72 over 6 years accounting for 99.36% of the couple’s weekly income of £119.48 in 2018

The difference between the average food bill and average JSA income for a couple in 2018 will be 76p. That is 76p to pay for all the other bills and costs that may arise in the course of a week.

So if we then consider household energy bills costs. The Sun newspaper (I know, I’m sorry) claims that between 2004 and 2012, household energy bills grew by 151% or an average of 18.89% per year.  In 2012, Money Saving Expert claims the average home energy bill is £1240 per year or £23.85 per week.  If we apply the average of 18.86% per year over the next 6 years to 2018, the average energy bill will cost the average household £3502 per year or £67.25 per week. This is 43.4% of the benefit recipient couple’s weekly income of £119.48. Remember if we decide to let the couple eat, they only have 76p left over with which to pay this bill.

Already, for ONLY food and energy bills the cost is £185.97 per week for the average household with a small family compared with the basic JSA income of £119.48. A deficit of  -£66.49 between income and basic outgoings. When MPs scoff at the idea of people choosing between heat and food, they obviously havent tried to look at the basic maths. Even counting in Child Tax Credit and Child Benefit for one child, in 2018 the difference between income and outgoings is only + £20per week to pay all the things listed below.

I havent looked at costs such as clothing, school trips/costs, additional utilities (water, phone, net), insurances, potential emergency costs, or compulsory contributions to housing costs or council tax and any new costs that may be thrust upon us in the future.

One additional thing I decided to have a look at but not add to the essentials was fuel costs for unleaded petrol. Petrol is essential for many to get to work, or to look for work, attend interviews, hospital appointments etc. In 2006 the cost of a litre of unleaded petrol was 89.9p. There was a 54.5% increase between 2006 and 2012, where a litre of unleaded petrol now costs around £138.9p. If we apply the same increase over the next 6 years that means we will be paying around 213.9p per litre for unleaded petrol. Already a couple on JSA are priced out of the driving market and that’s purely based on fuel costs and not including tax, insurance, repairs and HP/loan repayments.

Forcing people into abject poverty when there are not enough jobs for the number of unemployed in the UK is barbaric. Anyone looking at these figures who still thinks a life on benefits is luxury perhaps should try it for a while. It’s hard enough balancing the books based on current costs of living and in this blog there are many assumptions made about the economic situation not getting any worse, food prices and energy prices not rising by any more than they have in the past 6 years and the rate of inflation not changing upwards drastically.

This may not be my most thought out blog or best written but I wanted to see the numbers written out for myself… and it terrifies me. Terrifies me that it could be any one of us relying on these kinds of incomes with these kinds of outgoings. It terrifies me that as a society we seem happy to let people live in this kind of poverty and happy to make it worse for them. If you are not in this situation think yourself very lucky and hope to whatever power that be, you never find yourself in a situation where you have to rely on state help to exist. I wont say survive because I can’t see how it would be possible to survive on these kinds of figures, even with some fancy budgeting.

That said as I mentioned at the start, I’m no economist and there are many complex formula applied to determine living costs now and in the future… this however just looks at the basics and without manipulation or spin, to me, they present a scary story.

Good Luck. You’ll need it.

 

 

Oh I may add a simplified chart to save reading all the gibberish in the morning if I get time/inclination.

 

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