PEOPLE living in the UK are 39% worse off than those in neighbouring countries, a think tank found this week – and campaigners argue independence could be the solution.
New analysis from the Resolution Foundation shows that low- and middle-income families in the UK are poorer than those in any other European country.
This is caused by soaring housing prices, which are 44% higher in the UK compared to the Organisation for Economic Co-operation and Development (OECD) average.
The think tank showed that UK prices are 8% higher than the average in the 38 countries in the OECD.
The organisation also found that food is 12% cheaper in the UK than the average, but this benefit is outweighed by the continuous rise in housing costs.
The Resolution Foundation compared the findings with German prices and low- and middle-income families.
The think tank considered that lower-income families typically spend a higher proportion of their income on essentials and less on non-essentials. With this adjustment, German families are 21% – or £2300 a year – better off than their UK counterparts, and the difference appears even larger compared to Dutch families, at 39%.
Without this adjustment, poorer German families would still be 16% – or £1700 a year – better off than their British equivalents.
“The choices of UK governments have left the people of the UK poorer than their European counterparts,” said Scottish Greens co-leader Lorna Slater MSP.
“Deliberately driving up housing prices, cutting holes in the social safety net and trying to balance the books by cutting services rather than taxing the wealthy have led us to this state where children are going hungry and households are relying on food banks.”
Households in the UK face prices 8% higher than the OECD average across all spending categories, making it essential to adjust for this when comparing incomes between Britain and other countries.
“The gap between rich and poor is no longer sustainable,” said Gordon MacIntyre-Kemp, chief executive of Business for Scotland and founder of the Believe in Scotland campaign.
“Our economy broke in 2007. It's like a hurricane ripped the roof off but the UK Government is moving buckets around to try to catch the rain.
“It’s not just leaking. It's gone. They are all just running around saying everything's going to be okay but actually, the sky is falling in.
"We need a new approach to economics and society that is fit for the reality of this century and that has to be the wellbeing economic approach.”
MacIntyre-Kemp highlighted that the most basic needs of the population are not being met, citing the work on human needs by psychologist Abraham Maslow.
Maslow identified five hierarchy needs. The most basic needs are food, water and shelter, but also, people need to feel safe and secure. Then people can look for social connection and self-esteem and seek to achieve their potential.
However, MacIntyre-Kemp explained that with wages remaining low, young people unable to afford homes, older individuals hesitant to turn on the heating, and food banks supporting those struggling to feed themselves, the economic system is failing to meet the country's most fundamental human needs.
“Food is now also getting more and more expensive in the UK and our society can't meet the actual fundamental needs of a human being, survival and wellbeing and that's why we have a completely broken economy,” said MacIntyre-Kemp.
A constant rise in house prices
IN December, Halifax, the UK’s largest lender, reported that the average house price hit a record high of £298,083.
This followed a 1.3% increase in prices in November, surpassing the previous record set in October by nearly £5000. Before this recent rise, the highest average house price had been recorded in June 2022, at £293,507.
House prices dipped by 0.2% month on month on average in December following five months in a row of rises, according to the index.
In five years, house prices went up by 25% despite the cost of living crisis, an increase in mortgage costs and the Covid-19 pandemic.
Stella Rooney, chair of the Dennistoun branch of Living Rent said that since 2010, rents in Scotland alone have increased by 60% which is 11% higher than inflation.
“Rent over the past 14 years has been increasing massively across the country, well above inflation.
“Scotland is one of the most profitable places to be a landlord in the whole of the UK,” added Rooney.
The abundance of Airbnbs, holiday homes in rural Scotland, the shortage of affordable housing, and the rent increases in city centres pose a threat to Scotland's economy, explained MacIntyre-Kemp. Along with rising energy prices, these factors are major contributors to inequality and the ongoing cost of living crisis.
“If you do not come from a family that is wealthy middle class, you're not getting on the housing market,” said MacIntyre-Kemp as he explained that a well-paid graduate from the middle class might only be allowed a £128,000 mortgage.
“There is a lot of talk about millennials being the first generation that earns less and thus is less well off compared to their parents. Although that is true in general, there are some that are earning more, they just didn't start from low-income families and it’s the growing levels of inequality that send the loudest signal that we have a broken society, a broken economy.”
An independent Scotland could be a solution
IN November, the Scottish Government unveiled figures showing the skyrocketing prices for last year's rental costs.
Across the whole of Scotland, one-bedroom properties increased by 9.6% in only 12 months, while two-bedroom places have seen an increase of 6.2%.
Prices for renters “are going through the roof” said MacIntyre-Kemp.
He believes that without the Union, Scotland would be able to remedy the economy, making it more sustainable.
"We'll stop living in a half-nation, semi-depressed state of mind and start raising our ambitions and if our economy thrives, then we will be able to invest in housing. When every decision is made for the benefit of Scottish society and Scotland's economy then every decision will benefit Scotland."
He hopes that an independent Scotland would benefit from a form of targeted rent controls such as in other European countries and address housing shortages with more investment.
