Millions of families are grappling with an historic drop in living standards as today’s generation faces the slowest income growth in decades, a new report has warned.
Research from the influential Resolution Foundation think tank has found that it would take more than a lifetime – 137 years – for lower-income families to see the doubling of living standards previously enjoyed every 40 years.
This has been driven by slowing growth, researchers say, as people “are working harder but seeing their incomes stagnate nonetheless.”
From the 1960s to the mid-2000s, the disposable income of working-age families doubled, the report finds, growing 1.8 per cent a year. Since then, this has slowed to 0.5 per cent, and even dropped for the poorest families.
In-work poverty has become a growing issue, as 55 per cent of households living in poverty now contain at least one working person, researchers add. This has risen from 38 per cent in the mid-90s.
Ruth Curtice, chief executive of the Resolution Foundation, said: “The 13 million working-age families across the poorest half of the country are widely courted by politicians. But despite working harder they have seen their disposable incomes stagnate, as they grapple with shrinking pay rises, higher costs and a growing struggle with their health and care needs.
“The stalling of disposable incomes means that many families’ hopes of home ownership have evaporated and work is not a guaranteed a route out of poverty.”
The research forms part of a wide-ranging new book, Unsung Britain, in which the Resolution Foundation warns that failing to address the “malaise” of lower-income families as they feel the impact of these trends risks “further political disruption”.
One of the key recommendations from the think tank is to reform the ‘unfair’ council tax system, with the very poorest households now spend four times as much as a share of their income compared to the very richest households.
Living standards should be put “at the heart” of government policy, the report adds, through cost of living-focused measures such as targeted discounts on energy bills and bus fares,
Sir Keir Starmer has said that tackling the cost of living is one of his government’s key priorities this year, telling families in January: “This Labour government is on your side, doing everything we can to ease the cost of living, and make life better. In 2026, the choices we made will mean more people begin to feel that positive change.”
The Labour government continues to struggle with dropping popularity in the polls, as political drama and the high cost of living impacts public opinion. Latest YouGov polling shows that 54 per cent of the public put the economy as one of their most important issues, above immigration (50 per cent) and health (32 per cent).
An HM Treasury spokesperson said: “Living standards are higher than they were in the previous parliament and real wages are up more in the first year of this Government than the first decade under the previous government.
“At the Budget, we took action to bear down on inflation and the cost of living – £150 off energy bills, a freeze to rail fares for the first time in 30 years, a freeze to prescription charges for the second year running, an increase to the national minimum and living wage and we lifted the two child benefit cap which will lift 450,000 children out of poverty by the end of this parliament.”
