Low-income households in UK worse off due to ‘sky-high’ housing costs

The Resolution Foundation has found that ‘sky-high housing costs’ outweigh the relatively low cost of food

Low and middle-income families in the UK are worse off than families in other Western European countries due to ‘sky-high housing costs’, according to a new report by the Resolution Foundation.

The think tank said that while food costs in the UK are 12% cheaper than the average in other developed countries, less well-off Britons were more affected by the cost of housing, which is 44% higher in the UK than the OECD average.

The report found that, after adjusting for the cost of living and housing, poor German families are £2,300 a year, or 21%, better off than poor families in the UK.

The income gap with poor Dutch families is even wider at 39%, while the gap with poor French families is 8%.

The foundation’s report showed that families in the bottom half of income distribution spend 22% of their budget on housing and 17% on food. In contrast, wealthier families spend 13% on housing and 13% on food.

Simon Pittaway, Senior Economist at the Resolution Foundation, said: “Britain’s recent toxic history of low growth and high inequality has left low-to-middle income families far poorer than their counterparts in Western Europe.

“These damaging income gaps are even worse once we factor in the prices of goods and services that matter most to these families.

“While food and clothing are relatively cheap, the sky-high cost of housing – which accounts for almost a quarter of all spending by lower-income households – makes Britain a particularly pricey country for poorer families.

“Britain’s housing costs crisis is a major driver of child poverty, and contributes to poor families being £2,300 worse off than their German counterparts. The crisis needs to be tackled urgently – from building more affordable homes to providing better support for low-income renters.”

Olivia Barber is a reporter at Left Foot Forward