Labour on Track for Worst Living-Standards Parliament Since 1961
Labour is on course to preside over the worst parliament for living standards in modern times, according to new modelling from the Joseph Rowntree Foundation published on 7 October 2026.
The Foundation predicts average household income after housing costs will be £440 to £770 lower in real terms in 2029-30 than when Labour came to power. After housing costs means money left after rent or mortgage, and real terms means adjusted for inflation. JRF says even the £440 fall would be the biggest decline since modern records began in 1961. The Guardian
JRF points to soaring energy and housing costs. The analysis uses the Bank of England's central and adverse scenarios for energy prices. Oil has surged back above $100 a barrel after hostilities resumed in the Middle East, close to the Bank's adverse scenario from July. The average five-year fixed mortgage rate hit 6% in the week of the report, for the first time in three years. Markets are betting on four quarter-point rises taking the Bank base rate to 4.75% by the end of next year.
JRF chief economist Chris Belfield said "without bold policy action on living standards, families are set to be poorer than they were a decade ago."
The October estimates update JRF assessments through 2025 and mid-2026. Its September 2025 pre-budget assessment titled 'A decade of falling incomes? JRF's pre-budget assessment of living standards' said average incomes would fall by £550 over this parliament. Its November 2025 modelling titled 'New JRF modelling shows bleakest parliament on record for living standards but less pain for worst off' found the average household will be £850 worse off (2.0%) in 2029-30 than in 2024-25. Joseph Rowntree Foundation That work found households in the highest third of incomes face the biggest fall. By June 2026, JRF found most families are set to have a worse parliament than the last one, and said another price shock from Middle East conflict threatens to make this the worst on record. Joseph Rowntree Foundation
The broader context here is that earnings are not driving the forecast so much as energy and housing costs feeding through to households. Like two valves tightening at once, bills rise while mortgage repricing adds a second squeeze. The £440 to £770 range reflects the gap between the Bank's central and adverse energy paths.
Looking at what this means for policy, the timetable points to the pre-budget period. JRF frames the choice as accepting a decade-long erosion of real household resources or intervening on living standards. Higher base-rate expectations raise debt costs for mortgage holders and government, while an oil-led price shock leaves less room to support incomes without adding to lasting inflation.
In my view, who is hit matters as much as the headline range. Earlier JRF work pointed to larger proportional pressure higher up the income scale, linked to mortgage exposure and the withdrawal of targeted support. Whether that holds in the October adverse case will shape how analysts read poverty, arrears and savings through 2029-30. Diplomacy matters too, because a shock tied to renewed hostilities links household budgets to outside de-escalation and supply responses, not only domestic decisions.
