/ Money

So, we’ve never had it so good?

‘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?

Comments
Guest
Sophie Gilbert says:
15 September 2012

Thinking about it, all things considered, keeping a sense of proportion, maybe we could say that most of us have seldom had it so good?

Guest

Not sure, I mean the amount I spend on my broadband connection and mobile phone service has skyrocketed compared with 1957.

Eating habits have changed too with more people buying prepared meals, more exotic foods and more wine and other drink for home consumption.

Guest

Let’s be honest, measuring happiness by how many material goods we have is not a good barometer. It has all been provided on credit. That’s it, now the credit boom is over, everything is contracting, except the salaries of the very rich.

So yeah, chin up eh?

Guest

It depends – when Macmillan was PM – Health care was free from cradle to grave – My parents were not forced to pay for anything – now it isn’t unless you are already a pauper – because if you are elderly and have a chronic illness – you will be forced to sell your house and all your assets to pay for care – even though you have already paid for your health care through NI. Nor were there food banks or “free breakfast clubs” in poverty stricken areas.

I was earning far more then with my own company. rather than being a teacher now.

Guest
Florriebunda says:
23 September 2012

Hi Richard
I do think you share a common misconception re NI. Unfortunately it is named badly as it is not insurance ie pay now and benefit later. The money we and our parents paid in NI contributions was spent as it went into the NI coffers. Just as it is today. The purse is empty.

Guest

Sorry – It is Called NATIONAL INSURANCE from the beginning – and when I started paying it in 1948 I was assured that it was payments I paid for welfare benefits UNTIL the day I DIED – Quote “FROM CRADLE TO GRAVE”, You are being misled by Tory propaganda. The fact that the governments misused MY payments has nothing to do with the contract. They PAY – Just like the BANKS who mis-sold PPI.have had to pay it back. Unless you buck up we will only have a private health service.left. The purse is not empty – there are vast sums paid to the rich for being rich and overseas aid…

As I said my parents HAD free care from cradle to grave – I demand it too.

Guest
Florriebunda says:
24 September 2012

Good morning Richard
I found your reply most interesting as I too am a retired teacher who thought I was reasonably well paid- I was never owned a company though.
I agree about overseas aid – we are out of date in supporting fast growing economies from what was the third world. However I think 1. Cradle to the Grave could be a media quote – not sure – do you know who FIRST said it? and 2 I always understood the phrase to mean that benefits were for people of all ages – young to old. I don’t think i meant that benefits would be paid for ever and ever to everyone. It goes without saying that no government can make promises for future ones – things change, much as we’d like them to continue in the same way that we find comfortable.
You might find the tv programme presented by Andrew Marr last night on the BBC worth considering – for the reality of what life is really like for the majority of the world’s population – not just our pampered bit of it. Oh and by the way, you talk of demanding your benefits Really ? You have had and still are enjoying being subsidised by young working taxpayers – what are you GIVING to those who are paying the price for pensioners??

Guest

Sorry Richard. It’s not going to work. You have been let down by Clement Atlee and his Labour government by making promises that neither the last Labour government or our current government could possibly fulfil.

The average life expectancy of people is much longer than it was just after the war and the medical treatment available through the NHS is very much improved. Coronary bypass, cancer treatment, MRI scanning, and so on. The amount spent on drugs is phenomenal. I have the small 1977/8 issue of the British National Formulary, the list of drugs available to GPs and hospital doctors. I have sometimes compared this with the current issue and the difference is amazing. Most treatment is free under the NHS, though the price of a few novel drugs makes the cost prohibitive. I don’t expect that doctors had much to offer those who were suffering in Atlee’s era.

Long-term care is expensive. A friend’s father is in a nice care home and the fees are around £1000 per week. At present, the costs are being paid from his assets, including the money from sale of his bungalow. He and his late wife were not extravagant, so hopefully their assets will be sufficient to pay for his care.

I cannot see a practical alternative to the present system, whereby the assets of someone going into long-term care are used to fund it. Even those who have made no effort to plan for later in life or who have not been able to for good reason often own a house, the sale of which could help fund care.

You are concerned that the NHS may fail, leaving us with private medical care. If the government had to fund long-term care that would happen very quickly. What is wrong with people using their assets to pay for care homes? After all, it would not be very fair for young people who can’t afford their own house and are struggling to make ends meet to foot the bill so that the elderly can have care and keep their assets.

Which government will pay for ‘cradle to grave’ welfare and how will they fund it?