Household disposable income "lowest for a decade"
20/10/2007
As many older people know through first-hand experience, the amount of money we have these days as 'disposable income' is dwindling on a daily basis. And, according to a recent study by price comparison website uSwitch.com, the soaring cost of utility bills plus hikes in taxes and rents are behind the trend.
Yet the company says that by switching suppliers for utility bills, householders could save up to £1,778 by investing less than three hours at their computer.
"Disposable income" is defined as gross income minus taxes and essential living costs such as utilities bills, food, transport, education, clothing, communication, TV licence fees, insurance, mortgage and rent. Net household income in the UK as a proportion of gross household income is down 5% compared to 1997. An increase in the number of households living below 60% of the average household income is another factor behind the cash squeeze, say uSwitch.
They also point out that an 85% tax increase and a 77% rise in social contributions have pushed down take-home pay, which means that the proportion of money left to spend on non-essential items is lower than any time during the past decade. So, despite a rise in average household incomes since 1997, the amount of "disposable" income has dropped 2%.
Mike Naylor, uSwitch's personal finance expert said: "Our pay cheques may be getting fatter, but the chunk that we have to hand over to pay taxes, bills and other living costs is growing even faster. We are working harder, but we are not getting any wealthier - we are just running to stand still."
The cost of water, heating and rent bills have risen on average by 33%, 46% and 44% respectively over the past decade, but housing costs continue to take the biggest chunk of household income following a 231% average increase in house prices and a 44% average increase in rent costs.
The uSwitch household expenditure statistics are based on figures sourced from the Office for National Statistics.
To check whether you could cut the cost of your household bills, uSwitch offers a free, no-obligation cost comparison service. Click on the link to find out more.