Using a budget standards approach to assess the adequacy of newstart allowance

Abstract

AbstractA budget standard indicates how much a particular family living in a particular place at a particular time needs to achieve a particular standard of living. The budget includes every item that is needed to satisfy the family's individual and collective needs, priced in current retail outlets. The approach has strong intuitive appeal because it reflects how actual families do their budgeting and has been used to assess the adequacy of a wide variety of incomes and costs. This article presents new budget standards for a range of unemployed families derived from the estimates produced in the 1990s, revised to reflect new data, improved research methods and changed circumstances. The new estimates are deliberately conservative and indicate how much is needed to achieve the Minimum Income for Healthy Living standard developed by UK public health researchers. They indicate that the current level of Newstart Allowance – the main form of income support for the unemployed – is woefully inadequate. The methods used to derive the budgets have been chosen so that others can vary some of the key assumptions (e.g., about housing costs) to tailor the budgets to fit specific applications.