All families 'to be worse off by 2030' as poor bear the brunt

Blow for PM over living standards pledge Chancellor under pressure ahead of cuts

- Toby Helm

Living standards for all UK families are set to fall by 2030, with those on the lowest incomes declining twice as fast as middle and high earners, according to new data that raises serious questions about Keir Starmer's pledge to make working people better off.

The grim economic analysis, produced by the respected Joseph Rowntree Foundation (JRF), comes before the chancellor, Rachel Reeves, makes her spring statement on Wednesday in which she will announce new cuts to public spending rather than increase borrowing or raise taxes, so as to keep within the government's "iron clad" fiscal rules.

In December, the prime minister announced a series of new "milestones" that he said would be passed before the next general election, which is likely to be held in 2029. The first of these was "putting more money in the pockets of working people".

But with many Labour MPs already deeply concerned over Reeves's plan to raise about £5bn by cutting benefits, including for disabled people, evidence that living standards are on course to fall markedly under a Labour government - and to decline most for the least well off - will add to the mood of growing disquiet in the party's ranks.

The JRF analysis rests on a realistic assumption that the Office for Budget Responsibility (OBR) will adjust its forecasts in line with the Bank of England and other main forecasters when it makes them public on Wednesday. The OBR is expected to halve the expected growth rate for this year from 2% to about 1%.

In what it describes as a "dismal reality", the JRF said its detailed analysis shows that the past year could mark a high point for living standards in this parliament. It concludes that the average family will be £1,400 worse off by 2030, representing a 3% fall in their disposable incomes. The lowest income families will be £900 a year worse off, amounting to a 6% fall in the amount they have to spend.