The ONS has today released its Family Spending statistics up to the end of 2013. These show that families’ weekly expenditure has begun to increase, following a steady decline since 2006, although levels of spending still remain lower than those of 2006 once inflation has been taken into account. The decrease was due to families cutting back on non-essential items following the recession. This increase can be attributed to rising housing and transport costs, forcing families to find money to cover their basic needs.
Housing costs, including fuel and power, account for the highest average weekly spending – a total of 14% of a household’s budget. This average cost has risen from £70.70 in 2012 to £74.40 in 2013, an increase of 5%. Within this category, rent is the biggest cost, followed by electricity, gas and other fuels. Mortgage payments are actually excluded from these costs, so this means the expenditure on rental costs by those families renting has been averaged out. In reality, the costs spent on housing by those families renting is significantly higher.
It also shows that renters fork out just under a third of their income on rent, whereas mortgage holders spend around 14% of their income on paying off their mortgage. It is hardly surprising then, that renters feel stuck in a trap. They are spending significantly more on housing costs than owner-occupiers and have no asset to show for it. Once the average renter has paid their housing costs, bills, transport and essential items such as food, there is very little money left over to even think about saving for a house deposit.
Families have cut back on many of their costs to deal with the financial hardship caused by the recession – this can be seen in the decline in household expenditure since 2006. However, expenditure has begun to rise again because families cannot choose to cut back on their rent, unless they want to face homelessness. The Government needs to stop pandering to people with property wealth and tackle the issue of spiralling housing costs for those trapped in the rental market.