‘Let us be frank about it: most of our people have never had it so good.’ So said Prime Minister Harold Macmillan back in 1957, the year Which? was founded. But does it still hold true today?
On the one hand, in the 55 years since Which? launched, real household incomes have doubled, home ownership has soared and people are living longer than ever before.
The average UK household had a gross weekly income of just £18 in the 1960s, which equates to around £323 in 2010 prices. By 2010, however, the average household was earning £700 a week.
On the surface our standard of living has increased over the years. In the 70s, 52% of households owned a car or van, compared with 75% this decade. I was surprised to find out that just 30% of households had central heating in 1970, compared to the 96% who had it by 2010. By these measures, it all sounds rosy in the consumer garden.
Standard of living in reverse gear?
But on the other hand, we consumers now owe a total of £1.5 trillion, which puts debt at its highest level since the 80s. The amount we have to spend on anything but essentials has dropped to its lowest in over twenty years, while housing costs have hit record highs and food has been increasing in price faster than inflation in recent years.
Gazing back to 1965, housing costs made up 14% of our total expenditure. Today they account for 24% of our budgets and this looks likely to grow to more than 28% by 2030 due to rising rent costs and recovering house prices.
In a seemingly positive development, in 1965 people were spending much more of their income on utility bills – 5.6% as opposed to around 4.3% in 2012. However, most of us will be all too familiar with the recent increases in energy and utility bills and spending on these items is due to increase further: by 2030 it’s forecast that we’ll be spending a painful 6% or more on energy and utilities.
Feeling the squeeze
It’s a similar picture for food prices. While food costs as a proportion of our income are lower today than 50 years ago, they’re now rising again. Food price inflation is a major concern for you with 75% worried about rising costs according to our latest Which? Quarterly Consumer Report.
After years of telling ourselves that our standard of living has risen constantly, could the current generation be the first in decades to see these advances go into reverse? Or have we been living beyond our means for years, with the overdue collective credit card bill only now hitting the doormat?
How are you feeling about your own finances – are things better now than they were in previous decades or are you still feeling the pinch?