Labour's Income Promise Faces Challenges

0:00On March 4, a new report from the Resolution Foundation paints a tough picture for household incomes under Labor's government. It challenges Chancellor Rachel Reeves promise that families will be 1,000 pounds better off in real terms by the next election. The think tank says most of that promise gain has already happened, leaving a bleak outlook for the rest of parliament. Lower income household on benefits stand to gain the most, with living standards projected to rise by 3.9%, or about 8, 100 pounds, from 20, 25, 26 to 20, 26, 27. That's mainly thanks to scrapping the two-child benefit cap and boosting universal credit above inflation. Typical middle income families might see just the 300-pound increase over that time, while better off households get nothing. The analysis also flags rising child poverty as a big worry. Businesses are expected to drop sharply by 3 percentage points, lifting 480,000 kids out of poverty next year.

1:00But after that, it's set to climb steadily for 3 years, ending with only a tiny overall drop by 2029-30. Looking further ahead, disposable incomes could fall for everyone after next year, with typical working-age families down 0.5%, or 150 pounds, through 2028-29, low-wage growth of just 1.4% is a key drag per official forecasts. Adding to the pressure, spiking oil, and gas prices from the Middle East tensions could push inflation up, and add 500 pounds to average energy, bills. That hits poor families' hardest, since they spend twice as much of their budgets on energy, making the road ahead even rockier for most.