BRITISH households’ outgoings outstripped their income last year for the first time since Margaret Thatcher held power, according to statistics published today.

Figures from the Office for National Statistics (ONS) show that, on average, each British household spent £900 more than they received last year.

Shadow chancellor John McDonnell said that the findings, coming in “the same week the Tory government delivered a slap in the face to workers over public-sector pay,” revealed the “disastrous impact of eight years of austerity on the living standards of families.
 
“For the first time in nearly 30 years, we see average household outgoings surpassing incomes,” he noted.

Mr McDonnell called the ONS report “a stark example of how brutal Tory pay restraint and austerity has led to living costs outstripping earnings for families.”

Last year's total shortfall was almost £25 billion, significantly greater than the £0.3bn overall gap when outgoings last outstripped incomes in 1988.

The shortfall means households must either borrow money or raid their savings – and the ONS found that borrowing is indeed up and savings down.

Households took out nearly £80bn in loans last year, the highest figure for a decade, while depositing just £37bn in bank accounts, the least since 2011.

Phil Andrew, chief executive of debt charity StepChange, said it was “really unfortunate that this very useful data is so heavily sprinkled with the phrase that households are ‘living beyond their means.’

“The reality is that too many households, here in Britain, in 2018, simply cannot make ends meet, however hard they try.

“Not having enough money to make ends meet is not the same thing as living beyond your means – which implies you have a choice, when too many people do not.”

He pointed to StepChange’s own recent analysis, which showed that its typical client spends “on average 60 per cent of their net monthly household income on essential household bills plus food.”

For those on the lowest net household incomes – under £10,000 a year – “an average 93 per cent of their monthly income is swallowed up by the basics,” he said.

“It is lack of choice, rather than poor choice, that explains why an estimated nine million people last year turned to credit to meet household needs,” Mr Andrew concluded.